• EconMan
    3.3k


    Thanks man! Especially the first one. Redfund is NOT a bank but a capital investment company. They must have a correspondent bank somewhere or they could not enter the MC/VISA system, but I was unaware they were doing this, and combined with their other offering, I'm excited. THis tells me the ACTUAL merchant bank does NOT want to be known.
    Regardless, will be contacting them tomorrow. I want in. Thank you so much. Could hug you :)
    And I owe you a bowl!
    I have dozens of canadian clients and a potential alliance with this company may have some efficacy.


    I do not understand why banks would have no problems with liquor and beer while still having an issue with pot. I'm talking in Canada where it's legal where I'd think the banks would be fighting to get in on the money they could be making in this billion dollar industry.Dr green thumb

    Yeah.... re US/Canadian political economy, Canada is and has long been codependent with the US. US law does not apply to Canadians but it does apply to ANY Canadian banks who chose to do business with the US government (and they all want to). Back when I started my cash forecasting company, my partner was a Canadian and we both KNEW we had to develop the software for the US bank model because the Canadians would still buy it, and deal with the inconvenience, whereas the Americans would never buy a system expecting them to bend around a canadian" way. The banking systems are very similar like that. Indeed, I struggle to thing of two countries on Earth whose financial systems are more intertwined? As economists have said for decades.... when the US sneezes, Canada gets the flu. :angry:

    Here is the NIGHTMARE scenario that keeps us all up at night... :zip:
    The POTUS has a heart attack and Pence is sworn in. Jesus comes to him in a dream and validates all of Reefer Madness. Sessions is recruited back more self-righteous than ever. More "war on drugs".
    Shops and warehouses are raided at first, mostly to send a message (don't say it can't happen because it just happened with e-cigs). Any merchant bank funding MJ sales are declared OFAC, threatened, and if noncompliant, are locked out of the system. Canadian banks yield or go under. They yield.
    Weed begins to cross the US/Canadian border by the ton, and therefore Homeland Security alleges (of course) that these weed sales are funding terrorists, and something must be done in the name of national security. The US "muscles" Canada to abate its "dangerous" black-market drugs transported to the US. The War on Drugs is in Canada even though it might be legal in Canada.
    Class-action lawsuits overwhelm. Since the credit card "contracts" funding the illegal drugs, are now declared null and void, ALL purchases made are no longer valid debts to consumers under US law....
    By now near every Canadian who has touched MJ commercially, regrets it.

    All it takes is one overzealous and reckless POTUS or Attorney General, and ONE little Executive Order; then thousands of merchants, and some of their merchant banks, go bankrupt nearly overnight. Also, they are all criminals now. I by definition would be a money-launderer, and no telling what else they would drum up. When our attorney went over all this with us (and in much more detail), I remember signing the contract was simply surreal.
    It was 20% pride and 80% anxiety -- WTF did we just do? :scream:

    NO ONE in the business is going to feel good about any of this until CONGRESS acts. I am not going to hold my breath. :worry:
  • BobCat
    1.9k
    Regardless, will be contacting them tomorrow. I want in. Thank you so much. Could hug youEconMan

    Great news. Hopefully, something beneficial to you will germinate and flower! Screw Ayn Rand and ethical egoism :rofl: Or maybe an Econhug is my self-interest? Take care hermano!
    :victory: -Robert
  • EconMan
    3.3k


    LOL :rofl:

    I absolutely would smash with Anna Rosenbaum. Ayn Rand I would fuck. Now that would be something for the resume..... :starstruck:

    And she would I presume get a chuckle out of this. California is finally figuring out its own insanity (I hope).

    https://www.cnbc.com/2019/01/28/calif-bill-introduced-to-slash-pot-taxes-as-legal-industry-struggles.html
  • BobCat
    1.9k
    Perfect! Just too damn funny. :rofl:
  • BobCat
    1.9k
    I'm trudging through that- still. Damn you DFW!!! 5 years ago, one of my nieces was reading him in college. I read his article about going to the porn awards in Vegas, and a few stories. I finally bought IJ a year ago and got 200 pages in and stopped. I think they were selling him like the new Pynchon to my niece in college. I'll give it another crack.
  • EconMan
    3.3k
    The guy from Ft. Worth who was using some "mechanical mod with unknown particulars" and it blew up and a piece of metal severed his carotid artery and he died.

    It is worth pondering on battery safety and the "Don't do's" involved.

  • Dr green thumb
    5.2k
    @EconMan

    If a dispensary has a fire or fire sprinklers go off. Can the inventory be covered under insurance or is it a total loss. I know the building can be covered and revenue coming in but I am unsure of the inventory. My guess is no.
  • EconMan
    3.3k


    Wow. Great question. I don't know. Getting Merchant Accounts actually completed, up and running, and kept running, is a PITA, but insurance is MUCH less regulated federally than is the case of the financial system. State insurance authorities probably can set the rules here, so I'm guessing it is an extra hassle but doable.

    I'll ask my client in CO. In the beginning he became my client because he had to deal with dozens of garbage bags of CASH transactions per day -- I arranged for an armored car service to pick up his cash twice a day and a blockchain monies system to account for it. I KNOW he has insurance on his concentrates lab because when I was there he specifically said he was insured (I made a joke about an explosion)? My guess is a local insurance agent under CO insurance law.

    So over the course of pondering this, my best guess is yes, they would be covered. They have to at least be able to get liability insurance, else no investor would invest. Ditto with asset/inventory insurance.... no bank will extend a line of credit for uninsured inventory.

