To provide a digital payment offering to financial institutions (FIs) working with cannabis-related businesses (CRBs), digital payment company Spence Labs has collaborated with cannabis banking technology company Shield Compliance, according to a Thursday (April 15) announcement.
“We believe compliance-first processes are the only way to bring transparency, trust and reliability to cannabis banking and payments,” Spence Labs Co-Founder and CEO Chris Rentner said in the announcement.
The Spence payment system lets dispensary clients use their cellphones or the web to make payments for cannabis purchases, taking away the need to hold cash or go to an ATM at a dispensary, the announcement stated.
Spence for Business lets firms handle large-scale payments between their businesses and suppliers or customers through a web interface without transaction frequency limitations or maximum transaction size, according to the announcement.
The system offers financial tools like compliance evaluations, supplier risk, pending invoices and payables/receivables monitoring in addition to report creation for legal and financial compliance, the announcement stated.
Shield’s compliance management technology tackles the special Bank Secrecy Act (BSA)/anti-money laundering (AML) risks related to offering banking services to the legal cannabis sector, according to the announcement.
“Our relationship with Spence offers financial institutions the opportunity to deliver a safe and secure digital payments option to their CRB clients while benefiting from a new source of non-interest income,” Shield Compliance President and Chief Operating Officer Tony Repanich said in the announcement.
The news comes as the U.S. cannabis market keeps grappling with a dearth of access to traditional financial services, and even a surge in FinTech offerings cannot close the gap, PYMNTS reported.
As a result, cash and cumbersome wire transfers, chockfull of non-automated paper-based workflows, are presently the norm in a fast-expanding market where cannabis has been legalized at the state level. The crux of this challenge is compliance.
Rentner explained his company’s game plan for traversing the compliance intricacies of legal cannabis B2B payments in the report and provided his perspective on why marijuana-specific financial offerings will continue to be needed even if — and when — the U.S. federal government opts to legalize the product.