November 15th, 2016
The cannabis industry has been struggling with the banking industry since its inception. While several states have legalized the drug, its status as a Schedule I Controlled Substance has complicated matters on a federal level. Many cannabis businesses have been forced to transact in cash, which introduces security concerns and complicates accounting and taxes. What’s more, regulators don’t seem to have any sense of urgency in changing the laws.
In this article, we will take a look at how CannaTrac plans to solve these issues with a robust compliance solution for banks and a cash-free solution for cannabis businesses and consumers.
Building the Right Team
The cannabis industry’s banking issues are a complex matter given the legal uncertainty facing banks and security issues facing businesses.
Over the past three years, CannaTrac has assembled a team with years of experience in banking, compliance, financial services, government affairs, law, and technology. The company has developed innovative technology that provides the financial transparency needed to meet strict regulatory demands, while forging trusted relationships with financial institutions in order to lay the groundwork for its network.
For example, James Zaring has over 35 years of banking experience and served as the CEO of a commercial bank for a decade. During his accomplished career, Mr. Zaring filed an application for a de novo bank that was approved and opened within five months of filing. He has also worked to help several troubled financial institutions meet regulatory demands and served as an expert witness for the FDIC pursuant to enforcement actions.
Solutions for Banks
The cannabis industry is expected to reach $35 billion in size by 2020, according to GreenWave Advisors, which translates into a significant market opportunity for banks.
The Department of Justice indicated that commercial banks were free to serve the cannabis industry in a 2013 memo issued by James Cole. The ‘Cole Memo’ and subsequent guidance from FinCEN indicated that banks could serve the sector as long as they carefully documented transactions by filing suspicious activity reports for any marijuana businesses. In addition, banks were directed to conduct extensive due diligence and adhere to other requirements.
CannaTrac has developed a fully transparent vetting process that qualifies, verifies, and satisfies regulatory compliance. The procedures included in the solution include Bank Secrecy Act (BSA), anti-money laundering (AML), financial crimes enforcement network (FinCEN), Cole Memo, and other key policy adherence. The system traces all financial transactions, provides full visibility and surveillance, and reduces overhead and regulatory risk for banks. More importantly, CannaTrac’s solution
Businesses & Consumers
Cannabis businesses face a number of challenges when it comes to handling their finances, but storing and transporting high levels of cash is a paramount concern.
CannaTrac’s technology enables cannabis businesses to eliminate cash through the use of a ‘reloadable card’ and automatically deposit tax revenues and fees to the government. The solution seamlessly integrates with any point-of-sale or seed-to-sale system, while providing transparency and traceability that exceeds financial institution requirements. This means that business owners can focus on their business without worrying about cash or taxes.
For consumers, the CannaCard can be easily reloaded online, at participating retailers, or through bank accounts and direct deposit. The Loyalty and rewards program enable consumers to earn points toward products as they shop without having to go to an ATM. The CannaCard will be available as a mobile app that makes the process even easier with mobile ordering, in-store text specials, and fast and secure payments without worrying about physical cards.
CannaTrac offers a compelling technology platform to an industry desperate for easier financial solutions. In addition to serving businesses and consumers, the company also provides a variety of compliance solutions for governments responsible for monitoring the sector. This triple focus has made it a leader in the cannabis financial services industry as it continues to expand its customer base. For more information, visit www.cannatrac.com.
About Ryan Allway