How do i industry sign banking hawaii work order
[Music] this is sin temple ye community matters here Allah and Mele Kalikimaka ah and instead of today talking about this cannabis is dear old beautiful plant that we have talked about for the last year and a half the plant that's a ten thousand year that we've know of anyway today we are going to talk about one of those things that an industry by cannabis needs to exist or to exist better we have a new best friend and you know I only talk to best friends and this is Michael Satan hi pleasure nice to meet you and he is the CEO of super processor and all of you that are working in the cannabis industry this is the man you need to know they are the first company to provide credit card processing for cannabis services in Hawaii that is so necessary in a cash business so tell us about Michael I'm five foot well I'm George so I've been in payment processing for about eighteen years uh-huh so the payment processing space I've seen a lot of changes from eighteen years ago and we were still phasing out of just imprinting credit cards and mailing them in for payment right just pretty crazy when you think about today because everything is so in the digital virtual cloud world and I've been really passionate about solving problems in the payment processing world for four years ten years ago the cannabis industry crossed paths with myself and I had a regional sales person come to me and say hey these guys these customers of ours in out in Oakland they want to meet you because they have a problem I think that you can solve it because you're kind of out of out of the box kind of kind of guy and I said I said sure what did I do I said they're in the cannabis industry I said what's cannabis so that was a that was the pivotal moment that I said that marked the milestone of the point of no return because they they showed me their dispensary out in Oakland they said they had this problem that they see this is ten years ago you know so now today if I were to say it's been a ten-year old problem so they said we have a problem that we see that's coming upon us that it's going to become all-cash and back ten years ago they were so very area credit card processing dispensaries are still getting credit cards but without being shut down officially and so then we spent time figuring it out and it was quite a journey we can talk about many different twists and turns so so you do all those things that make it happen that we don't we just slide the card and something happens right there's a lot that happens behind the scenes yes so you want to you the CEO of the company that does all of that that we don't see so when you swipe your credit card right it touches our server as it touches the card associated Network maybe as a MasterCard American Express and then it goes to your bank right it's just a credit card and this is full circle that happens and many companies are involved in that one split second transaction right and and all these and employees so many people and the behind the scenes because of that one transaction transaction yes yeah so this is cannabis is a because of the feds this is a cash business so can you explain to our audience what it is that the feds are objecting to that you can't use a credit card or a bank account or insurance or whatever well first of all cannabis is on a Schedule one which is ridiculous but okay which is ridiculous absolutely so but it's there that you can't do any about it at this point until it gets returned and the states have its own individual rules about whether what the position on cannabis is so it's always when the state versus federal and the same goes with banking the the issue the challenge that the banks and the credit unions have had is that who insures the banks FDIC which is federal or federal and then you have the NCUA which is federal and then so that touches upon there's a very sticky area of federal versus state of what's actually allowed then it's really a to sum it up it's really the financial institution that has to take the risk really to say I'm gonna get behind this I know I might get a slap on the wrist or maybe more but because the state level is allowing this me as a financial institution in that state should be able to should be okay so it's not a very black-and-white message from the federal government on what will happen to the local financial suit it is blacking like this will punish you if you do this but there's not really an official no one action okay because there's states rights it pains me to sell paintings me to say that but anyway the states right so the state made it legal to have medical cannabis so everything that's involved with that is within the guidelines of the state that's right laws so that the dispensaries can only service people that have the medical card right and so they can only grow certain things that these people need and all of these things that happen to make that industry move as within the state so they don't cross state lines they don't do that's right no cross border that's it because you'll be it'll be considered money laundering and craziness yes it's really crazy so then you come along and you say well we can assist you we can build out a what do you call it a platform but them that is generic or indigenous to the state of Hawaii and the cannabis so the solution we have is not just for Hawaii he's actually for multiple states across the country and we we had to find a few components we actually found the first component a few years back in Hawaii which is a sponsored bank a bank that's willing to clear the transactions for the cannabis industry what we didn't know is that we had to own the switches the data center because when we went out to the processors that are in the market they said go find a bin sponsor and we'll let you then process using our technology and we found out that that wasn't the case we came back and said look here's our bin sponsor let us now help the industry and they said absolutely not you can't use it and we were like why they said because we were just not allowed allowing you to do it and that became the case for every processor we came across during that time and we had lost that bin sponsoring three years going fast forward to today we found another bin sponsor and now we own that other piece was what do you mean sponsor so in order for a credit card transaction to be funded it has to have a almost like a clearing house where a bank has to a bank or a financial institution has to clear those