PayPal Wants To Help You Buy Marijuana (& Bank)

Like U.S. currency issued by the federal government, PayPal, one of the earliest online financial-services companies, has been and still is used to purchase illegal things — a broad category that, according to the federal government, still includes cannabis.

With very few exceptions, legal cannabis businesses remain locked out of mainstream options for banking and payments-processing. Only about 40 financial institutions nationwide handle marijuana-related accounts, it is believed.

(If you do encounter a dispensary that accepts credit cards or writes checks, there is a strong possibility they are lying to their merchant-services provider or have a very secretive arrangement with a daring credit union.)

This is why you must enter cannabis dispensaries with cash-stuffed pockets — and why the dispensary manager must slink out of a side door and into an armored car in order to deliver tens of thousands of dollars in hard currency to the taxman.

Like most anyone else who has experienced it firsthand, PayPal thinks this arrangement is bad and wrong. (Even Steven Mnuchin, Donald Trump’s Treasury Secretary, knows this cannot stand, as he told Congress during an April 9 hearing.)

This is why the San Jose-based company has officially signed on as a support of the SAFE Banking Act, a bill proposed in Congress that would end the madness and allow law-abiding cannabis businesses to use banks and other payment solutions, like PayPal.

PayPal started lobbying Congress to pass the SAFE Banking Act earlier this year, according to a release from U.S. Rep. Earl Perlmutter (D-Colorado), the bill’s main sponsor.

PayPal started lobbying Congress to pass the SAFE Banking Act earlier this year, according to a release from U.S. Rep. Earl Perlmutter (D-Colorado), the bill’s main sponsor.

The company listed lobbying Congress on cannabis banking as among its activities on Capitol Hill during the first three months of 2019, Perlmutter said.

Solutions for the cannabis industry’s cash-flow problem — that is, one of the only ways for money to flow is in risk-seeking cash — have been hard to find.

Efforts to charter public banks at the state level to accept marijuana money have not resulted in any concrete action, necessitating action at the federal level.

Thus, banking is among the cannabis industry’s top priorities in Washington, where a variety of companies are spending tens of thousands of dollars a month in order to influence Congress, with mixed results at best. Other priorities include descheduling cannabis to allow for interstate trade, fixing the tax code, and passing some kind of nationwide legalization bill that also includes a social-justice component like equity requirements.

Not every cannabis business wants all of those things, so the SAFE Banking Act is a not-common example of broad consensus. It’s also an instance where there’s great interest from a powerful lobby that does not necessarily have anything to do with marijuana.

Banks are aware that the cannabis industry is expected to reach tens of billions of dollars in annual sales over the next decade, according to nearly every estimate, and they absolutely want part of that business.

Here is where banks are very good, no matter how much money you have (or don’t): Congress listens to banks because Congress listens to money. If every big bank in the United States marched into Congress and told Nancy Pelosi and Mitch McConnell that they want to be able to handle cannabis cash and that Congress could forget calling them for campaign contributions until they could, it is a fair bet that Congress would do something.

This may be happening. The American Banking Association is spending $10,000 a month on lobbyists keeping cannabis banking on Congress members’ minds, Perlmutter’s office noted. Other lobbying firms pushing for SAFE Banking include the National Cannabis Roundtable, a recently formed lobbying group chaired by former House Speaker John Boehner.

As Perlmutter’s office noted, the main obstacle to progress remains Republicans. The chair of the Senate Banking Committee, Sen. Mike Crapo of Idaho, has yet to say what chance the bill has in getting a hearing in his committee. Without a hearing, the bill won’t get a vote and without a vote, it can’t become law.

Will Crapo listen to PayPal, if not Boehner or Trump’s treasury secretary? A voice like that won’t hurt. Until the change happens, you can still use PayPal to buy cannabis. Just not in a dispensary.

TELL US, does your cannabis provider only accept cash?