Sign Maine Banking RFP Now

Industry sign banking maine rfp now

all right well listen everybody thank you so much for joining us my name is Ken Burke I am the co-founder and CEO of Pei quark pink work pay quick and and we enable legal marijuana commerce so I've got a series of slides to go through and let's get started so the biggest problem facing the marijuana industry today is what do you do with all the cash and marijuana businesses can't get bank accounts as we all know this business is huge it's going to 20 million that 20 or 225 billion dollars in the next few years and it's going to be a hundred billion dollar business as marijuana becomes legal across the country and this creates huge problems in terms of cash and banking relationships this is what happens right now as you look across the top you see cash going from the consumer to the retailer and from the retailer's to either the wholesalers or the growers we call them producer processors and then the lines going down is where they pay their vendors they pay their taxes and that's all happening in cash you also can't get legal debit and credit card transactions to remove cash from the system so this is how the cash is flowing right now and this creates a lot of problems from a consumer level you've got a lack of convenience you've got lack of security reputational risk for purchasing marijuana on the producer processor and retailer side that is the growers the lack of bankability is a huge issue for them they can't get bank accounts there's a tremendous risk from lack of security and accountability standpoint the risk of violent crime for carrying around large sums of cash and of course it's horribly inconvenient for them to deal with cash the government and law enforcement also have huge issues facing them from this cash intensive business you've got illegal sales you've got money laundering you've got drug cartels and of course you've got the risk of violent crime and that's what my co-founder Keith marks and I realized was the problem in the industry so we developed pay quick and this was our mission statement was to bring well established proven payment processing and banking services to this industry and you do that through compliance and and our mission is to make sure that our clients are complying with the federal law out there that's available for dealing with marijuana and of course each state's law our core account holders are licensed producers processors retailers wholesalers and the consumers but everyone has to have a state license within their particular state to operate their marijuana business our other clients are what we call ancillary businesses and those are the vendors those are people who are serving the marijuana industry but they don't touch the plant so you've got attorneys and accountants you've got landlords you've got insurance companies you've got payroll services and those are what we call ancillary businesses businesses and they also have pay quick accounts well this is what our solution does we eliminate or reduce the amount of cash changing hands we provide for electronic payments through the entire supply chain from seed to sale we allow them to pay each other electronically instead of paying each other in cash with respect to the cash that does come in we have armored cars that pick up the cash take it to the Fed deposit into the Fed and it gets credited to each individual's paper could count now by tracing the money from sale back to scene and I'll come I'll go in a little more detail in this a little bit later but as you know most states have seed to sale traceability systems we trace the money from sale back two seed then when we do that and we layer that with our compliance program it makes that money safe for deposit into any financial institution and when the money is safe for deposit into a financial institution well marijuana businesses can get bank accounts so we enable legal bankable marijuana business what is paper you know exactly what are we well we're a proprietary technology and a compliance platform that has a very sophisticated he wallet for managing cash and providing for electronic payments we ensure that our clients do our compliance program comply with the Cole memo FinCEN guidance and state law so that the state knows that this business is operating legally we also provide bank accounts for our clients with our partner banks because of our compliance program our partner banks are willing to open normal business bank accounts for these businesses knowing full well that their marijuana companies by providing access to banking for marijuana businesses these businesses can operate with normal Commerce practices finally we also let consumers pay through an electronic key wallet work similar to a Starbucks card so that's the business-to-consumer portion of our platform and then the b2b the business-to-business portion of our platform works much like PayPal again allowing for electronic payments between sellers and buyers and with our compliance program where we do quarterly on-site compliance assessments of our businesses their cash is safe as I've mentioned for deposit into any financial institution let me let me draw an analogy for you essentially if you picture a funnel right and at the top of the funnel the wide end this is where the money for marijuana transactions go into the funnel the stem of that funnel is paid quick that's our compliance platform so when it goes through our compliance platform and it comes out the bottom it's safe for deposit in any financial institution across the country that's what pay quick is so graphically speaking right now if you look at this picture this is how our platform works across the top we still have cash going from the consumer to the retailer and from the retailer to the producer processors and the distributors and wholesalers but as you drop down on this guide on this diagram you can see that the cash is picked up by armored car and put into the retailer's take with your town