A safe alternative to cash for the cannabis industry Despite the rapid legalization in most states cannabis is still federally illegal which means customers can not use credit cards to purchase cannabis. Lauren Murphy CEO of Alt Thirty Six joins Dan Humiston to explain how their payment option is a safe and less expensive alternative to cash. Produced by podCONX
A safe alternative to cash for the cannabis industry
Despite the rapid legalization in most states cannabis is still federally illegal which means customers can not use credit cards to purchase cannabis. Lauren Murphy CEO of Alt Thirty Six joins Dan Humiston to explain how their payment option is a safe and less expensive alternative to cash.
Dan Humiston: [00:00:00] Cannabis capital. We are joined by Laura Murphy, the CEO of all 36 Lauren. Welcome to the show.
Lauren Murphy: Thank you for having me.
Dan Humiston: I'm super happy to finally have you on the show. We've known each other for a long time, but I've never had John.
Lauren Murphy: I know this is.
Dan Humiston: I know. You've always been the behind the scenes person. I really appreciate your making an exception for us today.
I thought we'd kick off things by laying a couple of common misconceptions to rest. Even though cannabisis legal in many States, and it's generally accepted throughout the country. It's still illegal nationally, which means we still have banking problems because banks are bound by their charters, forbidding them to do business, including processing credit cards with federally illegal businesses.
So Lauren Without all 36. How do dispensary's process sales?
Lauren Murphy: So how they process in a compliant way. Obviously cash is the easiest. [00:01:00] Form of payment, especially as new businesses. They don't really know where to go get payments. So cash is definitely a given. I think it was 2019. end of that year closed out a lot of non-compliant payment systems that were.
Using credit cards andgoing against visa, MasterCard rules. So a lot of those got shut down and unfortunately, a lot of businesses got their funds, held millions and millions of dollars were held. So that was a way that people went to, but it wasn't compliant.
So in all 36 is essentially Comes right from your bank account. You don't have to preload funds and it's free for the customer. So it works very seamlessly and the merchant gets their money right away.
In terms of efficient for the customer, it's awesome. To do any sort of digital payment with ACH and then on the merchant side, they get to reduce a lot of the fees associated with operating in cash.
Dan Humiston: Oh, yeah, for sure. It's not to mention the danger of it, but So it's comes right out of their checking account, but maybe get into a little bit more detailed because you have a unique way of doing this that's [00:02:00] compliant and safe at the same time.
Lauren Murphy: Yeah, absolutely. So in this industry, I would say we're one of the most compliant. Payment systems primarily becauseregistered as a money services business on the federal level, even though it is illegal. Federally still there is guidelines that Finn sends provided on reporting we're essentially considered a financial institution, even though we're not a bank.
So we do all the reporting that they require basically to , move cannabis-related funds. And then on the state level, as it applies, we get money, transmission licensing, all that means really to the merchant is that it's a compliance solution. That's not going to get shut down. I would say that's the forefront of what they should care.
And on the consumer side, it works very similar to a Venmo style experience, which is something that they're already used to doing and normal everyday behavior. So it works very well there and there's a lot of cool things that we're coming out with this year. We're really changing our narrative and focus.
For being very consumer focused and consumer at the forefront, [00:03:00] and just focusing on really delighting these end consumers. Cause we think by doing that we'll really end up growing our business, but also the merchants that we partner with to make it as easy as possible for customers incentivizing them different cashback promotions, if you will.
Dan Humiston: That's really cool. It's like you said, van Venmo or I use Zali, I think it is. Is that how you pronounce it? I don't know,for all my business banking where one click and it's immediately there. There's no like delay in transfer. It's just, people are comfortable with that approach and more important.
The whole cash thing. It's it's dangerous for the customer. It's dangerous for the employee, but now you add COVID into the mix. tell our listeners just how effective cash is at spreading germs.
Lauren Murphy: Yeah, there's some pretty gross statistics out there. And it's yeah , the list goes on, but it gets the grody, for us, like it's so much easier for customers, especially on delivery. For them to just be able to pay, not have to go to the ATM, not have to [00:04:00] get cash.
And the benefit as well for the merchant side is, if you're in store now you can have your customer do impulse buys. You can upsell them on certain products for, they don't have the cash in hand, so it really helps everyone involved. But yeah, the cash. And in addition to it costing you, I think it's anywhere from 20 to 25% of your overall revenue.
Is what that costs you. It's not a direct cost. It's split above, cash handling security employee, counting the deposits, there's all these different fees. So our solution in itself is a lot less expensive and more efficient for her businesses and customers.
