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Senators fighting bank regulation to make cannabusiness possible

(FINANCE NEWS) Despite the move towards legalization continuing to spread, state by state, legal marijuana businesses are faced with a lack of access to banks and credit unions.

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cannabusiness constellation

The spread of legalizaiton

The November elections saw a number of states decriminalize the purchase, possession, and consumption of marijuana, and it’s now legal in more than half the nation. However, despite the move towards legalization continuing to spread, state by state, we’ve written before about barriers to entry into the field, including a lack of access to banks and credit unions.

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“Good people don’t smoke marijuana”

Legal though it might be in some places, it’s still not a universally popular position that it ought to be, nor that ancillary businesses that support legal marijuana dispensaries ought to have access to banking. Jeff Sessions, the nominee for the Attorney Generalship and US senator from Alabama, has taken a vociferous and clear stance. Calling marijuana “dangerous” and commenting that “good people don’t smoke marijuana”, Sessions’ angst over the drug was noted as far back as 1986, when his bid for a federal judgeship was scuttled after testimony from Justice Department colleagues about his behavior while posted as the US Attorney in Mobile.

In direct testimony, Sessions was alleged to have joked that the Ku Klux Klan “was O.K. until I found out they smoked pot.”

If his position is clear, it’s not as if he’s been the only federal voice that’s not relented. In 2016, the Justice Department refused to both legalize it, or to reclassify it on the controlled substance chart, choosing to leave it as a Schedule I controlled substance, making it the legal equivalent of heroin. But while it’s illegal to possess it, current federal law prohibits the Justice Department from spending money for interdiction or prosecution efforts in states where it’s been legalized.

Legal, except for the profits

So, it’s federally illegal to possess it, but the Justice Department can’t do anything to enforce those laws in the states in which it’s illegal. In the states in which it’s legal, it’s legal, sure, but the profits from the businesses can’t be deposited in banks that hold a federal charter, so it’s an all-cash business. A Catch-22 for the 21st century, to be sure.

In late 2016, ten US senators sent a letter to the Acting Director of the Financial Crimes Enforcement Network (FinCEN), decrying the situation and identifying yet again the concerns that they have from their constituents, including both those directly involved in the marijuana business and those who aren’t, that restricting this segment of the business community to a cash-only trade “jeopardizes community safety, limits economic growth, and greatly expands the opportunity for tax fraud.”

“Most banks and credit unions have either closed accounts or simply refused to offer services to indirect and ancillary businesses that service the marijuana industry,” the letter stated.

“A large number of professionals have been unable to access the financial system because they are doing business with marijuana growers and dispensaries.”

Who is being affected?

These ancillary professions include vendors that work directly with the marijuana dispensaries, such as field chemists, security firms, attorneys, and repairmen alike. “Locking lawyers, landlords, plumbers, electricians, security companies, and the like out of the nation’s banking and finance systems serves no one’s interest,” the letter continued. Having these professionals unable to access bank accounts has become problematic for them as well, with some being placed in the unenvious position of having to choose between turning down business or finding themselves unable to go to the bank.

FinCEN and the Justice Department had provided guidance to the banking industry previously, in 2014, giving them the authority and ability to do business legally with the marijuana industry, but it hasn’t yet been universally adopted, nor, in the opinion of the senators, adequately addressed the additional issues that still surface.

Business is business

“These people are businessmen,” said Burton Marks. “Maybe they’re in a dirty business that you don’t like, but nevertheless they are in business.”

Marks’ comments came 33 years ago, in 1973, speaking to the US Supreme Court in his defense of Marvin Miller, who had been convicted of obscenity in California for his work as the purveyor of adult magazines and pictures.

The businesses are markedly different, but the sentiment is the same: it’s time that legal businesses were treated on morally neutral grounds and that protections that legal businesses enjoy were extended to all on a neutral basis.

#Cannibusiness

Roger is a Staff Writer at The American Genius and holds two Master's degrees, one in Education Leadership and another in Leadership Studies. In his spare time away from researching leadership retention and communication styles, he loves to watch baseball, especially the Red Sox!

Business Finance

Under-representation of women in fintech: Let’s talk about it

(BUSINESS FINANCE) Representation of women in fintech remains scarce despite a prevalent population of interest. Why is this the case, and what can we do about it?

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Woman reading a document in front of her computer, one of the women in fintech.

Women are 50% of the population – so why are there only 9 of us on the 2020 Forbes Fintech 50?

I’m personally shocked by how underrepresented women are in such a lucrative industry. By 2022, it’s predicted that fintech, or financial tech, will be worth $26.5 trillion, and we cannot afford to miss out.

And I’m serious when I say fintech is truly taking over. This includes payment processing, online and mobile banking, person-to-person payments (think Venmo or Cash App), financial software, to name a few. For some perspective, half of consumers use digital banking services as the primary way to manage their money. That’s a big deal.

So why does it matter that women are drastically underrepresented in leading roles at these companies?

