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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

Clyde helps smaller brands to offer product protection programs

(BUSINESS FINANCE) For small brands that sell not-so-little items, Clyde is a big deal! Now you can offer product protection normally reserved for the big brands.

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product protection

For small businesses seeking to adapt to their new or growing online presence, Clyde, a platform allowing small business consumers to receive extended warranties and protection on purchases may be the answer.

Due to the current pandemic, online retailers have reported on average, a 200% increase in digital sales. Online commerce is only expected to continue its growth with 52% of consumers suggesting they will not return to in-store shopping, post COVID-19. With online shopping in demand, stolen packages, damaged products, and lost goods are also surging.

If you’re ordering from a superstore like Amazon, Target, or Walmart, chances are your items are protected and will be quickly replaced upon a discovery of any of the above issues. However, for smaller companies, protection on consumer goods is usually not offered, not because smaller companies don’t want to give their customers this option, but because finding insurance for small businesses is hard.

Clyde, a company working to provide product protection programs to small retailers through the navigation and connection to insurance companies, intends to change that. Clyde gives small businesses or as their CEO, Brandon Gell, would say, “everybody that’s not Amazon and Walmart,” the opportunity to provide their customers with individual product protection or an extended warranty contract that can be purchased at checkout.

Clyde also provides the retailer with a portion of the insurance profit, serving as an incentive for smaller companies who usually get left out of this profitable market. Product protection is responsible for a whopping $50 billion market, so getting in on the game is key. The company also provides sellers with critical data analytics, product performance statistics, that otherwise would not be obtainable to smaller companies.

Not only is Clyde protecting consumer purchases, but its mantra acts in the best interest of smaller companies normally left out of big commerce perks. The company’s dedication to provide smaller businesses with access to revenue and its consumers with product protection at a time where the demand is higher than ever may allow this company to flourish.

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Business Finance

Will cash still be king after COVID-19?

(EDITORIAL) Physical cash has been a preferred mode of payment for many, but will COVID-19 push us to a cashless future at an even faster rate?

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No more Cash

Say goodbye to the almighty dollar, at least the paper version. Cashless is where it’s at, and COVID-19 is at least partially to thank–or blame, depending on your perspective.

Let’s face it, we were already headed that direction. Apps like Venmo, PayPal, and Apple Pay have made cashless transactions painless enough that even stubborn luddites were beginning to migrate to these convenient payment methods. Then COVID-19 hit the world and suddenly, handling cash is a potential danger.

In 2020, the era of COVID-19, the thought of all the possible contaminants traveling around on an old dollar bill makes most of us cringe. Keep your nasty sock money, boob money, and even your pocket money to yourself, sir or madam, because I’ll have none of it! Nobody knows or wants to know where your money has been. We like the idea of taking your money, sure, but not the idea of actually touching it…ewww, David. Just ewww.

There is no hard evidence that cash can transmit COVID-19 from one person to the other, but perception is a powerful agent for changing our behavior. It seems plausible, considering the alarming rate this awful disease is moving through the world. Nobody has proven it can’t move with money.

There was a time when cash was king. Everyone took cash; everyone preferred it. Of course, credit cards have been around forever, but they’ve always been just as problematic as they are convenient. Like GrubHub and similar third party food delivery apps, banks end up charging both the business and the consumer with credit cards. It’s a trap. Cash cut out the (greedy) middle man.

Plus, paying with a credit card could be a pain. Try paying a taxi driver with a credit card prior to, oh, about 2014 when Uber hit the scene big time. Most drivers refused to take cash, because credit cards take a percentage off the top. Enter rideshare companies like Uber. Then in walks Square. Next PayPal, Venmo, and Apple Pay enter the scene. Suddenly, cabbies would like you to know they now take alternate forms of payment, and with a smile.

It’s good in a way, but it may end up hurting small businesses even more in the long run. The harsh reality of this current moment is that you shouldn’t be handling cash. No less an authority than the CDC recommends contactless forms of payment whenever possible. However, those cabbies weren’t wrong.

The banking industry has been pushing for a reduced reliance on cash since the 1950s, when they came up with the idea of credit cards. It was a stroke of evil genius to come up with more ways to expedite our lifelong journey into crushing debt.

The financial titans are very, very good at what they do, at the expense of all the rest of us. The New York Times reported on the trend, noting:

“In Britain alone, retailers paid 1.3 billion pounds (about $1.7 billion) in third-party fees in 2018, up £70 million from the year before, according to the British Retail Consortium.

Payment and processing companies such as PayPal (whose stock is up about 55 percent this year) and Adyen, based in the Netherlands (up 72 percent), also stand to gain.”

All kinds of banking-related industries stand to benefit as well. Maybe we’ll go back to spending physical cash one day, but I don’t think there’s any hurry. Fewer old grandpas are hiding their cash in their proverbial mattresses, and the younger, most tech-savvy generation seems perfectly content to use their smart phones for everything.

We get it. Convenience plus cleanliness is a sweet combo. If only cashless payments weren’t such a racket.

If this trend towards a cashless future continues, future travelers may not experience what it’s like to fumble with foreign currency, to smile and shrug and hand over a handful of bills because they have no idea how many baht, pesos, or rand those snacks are. They may not experience the realization that other countries’ bills come in different shapes and sizes, and may not come home with the most affordable souvenirs (coins and bills).

We shall see what the future holds. Odds are, it may not be cash money, at least in the U.S. I hope the cashless movement makes room for everyone to participate without being penalized. We’re in the middle of a pandemic, people. We need to find more ways to ease the path for people, not callously profit off of them.

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Business Finance

How NASA helps small businesses reach for the stars

(BUSINESS FINANCE) NASA has been providing $51 million in grants to small businesses and innovators.

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NASA grants

With the political and social climate that we are all trying to survive this summer, there only seems to be a few things that bring us a light of hope. For some it’s the little gestures that keeps the smiles on our faces; little helping hands that keep us going from day to day. But thanks to some forethought in our government system, there are some rather large helping hands coming down from the top as well. The organization that sends people to the moon is also making some dreams come true here on Earth.

NASA has just announced their latest batch of small business grants. Grants that amount to a total of approximately $51 million. This money is being sent out at the most crucial early-stage of small business funding. Over 300 businesses are receiving up to $125,000 to develop and bring new technologies to the world.

This grant system has been in place nearly as long as NASA itself. The Small Business Innovation Research/Technology transfer program is designed to bring in entrepreneurs and inventors’ ideas, and combine them with NASA’s assets to bring their dreams to fruition, bringing something from the lab to the marketplace.

It is set up into a three-phase system. According to The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), the first phase, Idea Generation, provides grantees with up to $125,000 for a 6 – 12 month period to “establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II”. If they succeed, they may be eligible to move onto Phase II, where they will be awarded a new grant of $750,000 for 2 years to continue the R&D efforts and start on a Prototype Development. Phase III is called the Infusion/Commercialization stage and it is the culmination of years of work and grant access for these businesses. This also includes a few extra requirements like matching funding for things like marketing.

Over the years, the selection has covered numerous disciplines with an extraordinary range of industries. Some of the highlights this year are high-power solar arrays, a smart air traffic control system for urban use, a water purification system for use on the moon, and improved lithium-ion batteries. These are just a few of the many innovative projects. The list covers a huge assortment, but a few people have noted the number of neuromorphic computing efforts as well.

This list is updated periodically throughout the year as each deadline is met from previous grant holders. It’s a constantly updating assortment of tomorrow’s toys, and a great way to look toward the future.

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