Arizona (Cronkite) – When the marijuana industry started exploding, Kenneth Berke noticed a problem: Dispensaries and growers had to deal exclusively in cash.
Because marijuana is illegal under federal law, banks typically won’t deal with these businesses, even if they’re legitimate.
So Berke, who had worked as a lawyer for decades, launched California-based PayQwick, what he calls the “PayPal for pot.” He was among more than 75 vendors gathered at the two-day Cannabis Business Expo at the Phoenix Convention Center, which opened Wednesday.
The expo is a business-to-business expo that includes speakers and networking opportunities. Businesses ranged from security and online marketing to scale manufacturers.
Many vendors focused on the the crop itself: greenhouse manufacturers, specialized soil vendors and fertilizers. Vendors hawked machines that promised the best in extracting THC, the main psychoactive component in marijuana, and CBD, the non-psychoactive component.
For representatives of Royal Gold, a specialty soil manufacturer, this expo is just one of many they frequently attend. Rick Elliott, a West Coast sales representative for the company, said they attend an event like the Imperious Expo about once a month.
“There’s such a demand for this industry, it’s just booming,” Elliott said. “(And) this is the only place to meet new clients.”
Royal Gold started when the CEO wanted to grow his own bud at home, but he couldn’t find soil that suited his needs. After formulating a new soil blend made of coconut byproducts, he began giving it away to friends. He eventually formed a business as marijuana became more legitimized. Elliott said the CEO wanted to take advantage of the industry’s growth.
While some companies, such as Royal Gold, were products of old-school marijuana enthusiasts, many of the businesses at the event formed within the past five years.
(Video by Anthony Mitchell/Cronkite News)
For example, PayQwick started in 2013, to fill the gap in the cash-only business.
The issue of money has long troubled marijuana businesses. Banks refuse to work with them, often citing concerns about losing FDIC coverage. The Federal Deposit Insurance Corporation was formed during the Great Depression to protect customers from financial loss in case of another huge banking crisis.
E-wallet services, such as Venmo or Paypal, also shy away from working with the marijuana industry. Berke said they don’t want to deal with the potential bad press, or the risk of acquiring dirty money. He said PayQwick ensures its clients pay taxes, comply with rules and regulations, and it bars users from transferring funds outside their own state to avoid potentially breaking the law.
Chris Cogdill, who represented Tamisium Extractors at the expo, said he’s optimistic because of the industry’s quickly growing sophistication.
Cogdill said he once spent time in jail for eight grams of marijuana. Now he works for a company that developed an extraction method and recipes for wax and oil manufacturers.
“I can’t wait to see where this all goes,” Cogdill said.
Arizona voters in 2010 passed the Arizona Medical Marijuana Act, which allows people with certain medical conditions to use medical marijuana after obtaining a doctor’s recommendation.
Voters in November rejected a measure to legalize recreational marijuana in the state, but Safer Arizona has filed to put recreational marijuana back on the ballot this year, potentially opening Arizona up to even more canna-business.
Last fiscal year, the Arizona Department of Health recorded about 48,000 pounds of marijuana sold in dispensaries. In 2014, the department estimated marijuana sales generated $112 million in revenue.