it's picked up by armored car and it's put into the producer processor or wholesalers take with the account from there we allow for a count to account transfers think of PayPal right when you buy something on eBay you just pay the seller through your PayPal account and the money's transferred from your PayPal account to the sellers PayPal account we work the exact same when the marijuana growers the inventory to the retail store the retailer just logs into their pay quick account and electronically transfers the money from the retailer's pay quick account to the growers paper to town at that point as you can see if you drop down on the diagram one more time the retailer and the producer processor of the grower can send the money electronically to their bank account being an ACH transfer or they can pay their vendors we have a bill pay service floor where they put in the vendor information and we will mail a physical check to that vendor the other important thing that they can do is they can pay their excise taxes electronically through our platform so you don't have the situation that we've seen in a number of states Oregon Washington Colorado with people driving to the local government agency with 150 200 250 thousand dollars in cash in a duffel bag to pay their taxes our platform eliminates that and allows them to pay their taxes electronically so as I've mentioned by reverse engineering that seed the sale system we make the money safe for deposit into any financial institution our on-site compliance assessments that we do four times a year as I mentioned we check for two things one the business is not implicating any of the eight enforcement priorities in the cold memo and number two that they're operating in compliance with state law we are a federally registered money service business and a license money transmitter in the states in which we operate unless of course we're exempt so what that means is that we file the currency transaction reports for the money that comes in it's over ten thousand dollars and most importantly we filed the suspicious activity reports we file the marijuana limited SARS the marijuana priority SARS or the marijuana termination saw for every dollar coming through our platform we file those when the money comes in our partner banks have been through their FDIC safety and soundness exams and their IT exams that's how we know this is working and it's working well they actually went through those exams over a year ago in December of 2015 and passed with flying colors our volume with our partner banks has gone up incredibly over the last 12 to 14 months after they've had their FDIC safety and soundness and IT exams that's how we know we're working in compliance with federal law and the FDIC guidelines for banking this industry and the binson guidelines for banking this industry our compliance program which is really the backbone of what we do has two levels of extra due diligence under the Bank Secrecy Act and bananaman anti-money laundering Control Act one is expanded customer due diligence that's often can talk about as the know your customer due diligence requirements under the Bank Secrecy Act where we review their license application we check with their background checks we do quarterly on-site visits and we really know our customers to make sure that they're not a drug a French or drug cartels they don't have firearms on the premises they're not selling the minors or across state lines etc so that's our custom expanded customer due diligence we also do expanded transaction due diligence on every single transaction going through our platform as I mentioned we file the marijuana limited marijuana priority or marijuana termination Czar's our armored cash pickups have daily cash reconciliation reports that we then detail all of the cast deposit into the system and relate that to their sales that are reported through the seed to sale traceability system we do monthly reconciliations of these deposits with the state traceability system the licensees certify their deposits for us and as I mentioned we file directly with FinCEN arse arse and CTRs we've also developed because we've been doing this for 15 months now in full operation we also developed a series of red flags of what's usual and customary and what's outside of usual and customary and what is outside of usual and customary are those red flags and that's something that's required by the FinCEN guidance of any financial institution like us or any bank that is servicing this industry how are we different from our competitors well first and foremost registered federally as a money service business and where licenses of money transmitter in Washington Oregon Arizona and we're soon to be licensed in Nevada and California and the other states that we go to we enable legal debit and credit card transactions through a digital payment platform that we've implemented we also ensure that our customer our competitors don't do is that the money is safer deposit into any financial institution we get bank accounts for our clients which our competitors don't we do quarterly on-site compliance assessments which our competitors don't we filed the currency transaction reports and the Czar's which our competitors know their competitors out there that say they help businesses or they help banks but the bank still needs to file those currency transaction reports and those Czar's themselves with us the bank doesn't need to do it because the money's coming into the peg foot platform and we file it and then when the money's transferred from our platform to the bank well then the bank could file it themselves but for every transaction every ten transactions that come in that we file the bank files one on that one transfer to the bank and I think one of the most important things that sets our platform apart from anybody else is out there is that we provide for electronic payments through the entire supply chain from consumers to retailers and from retailers to their growers