credit card transactions to fund it oh when you swipe your credit card there's a bridge so to speak that is the processor and the financial institution that sponsors that transaction every day they have to reconcile all the transactions and pay every button and it's it's a it's a pretty crazy system when you think about it because of the amount of transactions that because I use a debit card and I can pay for something here walk over to the bank and it's gone yep that's right that's fast yep yeah walk across the street and the money's gone and it's only gonna get faster because there's real-time payments coming into the very near future that's already here where instant transfers are gonna happen and payments even some merchants are gonna happen faster and they'll have better cash flow because funds will be transferred right away instead of waiting but going back to the bin sponsor the bin sponsor is very important because it was very hard to come by it took us many many years to find someone that would entertain it and then sign it and then get behind it and then put the proper compliance behind it because now they're whoever's regulating that financial institution it has to be able to say okay these guys can do it because we're comfortable with them handling it based on federal regulations right and past performance exactly yeah yeah we came across that in 2008 when the market crash we we actually formed a bank just to try to solve this problem and then the market crashed and then we try to buy bank and we saw these really horrible balance sheets on banks and we couldn't find a good bank at the time to buy what could you create a home not a bank but of savings and loan or something credit union we we've explored and tried various models including industrial bank and they people don't know what an industrial bank is but it has a as a sole purpose for a certain business and we industrial bank was the extent of what we thought could be close to being coming our checking and sponsoring the credit card transactions but we realized at that point is that it was better for us to go and find the bank and convince them and help them get to that point with because they just needed help most most banks or credit units that were willing to do this didn't have the infrastructure or the resources to handle the compliance because they're so heavy the amount of work that they had to do they'd have the staff you really comply so they they were afraid of that oh yeah of course well what now could you create a hometown bank or give it a different name wouldn't call it a bank like credit unions are devoted to certain people only so there's an effort in that and it failed because they were focusing on a credit union that was all cannabis and back in 2008 when we were forming what's called de novo Bank a new bank we we talked to all the regulators that we were immediately regulating the area that we're at and they we said hey which model would you support if we did an all cannabis bank and we did a business bank that was friendly to cannabis or various versions of that and they said it has to be diversified it can't just be a cannabis bank because it makes sense yeah just for risk reasons for getting your your bank charter it's you give me a federal Charter right so it's hard to say what about now but now that they have passed this hemp thing the farm bill yep with hemp you made you can come back and try again yes yes absolutely it's it's quite an endeavor to start a new financial institution is I'm short and we we went down that route and but fortunately we're at a stage where we we have the ingredients that we need to launch the solution to help the industry but I think starting a financial institution again is probably out of our wheelhouse no the thought of that is just III was just thinking what could be done because the amount of cash that is turned over every day in this industry and I'm sure that people aren't feeling safe it's there's definitely a lot of liabilities you know we my business partner in this endeavor endeavor he co-founded Harborside which is one of the largest dispensaries in the world and he told me this very first payment they had to pay to his local tax office he had to carry three hundred thousand dollars in cash where's the backpack in California Oh Catholic City go to his local tax office and say I'm here too he called ahead of time he said I'm here to pay my taxes and they hand counted that tax payment three people had to hand count it for them to receive the money now that now they have built counters but when they first started taking a day they didn't they realized what was going to happen well it yeah I did read that the state of California had to hire more people oh yes would we have do we the state of Hawaii well they have to hire more people to handle this because this dispensaries have been open a year now I don't think the volume is there yet because California is very different compared to Hawaii and the volume has to pick up a lot more to make that more considerable of an issue and there are some forms of electronic payments today so it's not completely all cash and that helps a little bit and once we roll out our solution a majority of it should be in electronic payments because we can deposit into a dispensary or a cannabis related business as long as they have a checking account so that would be any of the people that are selling products that are not the dispensary but they're selling products yes Larry they're open to you also yep we can we can not just do dispensaries but we can handle ancillary products any type of vertically integrated area which they're in as long as they are compliant and they have their papers and everything else in order we have a pretty rigorous on the writing process with the bin sponsor that we have just because dairy take checking accounts they already provide service to the industry the one that we have in in California so they're not new to the space but the credit card processing is newest this next step that are taking to to really help the industry okay we need to take a break sorry and we'll be back in 60 seconds and then let's talk about where we go from here okay this is Hawaii raising public awareness it's choose to treat it with the help of a physical therapist physical therapist treat pain through movement and exercise no warning labels required and you get to actively participate in your care choose to improve your health without the risks of opioids choose physical therapy [Music] I'm Jay Fidel think Tec come around every Tuesday at 2 p.m. with John David Anna and me we talking about history history lens right John exactly seeing current events through the lens of the past absolutely see you next time okay Jay thanks Aloha I'm Marcia and we are back mrs. cannabis chronicles a 10,000 year Odyssey so we have we are right here today in this new world digital world in that 10,000 year process and we are talking to my new best friend and Michael has a product company he's the CEO of super processor and they are on the cutting edge of the digital world and all of the cash that goes through the cannabis industry did I get that right yes so it's one thing I wanted to add I forgot to add this but the division the division at super processor that handles that cannabis is called for ready pay every pay veridia means Green in Latin that's how we created this division that handle sold the cannabis wonderful so yes I didn't have that 30 pay we're ready pay vir I di PA why we ready we're ready pay greed pay okay pay great fit wonderful so does this take a lot of rooms and computers and all the kinds of sure we it needs a lot of data like servers and data centers we we we use data centers that process the transactions and it needs a lot of Technology software is a huge component to our platform it it requires a high velocity payment processing platform that can process many many many many transactions at a time okay do we have the students in Hawaii that are learning to go to work for you they are training in that's in those skills are we training people for that we we do there are several initiatives that I'm aware of there's something called devleague that the founders of devleague there's it's a school that trains this it's a boot camp that trains anyone who's interested in becoming a programmer in 12 weeks pretty pretty cool school and we would source we would source from there there's also the universities that we went to hpu a couple of weeks ago we attended one of their competitions and fairs and I was blown away by the tech talent that existed there I was like wow these these these students are just in a different age than when I was in school unbelievable day and we came across someone who actually had a product that they that we were just blown away by the way that he was thinking and we have a professional services division and we have a CTO that is is our programming genius and he was blown away by a student that said a lot to me I was like wow this it's pretty impressive that he's blown away by by the student there so we we have students now in high school and that are using all kind of technology so they move into this or do they learn these tech skills in high school or do they have to go to separate schools they have to go to some well yes or no because there are a lot of really really great programmers who don't go to school at all he's just our self-taught really and yeah this I know I know and I know two handfuls of really great programmers that never went to school for it but just they learn it out of their own fascination and they just trial and error well okay what what I want and I say this all the time I want this cannabis and the hemp especially hemp industry as an industry not just
a dispensary but a whole industry so that our children can learn all of these engineers architects all of this so they can stay home yep my sons all went off to college and they're still gone sure so yes I'm very selfish about for wanting that's why I'm asking you about these kids absolutely growing into this industry well first of all we we're we're building out the operations our call centers our support centers on the west side of Hawaii in 2019 to keep the jobs in Hawaii and that's that's something different because the options are somewhat limited for someone whose grammar development and we're gonna have more opportunities for developers to keep them at home we we have a hard time like everyone else sourcing tech not tech staff here and retain them here because they do go off to other cities unfortunately yes but we're we're I think we're one of the companies that are going to try to help with that to keep the jobs here because we have real initiatives to to hire them because it's not just about coming up with solutions and jobs for them to service Hawaii but outside of Hawaii too because we have customers all over the country it's not just not just in Hawaii and by my dad opportunity allows them to have more opportunities and their inner jobs and be able to hire more people in the tech space that I can say that's been my whole thing is that we need to take this and make it into something that our kids can grow into sure good yeah so where are you located usually a couple a oh we're siding and in Las Vegas so we're into two areas Las Vegas and Kapolei our two home basis Vegas is booming yeah yep it's a nice Island yes everything yeah our data centers out in Las Vegas and we co-located here in the west side and then the call center is where you call native customer service will be based on the west side here in POI as well oh I am really thrilled the schools understand that this is where they can go we we actually are working with some high schools to help them with some of their entrepreneurial programs and like my high school's a good example oh they're close to you they're very close to this very Kapolei they're well they're close to Kapolei and we've been I've been sharing some time to help them with their students with some of their programs so we're we're trying to think to the future because I think it starts at the root in the schools where the kids are young to help them on a path to a career that they can stay at home home yeah or do something because you don't have to travel out I let a lot of you think that they have to leave Hawaii for the opportunities there are a lot of opportunities here that they pick and keep them here yeah well that's like I said that's especially with the hemp industry which can grow into who knows what yeah yeah especially in Hawaii yeah yeah so the yeah you have even more transactions once they get going exactly or did were they just be scheduled already scheduled hemp is my understanding is do scheduled and that well it's it's allowed to you're allowed to do everything you wanted to do as a business person and have now we can it's only a little there's a restriction of how much you can build I met that Samara what the restriction is of how much but you can it's not we can process credit