As it stands now, selling medical marijuana is a high risk business as designated by the credit card associations. When it was approved in the first state there were quite a few news clips about long lines – and that the brick and mortar stores were cash only. They did not have a Medical marijuana payment processing. Patients were crossing state lines to get their prescriptions filled. Why do the card associations still consider this high risk? Is it because with all the cash flowing the stores were magnets for robbers?
The first and foremost reason is that cannabis is an illegal drug according to the federal government. The feds do not recognize the rights of the states to legalize something they say is illegal. What would it take for them to change their minds? You have heard it before – an act of Congress. And this is no joke.
Sellers of medical marijuana and their attorneys have written volumes to the feds and the answer they have received is: “The result you seek would require the Congress to amend either the Internal Revenue Code or the Controlled Substance Act.” In other words, it would take an act of Congress.
Sellers of medical marijuana are now running into tax issues that they had never faced previously. While no one has admitted it, it appears that if IRS and the DEA cannot close the stores ‘legally’ they will be taxed to death. According to USA Today, “In 1982, Congress amended the U.S. tax code to include 280E, which says businesses selling a Schedule I or II drug — like marijuana, heroin, methamphetamine or cocaine — cannot deduct all of their regular business expenses.’
The rule means that the “costs of the product,” like the soil and fertilizer used to grow plants, are deductible. But the “costs of selling,” like advertising, rent and utilities — even salaries for employees — are not deductible. What this means for those who are not math geniuses, is that if you sell locally legalized marijuana, you have no expenses. All the money you take in will be considered pure profit. And store owners will be paying the piper.
However, things may change. Plus there is a great deal of money to be made if you have a medical marijuana merchant account. Having a medical marijuana merchant account is to your advantage. Customers will not have to wait in line and you will not have to have large amounts of cash sitting around. It only makes sense.
Be forewarned. A conservative credit card processor or traditional bank will not approve your account. You must seek advice from a high risk merchant account specialist. There is such an expert that has set up hundreds of these accounts. Discount rates, authorization fees, application fees, monthly service fees, support fees and (for e-merchants) a payment gateway fee all impact the merchant account. You will discover that this processor has some of the lowest rates in the high risk industry.
Click below to set up a Medical marijuana payment processing with First American Merchant Funding today!Get Started Now