Alliance Financial Network Inc. recognized the problem and came up with a solution. As a federally registered financial institution committed to unbanked business and consumers, the company developed a membership organization, eXPO, that performs compliance review on its members to enable its members to join the electronic currency economy.

 

“Banks that selectively preclude consumers and businesses from owning an account generally are unable to perform necessary compliance and therefore turn them away,” explains Larry Lipman, chief executive officer of eXPO.

 

As a result, eXPO created a non-fluctuating mobile currency where members exchange their cash and other funds for one eXPO credit, which equals to $1.00, that moves electronically and is backed by the U.S. equivalent of dollars in large tier one banks.

 

“eXPO provides movement of currency in a compliant manner outside the banking system in a private financial system utilizing existing anti money laundering protocol,” says Lipman.

 

Financial institutions were provided federal guidance on how to work with the cannabis industry on February 14, 2014. Yet, of the nearly 13,000 US financial institutions, only 411 have registered with the federal government to follow the guidance of nearly 10 pages of filing Suspicious Activity Reports (“SARS”) and more.

 

Lipman notes that cannabis companies are mandated by states to follow a seed to sale tracking methodology and are disallowed operating write offs under IRS280E, putting them in a 70-90 percent tax bracket.

 

“eXPO provides financial tools with its membership that rejoins the member to the economy; laser focused seed to sale to accounting software that assists the business and tax CPA to bring the business back to a tax bracket most other businesses are in; and a complete financial system that banks provide to non cannabis customers,” says Lipman. “eXPO’s economic impact allows the industry to flourish.”

 

According to Lipman, the advantages of using a cashless system such as eXPO credit is that it allows a complete date and time stamped system to provide auditability, compliance, reduction in public harm via theft, and a tax trail.

 

“Each business pays each other electronically and non-members are paid via eCHECK, ACH and wire,” he says. “The payment system is highly flexible and robust.”

 

eXPO uniquely provides card processing and eCOMMERCE services without the merchant needing to disguise their business identity.

 

All members are provided with the complete set of financial tools. Starting in the dispensary, a financial center receives and remits cash and credit cards. The eXPO application in mobile or computer receives plastic cards and allows eChecks, credit payment and ACH/wire.

 

When consumers load their account, the bud tender scans a QR code providing the dispensary with credit to pay other business members or pay electronically their sales tax and other bills. These payments are date and time stamped to ensure true cost of goods in accordance with permissible IRS280E tax write offs.

 

“eXPO also provides proof of funds and escrow services for shipment and collection of highly valuable inventory,” says Lipman.

 

Additionally, Lipman says that they have identified that some cannabis businesses were also playing music without paying music royalties.

 

“Our music division, WeedStream, artfully integrates music and advertising of in-store products to produce revenue to the dispensary outside 280E,” he says.