and their suppliers and then both from retailers and growers to their ancillary service providers who they need to pay there's nobody else in the marketplace that's doing that so while we do have some competitors on the consumer side that have a kiosk or something like that they don't handle the b2b side of the business so that's truly what differentiates us from our competitors that we cover the entire supply chain and allow folks to pay their taxes in ancillary businesses there are significant barriers to entry to what we're doing take what we've been around in in operation for the last 15 months we started the business three and a half years ago my co-founder and I but we launched operation 15 months ago and we have attraction and we are the market leader and we've captured significant mindshare in the country for the papered platform we're out there we've been operating for over 15 months I'm sorry 18 months a year and a half if people know who we are we've captured that mind share we're also integrating into the POS systems into those point-of-sale systems so that people can pay using paper right at the point of check now we are obtaining credit card processing and acquiring banks approval for legal credit card processing in this industry mainly because of our compliance program they trust us and what we're doing to enable legal credit card processing for marijuana transactions the other thing we do is whenever we go into a state we first go and meet with the regulators and the state legislatures in that state and we become a trusted adviser to these state regulators and legislatures legislators to tell them what we've seen that works and what we've seen that doesn't work and make recommendations to them as they're building out their state marijuana regulations we're heavily involved in California with the legislature here and in Ohio in advising them on how to build out their system obviously our competitors face substantial reputational risks and securing and obtaining a money transmitter license for each state is a difficult and time-consuming process and finally I will tell you that developing a software platform that goes B to B and B to C so it covers the entire supply chain between businesses to business and businesses to consumer is inexpensive time-consuming an arduous process so those are the barriers to entry in this industry and why pay quick is leading the way how do we make our money right as an investor you certainly want to know how we make our money well here's our about revenue model we've got two types of subscriptions for the pay quit program you've got a basic subscription and a premium subscription that provides for you know different bells and whistles and different levels of functionality as I've just spoken about so I don't want to go through those different levels of functional right now but I what we do to make our money is we charge a transaction fee based on the money changing hands essentially so we have a sliding scale for money transmitted between pay quick businesses we charge 2.75 percent on consumer transactions and that's paid for by the marijuana retailer the consumer never pays a dime we do have a instant load function on our iPhone app that charges up $0.99 but essentially the consumer never pays a dime and on the business side whoever's receiving the money pays the fee so if the retailer's receiving payment from the consumer the consumer the retailer pays a fee if a grower or producer processor or ancillary business is receiving payment from them another marijuana business then the receiver the funds pay a small percentage for a transaction fee so that's how we make our money we charge a very small percentage to whoever is receiving the money electronically through our platform art we are not a start-up anymore we've been in business since the summer of 2015 18 months now and in the fourth quarter of 2016 we processed nearly 25 million dollars through our platform so we have significant traction in the market where are we going in the future we expect our revenue to grow to a hundred and forty five million dollars by 2020 as we know this is going to be a 20 or 25 billion maybe 30 billion dollar business by 2020 and it's growing to a hundred billion dollar business so through our transaction fees this is where w expect our revenue to grow and these are conservative conservative numbers as we take our platform and roll it out how are we going to receive how are we going to generate that revenue well we do have the first mover advantage as we take our platform in Washington Colorado Arizona and roll out across the country to all of the other states that have legal medical or recreational marijuana and have adopted seed to sale traceability systems we're driving consumer adoption so in-store promotions or software platform is fully scaleable to accommodate expansion across the entire United States and we're leveraging like I mentioned we're leveraging our know-how in Washington and replicating our model in Colorado Oregon Nevada Arizona Massachusetts Alaska California Michigan Florida Ohio Pennsylvania and Maine and in fact in Ohio Ohio is building their own closed-loop banking system and they're issuing an RFP and we've already met with the regulators in Ohio they loved our platform and we'll be bidding on and expect to be awarded the contract to build the closed-loop platform for the state of Ohio we also have established key political relationships in each state so people know us they trust us that as the regulators and the legislators and are promoting our platform because of the benefits we provide to government governmental institutions and regulators when folks use the paper platform by reducing cash eliminating money laundering it's fully traceable so they can audit people sales and people's collection of money in order to make sure that the government gets paid the appropriate excise taxes here are expense all here are our expansion plans for 2016 to 2018 as we replicate our model across