Banks Require Transparency in CannabisGenifer Murray interviews Tyler Beuerlein with Hypur about banking in the cannabis industry.
As the sun shines on the increasingly mainstream cannabis industry, the standards of accountability and bookkeeping continue to shift. While many may be accustomed to keeping shoddy records, the future will reward those with transparency, accuracy, and consistency.
The Future Looks Great If Producers Stick to the Plan
Recently, host Genifer Murray spoke with Tyler Beuerlein of Hypur on Inside the Industry to discuss the state of cannabis banking. He explained that while Montana and Alaska pose some difficulties, those in Colorado and California should have no issue finding a bank. While ten years ago, banks were wary of green money, now they're familiar with the sector and starting to higher employees specialized in the cannabis industry.
The broader issues of 2020 are fraudulent activities, including many cashless transactions. One such strategy is "cashless ATMs" that allow customers to withdraw money from their card to pay for cannabis. While it may seem innocent enough, until federal legalization, this is unacceptable.
Everyone wants to offer convenience to their customers, but the issue with cards is that Visa, Mastercard, and other leading providers are not banks. Instead, they are their own entities, and they are not yet allowed to process cannabis transactions due to federal restrictions on cannabis. Any way of working around that, including cashless ATMs, is fraudulent. According to Beuerlein, delivery companies have already reported competitors for such practices. They reported that engaging in such activities gave their competitor an unfair advantage as they were acting beyond legality limits.
Beuerlein described the payment process by saying, "A consumer can download our app through the Apple or Google Play Store. They can set up a profile, and during that process, they click on the logo of the bank they're banking with - very much like signing up for Venmo. They enter their credentials and choose a four-digit code. Once they've done that once they can place a delivery order, the consumer receives a secure text message with a link, they click on the link, enter the four-digit code on their device, and do the transaction. Our bank clients move the money from the consumer's account directly into the [merchant's]. So, it's a direct bank to bank transfer model. There's no branded card involvement whatsoever."
How Does Hypur Perform Differently?
While Hypur is aware of the reality that cards will one day handle cannabis transactions, their business is based in the present. Through their services, they provide bank to bank transfers from the customer to the merchant. By forgoing the use of a major card, Hypur connects banks already comfortable with servicing cannabis clients with those who want to buy it. This process is similar to wiring and cuts out the need for unnecessary exposure to risk.
Through years of being aggressively audited, Hypur proved themselves to be an ideal company for the responsibility. Most companies offering similar services will likely be hit with a fraud case unless they also figure out how to offer direct bank to bank transfers. This forward-thinking strategy has secured Hypur's position in the industry and sets them apart as offering one of the leading innovative payment solutions.
One of the best strategies for producers in the current environment is the same for banking as it is for insurance. Be honest and work with your team. If a bank asks for information, it is to protect your business and themselves from a lawsuit and address liability. As cannabis becomes more accepted, those who adapt to high standards of accountability will be richly rewarded.
Innovation and Patience Define Success
While cashless ATMs and loading prepaid cards with cash are interesting solutions to the cannabis industry's payment problems, according to Beuerlein, they're "fatally flawed."
"I hear the stories when an operator makes a short-sighted decision and, in some cases, lose seven figures," he continued. "It happens more than you would think. The cashless ATMs will be next, and that will be very soon."
He has made his contact info readily available for those interested in reaching out to Hypur's Tyler Beuerlein. Reach out through their website, and he is happy to connect with cannabis businesses eager to offer a more convenient payment method to their customers.