Payment processing companies like PayPal, Square, and Stripe have been purging marijuana-related companies since the beginning of the year. The purge seems to be in response to Attorney General Jeff Sessions' most recent threat of cracking down on the legal marijuana industry. Canna-biz startups ranging from vape pen manufacturers to marijuana business software companies are now forced to scramble to find new methods of handling their payments.
Boston-based startup Ardent, manufacturer of a federally legal decarboxylator used to make marijuana edibles, was bounced from at least seven different payment processors. Founder Shanel Lindsay said that she missed three whole weeks of sales while waiting to be approved by an overseas payment processor. "Everyone running an ancillary business got kicked off all at once," Lindsay said. "It was an unrelenting wave; you could not deny it. All of the banks seemed to be highly attuned to the issue and there was no flying under the radar."
Steve Brudner, agent at Merchant Services Consulting Group, said that their “phones rang constantly” as processors kicked marijuana businesses out. “People selling vaporizers, CBD products, other ancillary companies, we just had to tell them we don't have a home for you right now. Ancillary marijuana companies are considered 'unbankable' at the moment."
These companies have had to turn to high-risk processors, who often charge up to 5 to 6 percent fees per transaction, almost double what PayPal charges. These processors also hold funds for longer, creating further cash flow problems for the small businesses. Brudner said that the financial world is waiting for concrete legislation that will set the rules for canna-business finance.
"Banks want to work with all types of businesses,” Brudner said. “Some banks take the moral high ground and don't back vice businesses, but many banks have an appetite for risk and just need better guidance. That's what everyone is waiting for."