There are many wars being raged quietly against the Cannabis Industry online. From a consumers prospective it’s difficult to understand the challenges facing any startup in the industry, but from the startup prospective these challenges can range from frustrating to downright business-ending.
So first off, why did I choose to start a company in an industry that is tangential to cannabis?
I started my first company when I turned 25 in the LE/MIL space producing products that help us train first responders. I was young and asked myself the same question many young entrepreneurs ask themselves….
“How hard could this be?”
The answer of course was very hard, and the learning curve that I had to navigate was daunting at times. I thought that Five years of building my first company and consulting on scores of others prepared my for any future curve balls; time for another reality check:
Any company involved either directly or indirectly with the Cannabis industry is the wild west of entrepreneurship.
Why did I start this kind of company?
As I stated earlier my first company is in the LE/MIL industry and I work alongside Law Enforcement from around the globe. I tend to look at patterns and I noticed that a large subset of the officers we trained with were suffering from some level of PTSD. Military Veterans who transitioned to Law Enforcement after their service brought their unresolved stress into the Law Enforcement career compounding the problem. Anyone who has spent any time working with Law Enforcement understands the tremendous burden we place on their shoulders every hour of every day.
“We sleep safely at night because rough men stand ready to visit violence on those who would harm us.” — Winston S. Churchill
How many of you reading this article get uncomfortable when you overhear a couple arguing in public? Imagine having to show up to domestic violence incidents, dealing with abused children, or coming face to face with a violent repeat offender looking to cause bodily harm just because you are wearing a badge. It’s not surprising that our Law Enforcement and Military first responders carry these burdens to the point of having severe PTSD, what IS surprising (at least to me) is how we treat it.
My disgust at the current state of affairs for PTSD treatment led me to join the team over at The TouchPoint Solution to bring a medical wearable to market (Based off of EMDR therapy) that has shown to be profoundly effective at mitigating PTSD and chronic stress, but there was still a piece missing. Many of the retired Law Enforcement officers, and Veterans who transitioned to civilian life that I befriended were all using CBD or Cannabis to help treat themselves. They were sleeping well without night terrors, keeping their anger management in check, treating phantom limb pain, and genuinely thriving…. all without heavy doses of narcotics. Cannabis was never their first step; In fact many had been on all forms of anti-depressants, sleeping pills, and pain medication that each had terrible side effects not to mention can be highly addictive.
At the time I came up with the idea for the Spaced-X products I was also dating a woman with an autoimmune disorder that needed to medicate in order to eat. Without the use of cannabis her body would reject food and she would literally waste away. One day while at my desk I heard her in the other room violently coughing after using a traditional water pipe. This was not a cheap piece she was using, and having gone through several thousands of dollars worth of pipes I thought to myself “There has to be a better way.” Queue the Serpent-01:
But what does Stripe have to do with this?
Our world is run by Ecommerce, you can buy almost anything online at this point with very little effort on your part; But what became surprising to me was how difficult it is to work with traditional payment processors. After building the first prototypes and testing them our target audience was ecstatic, at this point in the development cycle it’s now time to get a website built and let the world know. I will save the marketing hurdles for another article, because they are just about as bad as the payment processors.
Once the website was built out (Link at the bottom) it was time to get our shop page ready. Shopify has been my go-to for several companies and we put the shop together quickly. Then the problems started, Shopify payments (powered by Stripe) informed us that we could no longer use them as we are a “prohibited product” and disabled our payment gateway. This confused us as we had already been approved by Stripe to work with QuadPay, but Shopify would not even allow an appeal of their decision.
QuadPay is a really fantastic service that breaks down a payment into 4 installments that get made over eight months, and was helping our customers get our products by fitting the smaller payments into their budgets. Without QuadPay many of our Veteran and Medical customers would have to wait much longer to get a product that could very well change their life.
Since QuadPay had gotten approval from Stripe directly we should be in the clear right? Wrong, shortly after Shopify gave us word that we would need to use a different payment processor Stripe notified us that our account was being frozen and we could no longer use their service directly as well, once again an appeal is not possible. Why would Stripe be so against working with a company that sells unrestricted products in the USA?
Anyone over the age of 21 can walk into any smoke shop across the US (even in states with Cannabis prohibition) and purchase a water pipe. So why not online?
What are Stripes Excuses?
In both Shopify and Stripes communications to us they routinely called our products “Prohibited” and “High Risk.” I’m sure their legal teams instructed the use of these types of statements to pre-load their arguments about a non-existent appeal process. “Prohibited” by who? “High Risk” in what way? At the end of the day Shopify and Stripe are private businesses and can operate how they see fit, but lets get two things abundantly clear:
- These items are “prohibited” TO STRIPE
- These items are “High Risk” TO STRIPE
We sell machined metals clad with laboratory grade glass. What if we marketed them as “Kinetic Sculptures”, or “Heat exchangers”, Would that change their opinion?
Right now you could walk into any grocery store or home improvement shop and buy a multitude of common household products that be turned into a smoking device with minimal effort. In 30 states in the USA, and now Canada (congrats to our northern friends!) this is a completely legal thing to do.
Once again I fully understand Stripe and Shopify are private businesses and can make whatever rules they want. What I would like to do is pitch some potential ways for them to work within the Cannabis Industry, after all this is a tremendous amount of revenue they are losing:
- Lock out purchases being made in prohibited states — When I was living in NY there were a whole host of products that were restricted to be sold within NY. Want to know what would happen if I went to a website to order one of those products? They would refuse the sale because of the delivery address. Now to be clear it is COMPLETELY LEGAL in all states to purchase a water pipe online, as simply buying the product does not imply you will use it for illicit purposes. Restricting the sale to those states without Cannabis legalization would just be a way of you “Protecting your behind” with your financial backers.
- Create a separate payment gateway for cannabis companies — Spin off your existing technology but keep anything within the purview of cannabis in a separate system. I feel a Higher payment processor percentages to accommodate the increased work of ensuring compliance with state laws would be accepted by companies like mine in order to use existing APIs that interface with Stripe.
The Cannabis industry and all of the ancillary businesses starting up due to the constant progression of legalization will require some radical departures from the “Norms” established over the past few decades. I understand that this takes time but hopefully we start to see positive movement from payment processors and online advertising to enable the growth of this industry. I also hope that Shopify and Stripe can look legitimately at these concerns and try to address them.
If you found any of this article helpful please leave a comment or clap, I’m planning on writing an article about our hurdles within the advertising segment of our business shortly.
Sincerely, The Spaced-X Team