NOTABLE NEWS: Recently, the National Credit Union Association(NCUA) ordered a Michigan credit union to stop opening new accounts for cannabis companies and to discontinue its money services business program to cannabis businesses that were credit union members. On March 17, 2021, The Credit Union Times reported: “the NCUA slapped a cease-and-desist order against the $69 million Live Life Federal Credit Union last month, ordering it to immediately stop opening new accounts for marijuana-related business members, discontinue operating a money services business program, and file suspicious activity reports.”¹
What happened in Michigan is not isolated. The Credit Union Times also stated that according to a new report from the United States Department of the Treasury Financial Crimes Enforcement Network (FinCEN) the number of credit unions and banks serving marijuana-related businesses declined in 2020.² While local credit unions and community banks have been willing to help neighborhood cannabis-related businesses in the past, there seems to have been a sharp turn in the direction of caution. We could speculate that due to Covid-19, increased use of marijuana and other cannabis-related products resulted in more chargebacks and less accurate reporting on the part of retailers, alarming financial institutions. In any event, you can imagine the shock and dismay of those Michigan cannabis business owners who woke up one morning to find their money service program, including the ability to accept credit and debit cards, was immediately blocked and discontinued.
The reason these institutions received a cease and desist order was due to compliance concerns. When FinCEN SAR filing requirements for financial institutions are met, the financial institution must file a suspicious activity report(SAR).³ The Credit Union Times noted that the NCUA directed Live Life FCU to hire a third-party to audit its MSB activity for suspicious transactions and file SARs recommended by third-party auditor. It is labor-intensive for a financial institution to meet the compliance requirements of MRBs. Due to the labor intensiveness of remaining compliant, financial institutions are forced to hire more employees, which adds to their operating costs. This is one reason why high-risk industries such as MRBs pay higher fees for their financial services.
As a business owner, you depend upon having the capability to complete transactions. Being forced only to accept cash and not having a financial institution where you can deposit the cash leaves you in a challenging situation. Whether you are starting a new MRB or an existing business, it is a daunting task to find a financial institution you can trust and depend on. Knowing this, you might not believe that reliable merchant processing solutions exist that allow your MRB to accept credit and debit card payments.
Similar to finding a financial institution where your MRB can safely keep your money, finding a reliable merchant processor requires a bit of research. Knowing how important it is that a financial institution remains compliant with MRB laws and regulations, it’s best to find a merchant processor that focuses explicitly on marijuana(MRBs) and cannabis-related businesses (CRBs). While the legal marijuana and cannabis industry is still relatively new, you must find a payment processor that offers stability. One way to ensure that is to find a processor backed by a well-established parent organization. Not only does the parent organization help provide stability, it also lends it’s technology and solutions to the subsidiary. This allows the subsidiary to provide you with powerful features that streamline your operations while offering secure, reliable credit and debit card payment solutions.
One example of a company that specializes in providing payment solutions to MRBs and CRBs is Unity Payments. Their advantages include no contracts, no cancellation fees, locked-in service rates, 24/7 tech support, and loss prevention specialists. Unity Payments is a subsidiary of Nuvo Company. With over 35 years of experience serving various businesses, Nuvo Company is an established leader in the merchant processing industry. If you are looking for a reliable, feature-rich merchant processor that will be with you for the long haul, call Unity Payments at (321) 972-9838 or sign-up online. They also offer a free audit of your existing merchant processing account to provide you with a cost savings analysis.
¹ The Credit Union Times – NCUA Orders CU to Correct Numerous Issues in Managing Marijuana Business
² The Credit Union Times – Number of Credit Unions, Banks Serving Cannabis Companies Declines: FinCEN Report
³ FinCEN – FinCEN Suspicious Activity Report (FinCEN SAR) Electronic Filing Instructions