    But great question. I'll find out for us. :)
  • EconMan
    3.3k


    I found out. He has no problem buying insurance -- liability AND asset recovery.
    Also, the FEDs take his money in taxes, FICA, etc..... they have no problem taking money. He files income tax as normal, using weed inventories as "cost of goods sold" etc. Normal accounting. lol

    His primary problems are in revenue management -- getting banking system partners.... before us he was dropped by three banks.... there are not that many cannabis friendly banks. He gets fucked with constantly because he deposits (and removes) large amounts of cash. Several DEA flags per week. He had to hire someone just to research particulars around his deposits and respond to DEA bullshit.

    My company is not doing cannabis accounts anymore as of March 1, except for current clients, and some referrals.... too legally "hot" right now and not enough profit to make the risk worthwhile in most cases.
  • EconMan
    3.3k
    Utterly absurd and ridiculous. pisses me off. Murderers and rapists and child molestors get treated better.
    Trump should pardon him and ALL non-violent MJ felons.

    https://www.ocregister.com/2018/09/10/this-man-will-spend-life-in-prison-for-a-marijuana-conviction-unless-donald-trump-or-the-supreme-court-helps-him/
  • To the Cloud
    587
    Imagine business has been getting much better for you yeah ?
  • EconMan
    3.3k


    The cannabis side of the business just sucks. The exact opposite of what I thought it would be..... We went into it a little naive. It's vicious. We've actually downsized it from where we thought we would be going with it. Live and learn.
    But the vape category business is booming, as is "High Risk" e-commerce in general -- travel & lodging, guns, porn, prostitution, spa & gym, subscriptions....
    Several banks now are offering dedicated "VAPE" categories reflecting a smaller discount rate (only bankers would call something you pay them a "discount" -- lol) for vape vendors who do NOT sell tobacco related products.

    There are two ways to make money in "high-risk" merchant banking.

    1. Dial-for-Dollars (marketing driven)
      Hire an army of telemarketers and get X% of merchants called to submit an application. Get-um-in and get-um-out is the operational goal. Ever apply for a merchant account and once submitted literally never heard ANYTHING from the person you made the application with? That was a dialing for dollars shop.... your application had a snag, and they don't do snags.... they don't care if their clients are happy, just that they are being added faster than they are dropping out, and they dropout fast.
    2. Professional Services Firm (services driven)
      Requires you also become a quasi software, accounting, and economic modeling firm. Better be able to write a payments app if needed. Accounts tend to be large ($100k+/mth), long lasting, low turnover, and have more experienced merchants. The vast majority of new clients come from referrals, not marketing efforts. It takes longer to build the payments business, but lasts longer once built. We turn away prospects we judge will be toxic, either financially or emotionally. Basically, if we don't want you calling us, we don't want you as a client.



    Thanks. Would love to offer some fellow humans some experienced advice -- some folks in this business give used car salesmen to shame -- but I try and stay away from the reddit vortex. :grimace:

    I already spend too much time here probably, but it's my little happy place :nerd:
  • EconMan
    3.3k
    Now this is encouraging. It will probably fail, so a long way to go still, but an excellent start. It made it into formal consideration. In essence, it would protect financial institutions when they do business in legal states, removing the lion's share of risk.

    H.R. 1595: SAFE Banking Act of 2019
  • Baron23
    8.4k
    Yep, NIMBY is alive and well in a lot of areas and especially legal MJ.

    My view is that jurisdictions that do not allow grows or dispensaries should not share in the tax revenue.
  • EconMan
    3.3k
    Interesting.

    @Dr green thumb this is in your backyard.

    https://www.cannabisbusinesstimes.com/article/illinois-marijuana-bill-to-come-up-very-soon/

    EDIT:
    direct link
    https://www.galesburg.com/news/20190422/marijuana-bill-likely-to-come-up-very-soon

    "If you legalize it, usage is going to go up. That’s been the experience of all the other states that have done this,” Sen. Dale Righter, a Mattoon Republican, said in an interview. “When usage goes up, abuse will go up, and there will be more people landing on the doorsteps of drug treatment providers across this state — drug treatment providers who will tell you we have more people than we can serve and we do not have enough money.”
  • Dr green thumb
    5.2k


    I'm so sick of that antiquated thought process. He obviously does not know how many people partake and could benefit from this.
  • BobCat
    1.9k

    Carl Sandburg was born in Galesburg. An old girlfriend went to Knox College in Galesburg.
  • EconMan
    3.3k
    Interesting. From one of my favorite media outlets.

  • EconMan
    3.3k
    CBD is getting hard. Two BIG players dropped out of the CBD Merchant Account this week. :gasp:

    Edit. And on a more positive note, this is interesting.

    https://www.cannabisbusinesstimes.com/article/which-states-legalize-cannabis-next
  • EconMan
    3.3k
    This is a positive forecast.

  • EconMan
    3.3k


    Wanted to say THANK YOU again for posting that article on Redfund.
    We will be doing business :cool: and it comes at the perfect time with US banks dropping out of CBD like flies. This helps me, merchants, and anyone who depends on CBD.
  • BobCat
    1.9k
    I appreciate the follow-up. I was simply sharing. :up: :100:
  • EconMan
    3.3k
    This is great intro for those curious about modern credit cards and who actually pays for those credit card REWARDS ?

  • keenlyside
    74

    Thanks EconMan for the insights into this, I have been looking at these issues for a while and have not come across many as well aware and spoken as you.

    Cheers
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