ROCKFORD, Mich. (WOOD) — With its long history in the illicit black market, marijuana has long been a cash-only operation when it comes to all aspects of the business.
Now a new business is looking to capitalize on the lack of banking options for those looking to enter the marijuana market later this year.
There is a lot that has to fall into place before marijuana businesses become a reality. Yet one of the biggest hurdles for potreprenuers is the fact that marijuana remains illegal on the federal level, customers can’t use credit cards to buy marijuana and banks won’t open accounts for cannabusiness.
A pair of West Michigan businessmen hope to change that.
“The industry has to become mainstream somehow and without banking, it will never be mainstream, so this is a step in mainstreaming this legally licensed business,” said Jim Dimitriou, a former criminal defense attorney.
Dimitriou and his partner, real estate investor Jerry Rizqallah, are now becoming the Midwest headquarters for the PayQwik company.
PayQwik is the brainchild of California attorneys Keith Marks and Kenneth Berke, who developed the technological solution: a closed-loop payment system that allows businesses to pay bills and collect payments electronically.
“We started with the idea, like everybody else does, ‘Hey, let’s just open a bank.’ Well, there’s a lot of reasons that won’t work,” Dimitriou said.
Some have called it the PayPal of pot. Dimitriou and Rizqallah say it offers all the services of a bank, except for loans.
As the state continues to move toward the licensing of recreational marijuana sales, production and growing later this year, big money has moved into the arena.
“It’s corporate America that’s in here, some of these guys are planning on having $100 million to $150 million packages they’re doing,” Rizqallah said.
Store owners, processors, and growers can take money out of their bank accounts and take it in and out of the PayQwik system, which will send invoices, transfer money electronically and write checks for payments.
Currently, all the banking is being done in the shadows.
“They’re trying to hide the money or go around the rules, ya’ know, play the shell game so they don’t get caught,” Dimitriou said.
PayQwick vets the finances of legal marijuana businesses, visiting quarterly to make sure the marijuana companies are complying with state regulations and following the funds from seed to sale as required by law.
“They built a compliance program so they could above-board get the money in the bank legally,” Dimitriou said.
The partners say there will be ATMs at the marijuana outlets when they do open.
PayQwick may be the first marijuana money solution but with all the money on the line, it’s likely they will see competition.