The regulated cannabis industry may be a legal enterprise and one that’s growing exponentially as more states adopt legalization, but that doesn’t mean major banking institutions are welcoming it with open arms. In fact, the industry remains notoriously reliant on cash transactions.
Despite generating billions in tax revenue, today’s legal cannabis industry is off limits for major banking firms because of the Schedule 1 classification of cannabis under the Controlled Substances Act. And though some smaller regional financial institutions will work with legal cannabis businesses for the capital they need, practically all cannabis businesses are forced to rely on hard currency for everything from retail sales in dispensaries to B2B wholesale transactions.
The situation is so problematic that the head of the Internal Revenue Service this past week even raised the issue before Congress. IRS Commissioner Charles Rettig said his federal agency would prefer that legal cannabis businesses be allowed to pay their taxes electronically because of the risks inherent in its largely cash-based world. Those risks run the gamut from employees facing the threat of armed robbery to the difficulties of tracking and preventing financial fraud.
Lawmakers are attempting to ease some of these banking restrictions through congressional action, and provisions in the recent U.S. House-passed Marijuana Opportunity Reinvestment and Expungement (MORE) Act and the Secure and Fair Enforcement (SAFE) Act would allow large banks to more readily meet the industry’s capital needs – but only if and when those measures are eventually approved. And that’s not a certainty at this point.
That’s why it’s important that cannabis businesses take any steps they can to simplify how they conduct financial transactions. Any way in which cannabis businesses can make payments electronically will lessen their financial burden and their anxiety about payments, even if they still have to rely on some cash and paper-check transactions, including making tax payments.
Leaf Pay allows Leaf Trade customers to manage all ordering, fulfillment and payment functions in one easy-to-monitor location. It’s a unique digital payment system that abolishes the use of paper checks and cash, and it simplifies transactions for both sellers and buyers.
Sellers don’t have to waste a lot of time and energy collecting payments, and buyers don’t have to spend hours on invoices and tracking them for record-keeping. Once Leaf Pay is set up the first time, it’s good to go for all subsequent transactions.
Leaf Pay is seamlessly integrated with accounting apps such as Quickbooks and cloud-based accounting services such as Sage. It’s the first system that really does everything at a flexible cost to the seller – and it’s free for buyers. You can learn more about Leaf Pay here.