cards right now if we want it to because it's not CBD is also there's also place that this ID a certain levels we would also process for CBD transactions now with CBD can you open it a account at the bank yes and no so the problem with even though if you have a legal CBD business with the federal legal limits and you open an online store and sell CBD a lot of banks because they lack of education they just cluster CBD with all cannabis so they vigor account for CBD they say hey there's a cannabis business we have to shut it down so the CBD industry has had a lot of the same pains that the cannabis industry has had with banking unfortunately and that's true for a lot of the banking solutions for larger banks well it banks a little more I think easier because you can have a conversation with with the risk person directly or this is a risk person that they have these complaints I thought about the banks having a risk person so they have to make an assessment of what what's allowed and not because then they have to answer to their the regulator's their their bank regulator otherwise they lose their charter oh my yeah so what do you how do you educate the bank or like you saying it at least with the small banks you can we used to people we used to did ourselves we it was more about compliance so the banks had didn't have a compliance program for cannabis or cannabis related businesses because they've just didn't they just never thought about or never you weren't allowed to do it and because of anything new there's there isn't a precedent of how to handle it and then there's a question of money yes who's gonna pay for it who's gonna pay for the new policies that that the banks need to handle those accounts and what we did was early on we we helped share the information we were freely sharing information all the time with anyone who needed it behind the scenes but because we were just interested in making sure that financial institution dispensaries would keep their bank accounts and we would say hey look at this court case here's some anti-money laundering policies that you might be able to use and use that as a foundation and we would help that but today what's great about today is there are several companies that specialize in in these programs for our financial institutions to help them so that they don't have to create an invest heavily and set that division well I would think the way things are moving especially with the states that are legalizing or recreation that at some point the bank has to come on board yes well there are over 400 financial institutions around the country who do service cannabis related businesses you just use can't google it and find out who does it you have to be able to know and be introduced and then there's an underwriting process I've seen on television that not television on the internet people selling shares in holding companies and different things like that what what is a holding company holding company is a company that holds the interest the rights of its the way I've seen it the holding company we use for many reasons but the way that I've seen it for the cannabis industry is for the purpose of protection because if you have a holding company my own the rights of a dispensary and then it might hold the rights for the vertically integrated part of it where they cultivate the product right and they don't want to keep the rights at the touching flower level because if something happened then they can preserve the assets of the company what about shielding for protection on if something happens so could the holding company have a legitimate banking account sure so that so what a lot of companies have done to in order to have banking accounts they've created a holding company where that company doesn't touch the flower at all right and it just becomes a management company to manage the finances of that company and the banks okay with with that as long as it's not touching the flower it'sit's cool complicated it's not the best way to do it because it's just that's has to be done the way it's done today because it's it's it's following the rules yeah well locally now how much is an annual income from all of the dispensaries do you know I don't know it's not a public number so I don't I don't have a real number on that it's okay I can't give that to you yeah I can probably you know at what level does it make sense I don't need to know their exact to make some numbers for what that the bank has to say look at all of this money here tax money everything we ought to have a part of that at what point does the bank say it's unfortunately the cannabis industry as a whole is too small many other industries so if you look at the total billions of dollars that the cannabis industry generates some revenue there are companies that just generate billions alone so when you compare sort of risk the risk rewards is very hard for banks to to to make that decision based on money because they've either just I deal with it and say that we if something happens we stand to lose many many billions as opposed to this what could happen they can lose their charter no I meant what could happen that you mean with the dispensary or something oh you don't want the banks right I was talk about the banks yeah and why they would not want to handle the business all the local banks that I saw as far as I'm aware all local banks have taken a position to not bank cannabis because it's something called reputational risk that's very real for them because they have that it's every bank has a list of things that are risk something risk or potential risk is one of those top categories and this falls along the lines of reputation risk and then they're the regulators have to they play a major part in that also and right now that's not a environment where they're looking to do that yet hopefully they will now what I would like for you to do is to look right over here in this camera and tell our audience that may want to have an account with you because we have a lot of people that sell CBD and other things so tell them how they can reach you sure right over here if you're looking for a merchant processing account we're launching them in 2019 you can email me at Michael at super processor com that's mi CH AE L at super processor com then you smell that super su PE R PR OC es s o R calm good thank you thank you and you will come back yes you have me back oh I will come back thank you so much and Mele Kalikimaka Aloha we'll see you next time hello [Music] you [Music]
