Despite the legalized and medical marijuana industries taking off in multiple U.S. states, investors and banks are still wary of getting involved in the extremely high risk industry. With marijuana being sold virtually as a cash-only project, few merchant service providers have a solution for payment processing. As 48 American states consider legalizing the drug for recreational use, marijuana merchant accounts are on the horizon.
Why is the Marijuana Industry High Risk?
Many banks and investors are refraining from getting involved in the marijuana industry because it is so high risk. An industry is considered high risk when it involves large amounts of money, legal restrictions, or age restrictions. For example, although e-cigarettes are considered to be far safer than traditional cigarettes, they still come with age restrictions that make the industry high risk.
For marijuana businesses, the problem is the legal restrictions. Many states have legalized medical marijuana, and two states–Washington and Colorado–have legalized the drug for recreational use. However, laws can change both on the federal and state levels, which, until they do, it is scaring away many banks and investors.
Marijuana Merchant Accounts Becoming Options
Six months ago, marijuana merchant accounts were a mirage. Today it is a slightly different story. Many banks remain hesitant to work with marijuana merchants without absolute legal clearance on state and federal levels. Even then, the controversy behind marijuana usage will cause many to turn away from any marijuana merchant.
The most realistic possibility is for offshore banks to embrace the marijuana industry first, which is happening. Some of these banks have fewer restrictions when it comes to high risk merchants, and are known to provide credit card processing services to e-commerce industries such as adult entertainment, online pharmaceuticals, e-cigarettes, and more.
What Can Marijuana Merchants Do For Now?
Marijuana merchants, for now, should considering processing with an offshore bank. Only a few marijuana merchants are actually in existence and most of them are employed by the state for medical purposes, limiting their ability to conduct business. If the market ever opens up and embraces marijuana merchants, they may still find trouble when searching for marijuana merchant accounts.