January 30th, 2017
The cannabis industry is expected to exceed $50 billion in revenue by 2026, which could create a $1 billion market opportunity for the credit card processing and payments industry. With seven out of eight states legalizing marijuana in November’s elections, there is a growing political will to open up the banking sector and create an overnight opportunity for these companies. Investors looking to capitalize on the industry may want to take note.
In this article, we will look at Singlepoint Inc. (OTC: SING) and its unique position within the cannabis payments industry and why investors may want to watch its stock.
In an exclusive CFN Media interview, Singlepoint CEO Greg Lambrecht discusses the company’s history, current efforts, the state of banking in the cannabis industry, and the way forward for his company.
Big Payments Opportunity
The cannabis industry could exceed $50 billion in revenue by 2026, according to Cowen & Co., driven by the ongoing legalization of medical and recreational marijuana throughout the United States. With the passing of California’s Proposition 64, the size of the cannabis industry is expected to roughly triple in the near-term as recreational legalization goes into effect. This represents a key tipping point for the industry and an opportunity for startups and investors.
“A 24 percent, 10-year revenue compound annual growth rate is hard to find in consumer staples, in particular one with a $50-plus billion end-point,” said Cowen analysts to Bloomberg. “Cannabis prohibition has been in place for 80-plus years, but the tides are clearly turning.”
The payments industry could be a lucrative opportunity in the space over the coming quarters. Since cannabis remains illegal under federal law, most commercial banks have kept their distance from the industry. But, those attitudes appear to be rapidly changing as a growing number of states legalize the drug. For instance, politicians like Massachusetts Senator Elizabeth Warren are fighting hard to open banking access to the cannabis industry.
“You make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise,” said Ms. Warren in remarks quoted by the LA Times earlier this month. “And, it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘give me all your cash.’”
The revenue opportunity for banks is difficult to overstate. According to CardFellow, the average credit card processing cost for a retail business ranges from 1.95% to 2.50%. A 2% transaction fee on $50 billion in revenue could create a $1 billion market for credit card processing alone. These numbers could be even higher if cannabis remains a high-risk product, which can justify much higher credit card processing fees than those standard rates.
Building an Early Footprint
Singlepoint initially recognized the enormous potential for cannabis credit card processing a couple years ago and placed cashless ATMs at around 200 medical and recreational dispensaries throughout Colorado and Washington State. While red tape has kept this business on hold, the network of clients could prove invaluable if and when regulators open up the market by giving the company an ‘in’ to payment processing for cannabis clients.
Fast-forward to today and the company has setup SingleSeed.com to start building a list of interested clients, while retaining its cashless ATM terminals as a way for clients to get a cash advance to finance cannabis purchases. The company also launched a connect-by-text marketing platform that enables cannabis businesses to communicate directly with customers in a way that adheres with strict cannabis marketing regulations.
“We are geared up to offer innovations that will usher continued advancement while offering safe and secure ways to transact monies for business owners who operate within the boundaries of state law and guidelines set forth by federal authorities,” said CEO Greg Lambrecht in a recent MicroCap Equity Research report.
Finally, the company also aims to expand its presence through acquisitions. With its strong performance of late, the company’s stock has become a valuable currency for executing strategic acquisitions to position itself in the space. CEO Greg Lambrecht told MoneyTV in a recent interview that at least one of its planned acquisitions was in the cannabis space and that the company remained focused on capitalizing on the new industry.
Singlepoint Inc. (OTC: SING) represents a compelling opportunity within the cannabis payments space. With the likelihood of banking reforms on the rise, investors may want to take a closer look at the stock given its strong foothold in the market. The company is also looking to uplist to a higher exchange later this year after it completes an audit of its 2016 financial statements – a move that could increase transparency and open the door to institutional investors.
For more information, visit the company’s website at www.singlepoint.com.
About Ryan Allway