All across the country, states are starting to shift their views on whether or not marijuana should be legal. Whether you are for or against this issue, it seems like this is an industry that is here to stay and is quickly gaining traction. States like Colorado, California and Oregon have already jumped on the marijuana train and have seen tremendous economic success. States like Arkansas, however, have been slow to get started but have recently seen huge interest amongst their residents as well as government officials.
The medical marijuana commission is set to choose five cultivators to grow marijuana and 32 to sell it here in the state of Arkansas. With hundreds of applicants being evaluated by the commission, there is a rare vigor in the activity of the Arkansas business community to get into this emerging market. If Arkansas is anything like other states, it’s going to be big business.
One Little Rock startup, MediPays, is taking a different approach to the surge in marijuana interest by focusing its efforts on solving financial problems that plague other states with legalized marijuana markets. The company wants to make it easy for patients to make purchases using their smartphones – effectively taking cash out of the equation. The startup’s platform will also enable dispensaries, cultivators and other businesses to access financial services, banking services, electronic B2B payments and payroll services.
Here are four problems MediPays will take on in the new Arkansas marijuana age:
1. Security and Crime
Criminals in other states have targeted medical marijuana businesses and owners in robberies, murders and kidnappings due to the storage and transfer of large sums of cash. It is not uncommon for tens or even hundreds of thousands of dollars to be stored and transported in other states.
MediPays helps get Arkansas ahead of this problem by removing the cash, so criminals never have a chance to capitalize, which keeps patients, employees and owners safe.
2. Consumer Convenience
Consumers prefer paying electronically to paying in cash. In 2016, only around 11 percent of consumers preferred to transact in cash. For consumers between the ages of 25 and 44, that number goes down to 5-8 percent. For higher dollar amount purchases, which marijuana purchases will be on average, consumers prefer cash even less. By giving customers the ability to purchase via phone or online, this removes friction on the consumer’s part and ultimately boosts sales and revenue potential for the market.
3. Reduce Business Friction and Cost
There is a cost to cash and it is a whole-market problem affecting patients, dispensaries, cultivators and banks. This cost is due to logistics, operational friction and banking compliance requirements.
The business friction really begins with the patient having to find an ATM to withdraw funds (even if the ATM is in-store, they have to pay a high fee). Patients then transfer the friction onto the dispensary by transacting in cash, which results in costs for storage and transport. Additionally, dispensaries and cultivators are paying as much as $60,000 a year for bank accounts to deposit the cash in other states. Banks incur hard costs from accepting these physical dollars in logistics, storage and regulatory compliance costs associated with taking marijuana dollars.
MediPays enables every participant in the chain to skip this pain and friction, as well as reduce costs, by transacting electronically. By accepting electronic payments, businesses can skip the logistics and MediPays makes it easy for banks to automate compliance.
4. Marketplace Transparency
The state and citizens of Arkansas want to see this industry roll out responsibly, regardless of individual political stances on marijuana legalization. MediPays enables greater transparency because, unlike cash, merchants, cultivators and banks will be able to discourage and prevent fraud and money laundering by tracking the source and destination of each dollar that flows through the platform in accordance with state and federal regulations.