the country to all of the states that have adopted legal medical or recreational marijuana statutes and as you can see it's quite significant but we've already built our mousetrap it's just a matter of replicating it in each new state and finally do we have the horses to get it done do we have the right people to get it done and as a matter of fact we do I'm Ken Burke I'm a co I'm one of the cofounders and the CEO I've been a corporate transactional and compliance attorney for over 25 years rather than law school from Loyola Law School in Los Angeles in 1987 my co-founder Keith marks has over 30 years of experience in real estate down steep downstream petroleum and Investment Banking he holds a BA from Arizona State and he also has a JD he is also an attorney more CEO Braun our chief operating officer has over 20 years of entrepreneurial experience running large organizations and compliance companies that he's built and sold in the past our CTO and Neal Sahai has a master's from the Sloan MIT school and runs our technology and our technology vision and finally from a compliance standpoint May Thompson is our chief compliance officer who spent over 20 years with money tree as a compliance officer but that's not enough we also have key advisors who are lobbyists and regulators in the industry both in the banking industry lawyers and banking attorneys like Chris Massie Brian Daugherty out of Miller Nash Graham and Dunn miles Cohen is our industry liaison he's an attorney and a recreational marijuana store owner up in Washington and Denny Elias and is the lobbyist for the Washington Bankers Association at this point we have approximately 18 employees in our offices offices and are fully up and running we're hiring more but we've been in business and have significant traction and been doing this for more than 18 months and willing to roll it out across all the other states that we have not yet penetrated so we have the team necessary to execute our game plan that is it for the presentation thank you very much for your time if you've got further inquiries I'll leave this on the screen please contact mark Strauss our Director of Investor relationship relations and his number he is on the screen and his email address is on the screen so thank you and now open it up for questions first question could you list the main reasons why cannabis businesses businesses cannot get bank accounts or bank accounts are closed yes the main reason that cannabis businesses cannot get bank accounts is because the bank is not able to ensure that no money from illegal sales is going to be deposited into that bank account and that's why the banks won't open accounts for them that's this problem that we solve because of our compliance platform remember the stem of the funnel is our compliance we make sure that no money from illegal transactions get deposited into the pay quick platform and we make that same representation and that same assurance to our banks and that's why the banks will Bank our clients and open accounts for our clients and we'll accept money from penguin now can the second part of that question how costly is it for banks to have that type of compliance and and would banks in the future how are you guys to to take care of that compliance for them instead of initiating their own platform it's incredibly expensive for banks to do to know your customer due diligence that's required to bank this industry to file all the Czar's and the CTRs and to handle all of the cash coming in that's where we step in and we stand shoulder-to-shoulder with the banks to take that burden off of the bank so even excuse me when if banks do get involved they're gonna want to have their clients also working with pay quick to backstop their own compliance programs next question how can you compete with bigger providers that will come into the space after it becomes federal legal and they made an example here first data which is a payment processor well they're the first data as a payment processor really works in the business to consumer space right they work because they process credit cards remember the main portion of our business is not the business the consumer space it's the b2b space where we're the only one out there allowing for electronic transfers business-to-business and in fact I'll tell you there are lots of people right now who are building exchanges that is where growers list all of their marijuana for sale on a website and the retailers can order through that website and when they get to checkout we are integrating with them to be the payment method or checking out and purchasing marijuana through those online platforms that's not something that first data is going to get into the question is a hundred percent right the consumer based business is you're gonna have margin compression when the big boys come into the consumer base space but we're not gonna have that in the b2b space and that's the main thrust of our business right now next question your sales strategy strategy do you establish relationships with the banks or directly with the cannabis businesses we establish relationships with both the banks that are banking the industry right now say in Colorado we establish our relationship with them we open our bank accounts with them and then they promote us to their clients we also go out directly and hold seminars and educational seminars and have a sales team in each state that goes out of markets directly to the cannabis businesses we also participate in trade shows we sit on panels at trade shows to educate the industry and that's how we push our sales team out there I think that's a good strategy so as new cannabis cannabis businesses established go to banks and try to establish these new accounts when they open up those new accounts the banks refer pay quick to those new clients is that how it works that's correct and I will also tell you in Washington State if you call the Department of Financial Institutions and asked for a bank account how do I