Dan Humiston: And safer.
Lauren Murphy: stay for. Yeah. So you don't have to worry about, coming out with a lot of cash, if you want to buy at 500 or a thousand dollars worth of product.
That's a lot of money to have on hand and who knows what might happen.
Dan Humiston: Yeah, for sure. , and then the employee has a thousand dollars in their drawer that's. risky. That is so risky. I think you make a really good point. For listeners, it's never been in a dispensary.
I walk in, I go [00:05:00] to the ATM, I get a hundred bucks. I start to shop and I'm like, Oh, I really liked that, but I only have a hundred dollars. Let's just get it over with versus right. If you had that right on your phone and I can do 115 that's. Okay.
Lauren Murphy: Yeah, exactly.
Dan Humiston: Yeah, that's that makes a big difference.
So you're already in a lot of dispensary's and working with a lot of cannabis businesses. What's next? Where are we going with this next?
Lauren Murphy: . So right now we're approved in eight different States to operate, but our main focus is really California and Arizona. . So our focus is very much consumer at the forefront. And so that's why we really want to focus on Arizona and California the most because we want to have as many consumers using our system in one area.
That way we can really target to them the different marketing aspects that we want to do. Really creating a community overall from not just on the consumer side, but merchant and our system. So we want. Or to increase the average ticket beyond what we're currently doing. So it's right now, we're able to increase the average ticket by 20%.
And then our frequency of [00:06:00] customers coming back to the merchant. So we want to . , listen to our customers, to what they want which will help them spend more use the system more more so that they do with cash or any other system that they may either be using.
That's not compliant. We want them to use all 36 first. So our customers are our main focus which I think will benefit the entire supply chain. Yeah.
Dan Humiston: Oh for sure. And if I am a customer that's already comfortable with using all 36, a dispensary is geez, , I need to. Make sure that I can service that customer if they come in and they go do you use all 36? And they're like, no hang on. I'll go over here. So I think it's brilliant to focus, especially California.
Jesus bigger than the whole country of Canada.
Lauren Murphy: Yeah, absolutely. That's a good point like to use, if your dispenser doesn't use all 36 our underwriting process is pretty streamless, so they could go to all 36 dot comments, set up a merchant account, but in terms of the customer walking away to another merchant, they're not just losing a customer from not paying without 36.
They're losing out on that increased spend that they could have had at that store. [00:07:00]
Dan Humiston: This is,a lot of marketing. Are you going to have to raise capital to assist you with this expansion?
Lauren Murphy: We are, we just are so we have updated our pitch deck just given all the different changes that have occurred. And we also just finished our growth plan for 2021. So it was cool our team coming together all different aspects and it's going to be
pretty cool that we do need to raise capital to support obviously the growth, which you'll probably hear most businesses and industry. So we are raising capital at this time.
Dan Humiston: You're unlikely out of businesses that are raising.This isn't a new business. You guys are established, you've already worked through all the bugs, like you said, you're registered in eight States and that groundwork right there is worth so much because it takes a while to get all that licensing that must have taken forever.
Lauren Murphy: Yeah, it definitely does. And it's upkeep each year. But the exciting thing that we have within the next 30, 45 days is we'll actually be approved to process in alt States that have a medical or recreational program. And that's [00:08:00] primarily through a different transaction flow that we've created.
We'll act as more of a traditional. Merchant accounts. So our banking is approved us for that. Our existing investors have put additional capital in there to help us get there because there's such a huge opportunity for that for us. And we're also working a couple of
point of sale platforms. And not as another incentive to us growing it'll grow pretty dramatically cause they'll have all their goal is to really do a land grab and get as many merchants using us as possible. So it's a pretty attractive time for an investor. We've restructured the company , we're really hitting this year pretty hard.
And I think it's going to be pretty successful.
Dan Humiston: Yeah, and a lot of people are like the new administration, there's going to be a lot of change. It's not happening overnight people. It's not going to be like wake up tomorrow. And cannabis is legal nationally. . There's so much work to be done, that this is a long process and , people are going to be using all 36 forever.
So now is the time to get in while you know why the getting is good. I'll have the links to all 36 in the show notes [00:09:00] and. If you are a dispensary or a cannabis business, want to learn more, or if you're interested in maybe participating in their expansion as an investor, just click the links.
And I know somebody from Lauren's team will be happy to help you. Lauren, we ought to do this more often. This was good. Thanks for being on the show.
Lauren Murphy: Yeah. Thank you. I appreciate you.