Payment solutions for cannabis industry take forward steps

Though the legal cannabis industry in the U.S. is moving forward, one of the lagging sectors is in financial services. A low-risk approach combined with legal issues, especially at the federal level, is keeping banks from serving cannabis businesses. This has created a situation where many cannabis outlets, both medical and recreational, are forced to do much of their business in cash. However positive forward motion has been seen with payment solutions.

Banking services for the cannabis industry in the U.S. have been greatly limited by resistance at the federal level. In particular, Attorney General Jeff Sessions' anti-cannabis stance created a major roadblock towards progress in this area. Though it is unclear how his replacement will handle the situation, work has been ongoing to create workable payment options for cannabis retail.

One of the biggest issues cannabis retailers face regarding payments is the inability to accept credit and debit cards. However, American Express, Visa and Mastercard all leapt at the opportunity to provide such services once Canada legalized recreational cannabis.

Cryptocurrency payments also have great potential for cannabis payments in an uncertain environment. Though yet to find mainstream adoption, cryptocurrency is intended by design to be agnostic to specific use cases and so cryptocurrency payment companies are a natural fit for the cannabis industry.

Two examples of payment services in the cannabis industry offer both insight and investment opportunities. One is the move by Net Element to offer payment solutions to cannabis retailers operating in states that have legalized cannabis. Another is the partnership between Smart Cannabis and SinglePoint to provide cryptocurrency payments to cannabis cultivators selling directly to dispensaries and retail outlets.

Net Element (NASDAQ:NETE) recently announced the launch of retail cannabis payment solutions using their Aptito and Unified Payments services. In particular, Unified Payments seems to be the focus with the ability to provide point of sales, mobile and ecommerce transactions.

Regarding the new service, Vlad Sadovsky, president of integrated payments for Net Element, stated:

“We are excited to launch a legal cannabis payment acceptance solution to meet the needs of sales partners and merchants for this emerging market."

Another effort is intended to help cannabis cultivators who sell their product directly to retailers. This is an overlooked issue in coverage of cannabis and banking but clearly a significant one for those involved in such wholesale transactions. Currently Smart Cannabis Corp. (OTCMKTS:SCNA)  is working in partnership with SinglePoint, Inc. (OTC:SING) on a number of initiatives including an agreement.

The partnership aims to "invest development resources that will extend cybercurrency transactions so that commercial scale cultivation clients can track and transact their business with clients using blockchain technology and SinglePoint’s cybercurrency payment portal. SinglePoint will also work intimately with Smart Cannabis to effectively implement Blockchain technology into their 'Track and Trace Software System."

This joint effort will be designed to extend SMART App development by Next Generation Farming, a wholly owned Smart Cannabis subsidiary, in order "to build in blockchain technology and Bitcoin as a potential currency system so that a commercial cultivator can interact and sell his products directly with the dispensary from within the SMART App itself."

Initiatives to address the financial needs of the emerging cannabis industry are offering new opportunities for both businesses and investors. Financial services companies and their partners are laying the groundwork for serving an industry that will expand rapidly once fully legal. And those that are prepared will be the ones most likely to prosper.