Correctly managing security is one of the best way to ensure that cannabis companies remain sustainable. Cannabis companies will have continue to have limited banking options until federal laws are changed. Abundance of cash created a very dangerous environment for both customers and employees. Scott Solomon the CEO of Operational Security Solutions (OSS) joins Dan Humiston to talk about being uniquely positioned to assess, manage and mitigate risks that threaten the sustainability of businesses across the industry supply chain. He explains how OSS solutions and services address the full spectrum of risks that these businesses must manage. Produced by PodConx MJBulls - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Scott Solomon - https://podconx.com/guests/scott-solomon Operational Security Solutions (OSS) - https://opsecsolutions.us/
Correctly managing security is one of the best way to ensure that cannabis companies remain sustainable.
Cannabis companies will have continue to have limited banking options until federal laws are changed. Abundance of cash created a very dangerous environment for both customers and employees. Scott Solomon the CEO of Operational Security Solutions (OSS) joins Dan Humiston to talk about being uniquely positioned to assess, manage and mitigate risks that threaten the sustainability of businesses across the industry supply chain. He explains how OSS solutions and services address the full spectrum of risks that these businesses must manage.
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Scott Solomon - https://podconx.com/guests/scott-solomon
Operational Security Solutions (OSS) - https://opsecsolutions.us/
Dan Humiston: [00:00:00] today on MJ bulls, we are joined by Scott Solomon, the CEO of operational security solutions. Scott, welcome to the.
Scott Solomon: Thank you, Dan.
Dan Humiston: Well, I'm really appreciate you joining us today. Operational security solution is a full spectrum risk management company, providing cash management and financial solutions, including secure cash, transportation, logistics, and depository services. And I want to talk about everything today, but I thought.
Maybe to get things rolling. You can kind of give us an update on the status of the safe act in Congress. I'm not sure if you have any insight. And also when do you think the financial world will finally start treating cannabis companies like every other business?
Scott Solomon: Absolutely. And that's a common question that we get, especially the OSS leadership is, is what's happening with the safe banking act. And I think we're seeing it now for the six time going to the Senate it seems like it just continues to [00:01:00] stall from our end, I guess from just a support service is the way that we look at it.
It's something that we strongly support. , we want that act to pass or some form of it or another act that's equally as helpful to these cannabis businesses that seem to struggle and they don't get a fair shot at legitimate financial services. but in, in our honest opinion I think it's still going to stall.
I still think that there will be hurdles that we have the need for more bi-partisan support. And I think we need a few more success stories. In, in various states, we need to see a strong commerce. We need to see positive tax revenue and some more of the good stories to get that national attention and to move it beyond.
Dan Humiston: I hate to confirm what you're saying, but that's what we're hearing as [00:02:00] well. It's, it's unfortunate. But in what it does is it creates a situation in cannabis businesses where there's a lot of cash on hand, which is very dangerous for the business and the employees and the customers.
How do you help cannabis companies create a safer environment for their employees or customers?
Scott Solomon: OSS started as a security company and , to just briefly overview that original start , we are a group of former law enforcement and military , and federal regulators that came together and saw a, a strong need to help this burgeoning market. At least to make it more safe. And that started with hardening facilities with providing video security measures to coming up with policies and procedures and, and checking off that box.
When a cannabis business wanted to say that they had a safety program or a security program.[00:03:00] But it didn't take too long for us to realize that when we actually listened to those MRB or cannabis related businesses to find out that their biggest problem was access to bank. They were forced into a cash intensive business.
They are heavily regulated. They are overtaxed. They have inordinate fees and they have to deal with all of this with big piles of cash.
Dan Humiston: Yeah.
Scott Solomon: And so we looked at how can we support secure cash in transit or CIT? And so we developed a new business vertical focusing on. A model that really is an easy way for me to describe it is that we provide executive protection for cash.
So we're not like a traditional armored car company that has big paramilitary vehicles and, people jumping out with machine guns and scaring, small children. , we have a [00:04:00] discreet model. We want to provide at discreet level of service. But the key with us is that we want to partner with a financial institution.
So that's really our main business partner, but then we want to bridge that gap between the financial institution and the MRB with compliance. So we put a huge focus on internal training. We have the same BSA, AML training and expertise that our partners at the banks have. And it's in our best interests.
It's in the financial institution's best interest in the MRBs best interest if we keep that account open. So we do everything in anything possible to help both sides understand the rules that we have to play by and how we can do it in a compliant fashion.
Dan Humiston: You mentioned you're working with financial institutions. So that is interesting to me. would that be considered those are banks , or [00:05:00] credit unions, is that what you would describe as your financial institutions that you referred to?
Scott Solomon: Yes. And we, we loosely put them into three categories. Unfortunately one of the things that the safe banking act is trying to address. We can't deal with international banks, but we can't deal with national banks or those banks that have FDI C federal deposit insurance. Because that's that's a tax bay, a taxpayer supported industry, and we don't have 100% tax payer support.
So we can't rely on those national systems to support this niche in this. So that means that we're not forced, but , we're put in a position where we deal with state chartered bank. So state chartered banks, when you have a cannabis legalized at a state level they can engage in that commerce.
There's also second batch would be credit unions. So again, credit unions are membership based. [00:06:00] So they have a board and a membership that determines who they can support, who they can engage and serve as members and cannabis is one of those industries. And then the third would be. Payment processors. And so these would be sometimes local or state-based, but often multi-state operators that in most cases have an electronic or a web-based offering that enables a cannabis business to legally and in a compliant and transparent fashion, pay their bills.
As it's, it stinks when you have to walk around with duffel bags, full of cash to pay your taxes or to pay your suppliers or to pay your employees. So there, there are Ebates systems that provide those opportunities and we work with all three of those groups.