get banked they will actually refer you to pay quick to work with us well we're listed on their website as one of the solutions in Washington State for people to help to help cannabis businesses get bank accounts in Washington so because of our relationship and our trusted advisor status with the regulator's the state regulators are also referring folks to paper next question can your platform facilitate retail online transactions as well as brick-and-mortar if so how would that work we absolutely can that's called a gateway and that's through an API from a technology standpoint into that online platform so we all we accommodate both brick-and-mortar and we accommodate the online platforms like the exchanges I just mentioned next question what would happen to your business if and when major banks change course and accept cannabis customers and allow credit card purchasing like usual business we are just as strong when that happens because remember we stand shoulder to shoulder with the banks from a compliance standpoint so one I don't think that's happening for a very very long time it's it's just not big banks move very very slowly what you're seeing now is credit unions and community banks serving this industry and I think it's going to stay that way for the next at least five to ten years but in any event it still doesn't hurt us because our compliance program buttresses and backstops a banks compliance program so that they want to have their clients as part of the paper platform because it helps them and it eases their compliance burdens both from on-site compliance assessment standpoint from a filing Czar's and CTR standpoint etc one of the questions can is you know how much money are you guys raising and and you know I guess some some viewers don't want to know about a private placement but I think you can Carl can his numbers right there where they can call you investor relations guy amazing call mark Strauss and we can get you out of and all the details of what we're raising okay next question how many licensed cannabis businesses are currently using euthanizing your platform in Washington state alone we have over 200 on our platform in Washington we're rolling out this quarter into Colorado and we expect to add another three to four hundred in Colorado and through our credit card processing and integration into the point-of-sale system we to have another two to three hundred retailers coming online in Washington alone next question which online exchanges are you integrating with we are integrated right now with grasshopper hub and we're speaking with a number of other ones but we're subject to confidentiality agreements right now with respect to those a next question are you working with any members of the Fed and DEA we are not working with any members of the Fed or DEA as I mentioned before the FDIC has come in and done their safety and soundness exams of our partner banks and it's funny the first thing they asked for when the FDIC examiner's came in was show us the pay quick file how are you guys working with pay quick what is your bsa/aml compliance programs look like what it paid clicks bsa/aml compliance programs work look like I will tell you from a from a federal standpoint we are going and meeting with a number of senators and House members in early April in Washington DC who are pushing for banking reform in the marijuana space and we have contacted them all that cutting back to us immediately and said when are you next in Washington we want to meet with you so we are meeting with a number of federal congressmen and Senators in early April ok someone got to the webcast a little late they're asking where is the fee schedule do you have a fee schedule we do have a few scheduled but to answer that person's question we charge a small percentage of the transaction for whoever receives the money so if a consumer is paying a retailer the retailer pays 2.75 percent when a retailer pays a grower or producer processor the producer processor pays a small percentage or when they pay their accountant their lawyer their landlord their insurance company the whoever that ancillary business is whoever receives the money pays a small percentage okay a two-part question here can and I think you touched on the California are you planning to expand to California are you expanding to plant to expand to Canada let's cover California first California absolutely 100% we just testified in front of Treasurer Chang's cannabis banking working group the testimony occurred on February 10th I was there in front of the working group to talk about pay quick and our recommendations for California we have met with all of the top regulators in California including Genoan Alec Kidane Alexis Podesta Lorie Ajax all these people to present pay quick to them and what we're doing and they're dying for us to come to California and we will be coming to California as soon as the see the sale traceability comes in place which should be January of 2018 there are local initiatives in Los Angeles humble and Mendocino County to bring traceability track and trace to those counties or those cities and if those are implemented then we'll come to California earlier so the bottom line is yes we are absolutely coming to California as far as Canada goes we've got our I in Canada we intend to expand to Canada but we're covering the United States first okay next question what is what is paid clicks outlook of the marijuana industry going forward I guess it's sort of a general question probably maybe your opinion on legalization recreation let me start by first and foremost they're not going to get the toothpaste back in the tube the marijuana business is here there is too much tax dollars involved for this industry to go away president Trump has said he wants to leave marijuana regulation to the state while Attorney General Sessions has in the past been hostile to marijuana he has also indicated in a recent press conference and you can go look up the transcript of that press