  • Women CEOs receive only 2.7% of all VC funding – that is astonishingly low, considering that the remaining 97.3% is secured by their male counterparts.
  • While a study conducted by the Harvard Business Review on leadership skills found that women scored higher than men in 17 out of 19 categories (I could’ve told you that), women founders make up only 17% of fintech companies. Some of the categories tested on were:
    • Bold leadership
    • Taking initiative
    • Resilience
    • High integrity & honesty
    • Collaboration and teamwork (this is a big one!)
    • Inspiring & motivating others

If you’re a woman interested in business, tech, or entrepreneurship looking to break into the big leagues, here’s some exclusive advice from lady CEOs, founders, and COOs:

  • Stay Passionate
    Suneera Madhani, Founder + CEO of Fattmerchant, says: “…remember why you started and hold that close to your heart when times get tough.”
  • Be Open to Learning
    “Never behave as the smartest person in the room because you may miss some of the best ideas.” Says Snejina, Co-founder + CEO of Insurify.
  • Trust Your Intuition
    As the Founder + CEO of Tala, Shivani Siroya urges us to: “Stay excited, focused on results and be incredibly optimist. It’s okay to really believe in your gut – just make sure that you see the results with it.”

2021 is a new year full of opportunity – even though the odds are (and always have been) stacked against us, let’s have this be the year where women techies and business owners capitalize on their leadership skills. We have lost time – and profit – to account for.

Author’s Note: Thank you to CreditRepair for the linked infographic!

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Business Finance

Is the convenience of payment apps worth the risk of fraud?

(FINANCE) Peer-to-peer payment apps like CashApp and Venmo are quick and convenient – for users and scammers alike. What are Square and PayPal doing to help?

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CashApp open on phone one of payment apps susceptible to fraud.

More and more people are using peer-to-peer payment services, like Square’s Cash App and PayPal’s Venmo, to make purchases, handle their banking, or just to pitch in on the pizza you and your friends had delivered last night. These payment apps have been particularly useful for folks who may not be able to afford bank fees or have other barriers preventing them from accessing a bank account.

That’s because they are very easy to set up, requiring nothing more than an email address or phone number. Even folks with bank accounts are using these payment apps more as folks are trying to stay home and reduce their in-person contacts during the COVID-19 pandemic. The number of daily users on Venmo has grown 26% since last year.

While these apps bring a lot of convenience to our lives, they have also made running scams more convenient for cybercriminals. According to experts, the rate of fraud on Venmo and Cash App is three to four times higher than with credit or debit cards. While PayPal and Square don’t provide statistics about scams, there are some telling signs. The New York Times and Apptopia, a mobile services tracking firm, found that the number of users mentioning frauds or scams in Venmo customer reviews had increased by four times in the past year.

It seems that Cash App has the most fraudulent activity, with the Better Business Bureau reporting twice as many complaints about Cash App as Venmo, even though Venmo has more users. Zelle has a better track record when it comes to fraud, most likely because it requires a more thorough authentication process when setting up an account. It also has better legal protections for folks who have been scammed.

Some of the things that make these payment apps so quick and easy are exactly the reasons it’s so easy to scam users. The instantaneous payments mean that there’s not much of a vetting process, and not much time to catch a fraudulent transaction before it’s too late. Because you only need an email address or phone number to set up an account, it’s easy for criminals to set up dummy accounts for running scams.

Other scams have been facilitated by the marketing choices of the companies. For example, Cash App regularly runs a Cash App Friday promotion, in which users are rewarded for sharing their username, or $Cashtag, on social media. Unfortunately, this has essentially created a Rolodex of potential victims for criminals.

Square and PayPal are doing what they can to address the problem. Lena Anderson of Square says that they are “aware that there has been a recent rise in scammers trying to take advantage of customers using financial products, including Cash App. We’ve taken a number of proactive steps and made it our top priority.”

One “proactive step” Square has taken is to roll out a customer service phoneline, not only to make it faster and easier for customers to vet potentially fraudulent transactions or report scams, but also because scammers have been creating fake customer service phonelines to target users and collect their personal information. The phoneline is currently available to only some customers, but Square plans to scale it up to be available for all users over time.

Until these companies come up with more robust security systems, there are several things you can do to avoid scams. While you might get a cash bonus from Cash App, it’s probably not worth it to share your $Cashtag on social media. Only share your username with people you know. Never share your personal or banking information with strangers. Examine all transactions carefully. Some scammers are stealing money by making a payment request from an account that looks legitimate, but may have a slightly different spelling or one-letter change in the name.

No legitimate agents of these services should ever ask you for your sign-in code, or to download software, and you shouldn’t click on any links in messages promising cash prizes. Never send small payments in exchange for a promised reward – if it sounds too good to be true, it’s probably a scam. Don’t use digital payment apps to pay for or receive payment from sales on Craigslist, Offer Up, or Facebook Marketplace.

If you think you’ve been scammed, changed your PIN number immediately and contact the company and/or the FTC.