Dan Humiston: Well, I think you mentioned keeping the company operational is really essential. And it's probably pretty easy if they don't know what they're doing. [00:07:00] Even if they do to make a mistake from a compliance standpoint, is that one of the services that you provide is helping them stay on top of all the changing regulations and maintaining their compliance.
Scott Solomon: Absolutely. So, going back to our early days is just security consultants. We actually helped cannabis businesses prepare their application for a bank account. It's loosely called onboarding. And so the financial institution needs to go through. EDD or enhanced due diligence. They have to go through a process called know your customer.
KYC. And it's essentially like putting together a comprehensive term paper. So all aspects of the ownership of the company, of their business plan of where they want to operate, how they will set up their facilities the suppliers that they want to work with and how they manage and report both cannabis [00:08:00] sales, as well as where the money comes in.
And where the money goes. So, we do have the ability to work closely with them on the front end, but once a cannabis business has an open account with a a financial institution. We can support that through a site visits. So we have a very strong compliance program, a field audit survey, programmer, FAS program, as we call it in which whether it's at the behest of the cannabis business or of the financial institution.
We know the regulations. We know the requirements of FinCEN, the financial crimes enforcement network, and we can actually go to the facilities we can observe and report. We can interview personnel. We can document compliance, and if there are weak areas, we can work with the business and the financial institution to shore those up.
Again, we're not in the [00:09:00] business, even though a lot of us were former law enforcement agents. We're not in the business of shutting somebody down.
Dan Humiston: No.
Scott Solomon: We want to educate, we want to support, we want to show people how to do it the right way. Yeah. We make money when they make money. You know, We're not a flat fee business.
We essentially work off of the volume of commerce that our banks and our cannabis businesses generate. So we want everybody to be more.
Dan Humiston: So far in this conversation, we've talked about. helping locations, harden their security. We've talked about transportation. You called it executive protection for their cash. We've talked about the consulting work that you've done there.
And I know we're just scratching the surface of all the services that you provide, but what does the next 12 months look like for your company? , where would you like to see your company over the next 12?
Scott Solomon: This is a very busy time for OSS. The main reason [00:10:00] that we are more busy is that we've just opened by coastal operations. So we were founded in California and I think that right now, we're the number three cash and transit business as far as size and operational expanse in the state of California. But we also service Nevada, Oregon, and Washington state.
But here recently, we, planted a flag in Philadelphia, Pennsylvania. As I think people in this industry know, we, we see booming markets in Pennsylvania, but more specifically in New Jersey in New York Maryland is a booming market. And Philadelphia provides us a more economical location where we can service all of those.
Businesses, but we have easy access to the federal reserve banks in Philadelphia and in New York. , we think that. Once we're established in Philadelphia, we will be able to move up into [00:11:00] new England. Of course, the Massachusetts and Connecticut markets are really booming. And then down the Eastern seaboard to the big markets.
And some of the Southern states. And of course over time it's always based on a revenue model, but over time we would want to fill that in and connect the coast. That's our main goal from a business expansion perspective, but we also know that that. Cash. Isn't going to be the only medium for commerce in this industry.
So we've put a lot of effort into developing business verticals in which we partner with smart, safe companies. So smart safes are equipment that go into businesses that. Help protect the customer and the employees. So cash goes in, but it communicates with us. It communicates with the bank it's secure in that facility.
So you don't [00:12:00] have open cash registers. We communicate with those smart safes and know when we need to go and do a cash pickup. So they don't have too much cash on hand. We also know that there are electronic measures out there. In which you can have cashless payments. W we know that there are also a lot of hot topics related to the fact that visa and other national and international card processors don't want to touch this industry, but there are online methods that are compliant in which businesses and customers.
Can, whether it's through blockchain and ACH and other electronic measures, exchange funds in a very transparent fashion and remain compliant. So we know that there were a lot of these other measures on the horizon and we're trying to stay agile and adapt with them as they come on.
Dan Humiston: That's really exciting. , there's a lot of opportunity in this industry in all sectors, but the opportunities within your sector [00:13:00] really seem to exciting before we let you go. Will you be needing to raise capital in order to fund some of this expansion that you've just talked.
Scott Solomon: that's arguably one of the the hottest topics within OSS. Fortunately OSS was founded by a small group of principals and we've been able to fund all operations internally. So we've raised our own capital. We have absolutely zero outside or leveraged. So it's a cash positive operation, which is very unique, I think, in, in our industry.
Dan Humiston: Very unique.
Scott Solomon: And we're trying to do this this growth or this expansion. , in a cash positive mindset. So right now we don't have the need for external support, but that could change. That could change in a day and a month definitely within this year because we try to respond to demand. And if we have strong demand [00:14:00] from a large multi-state operator or from a financial institution that comes to us we have 20 or a hundred new accounts or new locations, or we have massive volume that needs serviced.
We will want to be responsive to that. And I think that would create an opportunity where we would want to partner or look at a a second round of funding a way that we could be responsive as quickly as possible and not miss that opportunity to capture some markets.
Dan Humiston: Well, I'll tell you we'll have the links to operational security solutions. In the show notes. So whether you're a company that's needs to harden their facility, improve their security or investor. Maybe you want to convince Scott to let them participate in their growth. Just click the links in the show notes.
And I'm sure somebody from the OSS team will be happy to talk to you, Scott. We just really scratched the surface on this today, but so let's plan to have you back on again, maybe in six months and we can get an update as to how you're doing on the east coast, but I really [00:15:00] appreciate you being on the show.
Scott Solomon: Absolutely. Thanks a lot, Dan. I really enjoyed it. And look forward to speaking with you and everyone else.