Across 30 states and the District of Columbia, marijuana consumption is now legal in some form. With more than half the country buying and selling cannabis products legally, there’s still a large gray area when it comes how these transactions are handled.
For example, as of Jan. 2, anyone 21 and older may legally buy and consume an ounce of marijuana in California, whether you’re a resident of the state or not. On the federal level, this is a problem. Agents can still prosecute anyone caught with marijuana bought in a recreational store.
At this point, there aren’t many payment processors willing to stick their necks out until there is more definition and regulation of the market. However, if and when lawmakers do act, there is no doubt that medical dispensaries will come online in the U.S. and to many other countries.
Owners, distributors and growers could also be federally prosecuted, essentially treating them as drug dealers. Banks caught handling cash from these transactions could be prosecuted under organized crime laws. Even though the industry is expected to generate $7 billion a year for California, at this time the cannabis business is considered illegal under federal law.
Banks subject to federal regulations are reluctant to open accounts forcing businesses across California to handle all transactions in cash. We believe this issue must be addressed, sooner rather than later, at the federal level — by Congress defining what is legal and establishing regulations.
A tipping point may have come for California. On Jan. 25, state Sen. Robert Hertzberg, D-Van Nuys, Calif., introduced a bill (SB930) allowing California chartered banks, credit unions and other financial institutions to open checking and savings accounts for marijuana retailers.
This would enable them to issue checks, and pay their employees and other bills like most businesses, with something other than cash. It’s an attempt to deal with U.S. Drug Enforcement Administration rules that still classify cannabis as a Schedule I drug.
Can you legally buy cannabis online? That depends on where you live. In Canada, Buds2Go.ca is considered an online dispensary. It’s also possible in parts of California: we found eight online delivery services listed at KushCa.com backed by payment processors. Technically, it’s not federally legal to deliver across state lines.
There is crossover from the adult market to the cannabis space as well, and we are seeing it as a growth channel for some of our existing clients.
At this point, there aren’t many payment processors willing to stick their necks out until there is more definition and regulation of the market.
However, if and when lawmakers do act, there is no doubt that medical dispensaries will come online in the U.S. and to many other countries. Once this legal channel opens up there is a big opportunity for payment processors. Laws will need to be put in place to control where the money goes and credibility will need to be developed in the marketplace.
At SegPay we believe the legal sale of cannabis online will ultimately happen and we are focused on this issue. We are exploring how we can help sellers of cannabis products, including CBD oil, process payments online.
When the legal and regulatory landscape becomes clearer, we plan to take a leadership role in this process, as we believe it offers a huge growth opportunity (pun intended) in the online payment processing space. We’re also exploring options with banks in both the U.S. in Europe. When the smoke clears, SegPay wants to be a clear leader in this movement.
It took only three years for Cathy Beardsley to turn startup SegPay into a profitable company. As president and CEO, Beardsley oversees the day-to-day operations and long-term strategic planning for the company. SegPay is one of four companies approved by Visa USA to operate as a high-risk internet payment service provider in the U.S. Since 2005, SegPay has offered online merchants a state-of-the-art billing platform that provides realtime payment processing around the globe.