conference that he's going to be following Trump's lead and that the DOJ has very scarce resources and that's essentially what the Cole memo says so it indicates to me that sessions is gonna follow the Cole memo he may supplement it and add a few more bells and whistles if he wants of what he wants to see marijuana business is doing in the States in order to give further guidance to his local local prosecutors about who to go after knew not to go after but I don't think it's going away at all and there's no way that the federal government is going to be able to take hundreds of millions of dollars in state tax revenue out of state coffers it's just not going to happen so I think we'll see some additional regulation will cease maybe an expansion of the Cole memo some additional guidance but I don't think the industry is going away it's just it's just too big and it is tipping and is about to tip it if you're not read the book the tipping point it's a great read that the marijuana industry is about to tip and I don't know if you can answer this question Ken but you know this question is it's probably wale out do you guys have intentions in the future of a public offering IPO that's a question directed to to mark Strauss okay next question how does pay quick differ from PayPal well that's a great question so from a functional perspective we are just like PayPal because it's a means for people to pay each other electronically but the main difference between us and PayPal and why PayPal is not in this industry is that PayPal is built from the top down and they cover the entire country right now we've built pay quick from the bottom up and each state is siloed if you will within our software platform because we can't allow a retailer in Washington to order and pay for marijuana from a grower in in Oregon or vice versa you can't have a retailer in Oregon buy marijuana from a grower or producer processor in another state so our platform is siloed within each state so that the money stays within each state the transactions stay completely within each state that we go into PayPal can't do that they're built from the top down and there's no way for them to prevent money crossing state lines or people ordering and paying each other across state lines we can because of the way we built our platform from the bottom up next question can would let me see if I can get this question straight here what right how would you recommend a cannabis company opening up a bank account what what would be some of your recommendations on ho to open up a bank account well a lot depends on what state they're in okay but basically you've got to be 100% aboveboard and honest and transparent with your bank tell them what you're doing tell them the business that you're in establish a personal relationship with the branch manager so they know you they trust you and they and they trust that you're operating your business in compliance with state law and that you are not implicating any of the eight enforcement priorities in the Cole memo that's how you get a bank account and if you happen to be in Washington or Colorado or Arizona or Oregon obviously contact us and we'll see what we can do for you okay and last question who are your competitors I know you touched on this a little bit but who are your direct competitors in the cannabis space or do you have any competitors we do not have any direct competitors in the cannabis space covering what we do certainly there's some folks that are putting kiosks into dispensaries and they're trying to capture the b2c business when consumers buy from a dispensary or from a retail store there is nobody that's covering the entire supply chain from seed the sale like we are that is from the marijuana growers to the retailer's to the consumers we cover the entire supply chain and there's nobody doing that there's also no one in the industry that's actually taking possession of the money like we do and filing the currency transaction reports and filing the Czar's suspicious activity reports the marijuana limited size even these kiosk companies that put a kiosk in the business in the marijuana business and maybe issue some kind of card or something like that they're not filing the CTRs and they're not filing the suspicious activity reports so there's nobody in the industry right now that's doing what we do well thank you can that concludes our Q&A any last comments regarding pay quick you know please give mark Strauss a call if you're interested in investing we enable legal bankable marijuana commerce and we've been doing this for over 18 months and putting millions and millions and millions of dollars through our business so we're not a start-up anymore we're up and running and we're raising these funds to expand our platform across the country so please contact us and grow with us can we got one last question are you integrating via API with MJ freeway bio track etc great question we are integrating right now with a company called green bits we are also in discussions with MJ freeway Korona and a number of other POS providers both at the retail level and at the producer processor grower level so like I said we're integrated right now with green bits grasshopper hub and we are going to be integrating and we're in discussions right now to integrate with a whole host of other both other POS systems at the retail level and inventory control systems at the grower level green bits keep your eyes on green bits they have a approximately 16% market share in Washington people love them up there for the retail stores and we're going with them into Colorado and Oregon as well well thank you can that concludes the paid quick presentation and their phone number is well I don't is it on the screen Ken I don't see your mark Strauss's phone number is on the screen his cell phone number you can also call our main number if you go to our website wwlp.com it lists our main number and give us a call thank you can we really appreciate it alright thanks so much