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Business Finance

Will your stimulus check be taxed? (and other burning questions)

(BUSINESS FINANCE) One of the biggest questions of 2020 (and potentially further) is whether or not your stimulus check will be taxed. Let’s take a look at this, and other questions.

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Couple looking at computer together to see how to use their stimulus check.

We’re finally able to put 2020 – and its unending laundry list of concerns, tragedies, and turmoil – behind us. At least, it’s a new year finally, but we’ll still be feeling some of the effects from a historically volatile time for a bit, and part of that includes one of the great certainties in life – filing taxes.

Arguably the biggest question that has been repeatedly asked is whether or not a stimulus check is taxed. This is against the greater backdrop of questions as well – does it affect (lower?) one’s tax refund, whether or not someone qualifies for the checks to begin with, when additional rounds might be deposited, whether or not anything changes when filling out tax forms, and so on.

So let’s break these down as simply as possible.

Are stimulus checks taxed?
In short, no (woohoo!). The tax code states that taxes are levied on “all income from whatever source derived” unless there is a specific exemption. While that makes it sound like a stimulus check would be taxed as a form of income given that it is not directly excluded, stimulus checks are considered an advance payment of a tax credit, and thus are not considered taxable income.

Does the stimulus check lower my tax refund?
Also no (hooray!). If anything, it will increase your tax refund. Essentially, this lowers the amount of taxes you are paying. There’s more to it than that, but this is the quickest summary.

Does anything change when filling out my taxes?
I’ll start by saying this is a bit of a trickier area, and I would absolutely suggest speaking with a CPA if you have any specific or in-depth questions.

When filling out the Form 1040, there will be a line on the second page for “Recovery Rebate Credit,” and this is where a number is entered under certain conditions. This is directly related to taxes filed in 2018 and/or 2019, as these years were used to determine who gets a stimulus check and the amount. The general rule is that if there was a big change between those years – losing a job, having a child, starting a new career, graduated college, etc. – then this line may need to be filled in. Essentially, if you are/were entitled to more stimulus payout, then you would enter in the difference here.

For example, if your taxes from 2018 were used to determine your stimulus amount, and this resulted in a low payout due to a high income for that year, but then you lost your job in 2019, you’d write in the difference here. So if you received $100 in stimulus but were laid off in 2019, you could still be owed $1100 (going by the first stimulus check that was valued at $1200 for an individual). You’d enter that amount on this line, which would then lower your tax bill and potentially (should) lead to a higher refund.

Essentially, this line is where you’re stating that you are still owed additional funds that the stimulus was designed to pay out. The IRS website goes over this in some detail, where it explains that individuals who did not receive the full amount via stimulus checks (called “Economic Impact Payments”) from the CARES Act should fill this line out.

In short, if you did get the full amount? Ignore this line. If you did not, you may be eligible, and should determine what to fill in so that you maximize a potential refund.

Will I get the second stimulus check?
President Trump did sign a COVID relief bill recently that was designed to give $600 checks to individuals, as well as other stimulus benefits for unemployment and various funding programs. However, not everyone is eligible for this second check. This includes high earners (anyone with an adjusted gross incoming of $87,000 or more), dependents, and persons who lack certain legal documents/designations.

If I qualify, when do I get the second stimulus check?
Some people have already received this payment via direct deposit, and these will continue onward for the next few weeks. The IRS cannot send any checks for this second round past January 15th, 2021. If an eligible person does not receive the payment by then, they can utilize the “Recovery Rebate Credit” mentioned above when filing taxes.

It should also be noted that some individuals could receive their stimulus via debit cards, so be sure to always check your mail carefully! There’s no indication this could happen with the second round yet, but it’s always best to keep in mind.

Is the tax deadline still April 15th, 2021?
At this time, this is still the official date that taxes must be filed. It should be noted that the same deadline was originally in place for 2020, but was pushed back once pandemic-related obstacles arrived. As such, there is a chance that the date could change for 2021, but until an official ruling is given, plan on having taxes filed by the standard April 15th date (or filing for an extension if that is a possibility).

Will additional stimulus checks arrive in 2021?
While there has been talk within the government regarding additional rounds, and while many are hopeful for a $2000 check, there is no official word or regulations in place to ensure that this will happen. It is still uncertain what the incoming administration will do, can do, or be able to pass in the future; to speculate would be ill-advised at this time.

Keep in mind that debates on the second stimulus check had been ongoing since July 2020 and were only recently passed; this would suggest that additional rounds could face similar discussion.

Summary
So, the good news here is that stimulus checks are not taxed and will not affect your tax refund, and this should help a large number of the populace as we continue to work through these difficult times. There is a chance that additional payments will arrive in the future, but keep in mind that they may not arrive soon. Lastly, as I previously mentioned, know that there is a chance to file for the rebate directly on your tax forms, and that I strongly encourage you to speak with a CPA if you have any questions.

Otherwise, as sincerely as I can say this, good luck in the new year!

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