Good day David! Thanks for hosting this very informative AMA!
Sorry Iām a little late to the party with my questions.
What are the top three major benefits of merchants using Zodakaās universal payment platform?
Have you experienced any issues with merchants and money laundering?
Thanks in advance!
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Kareenabis~
I think your idea is great! I was in the three hour line when the dispensaries opened a few weeks ago in Massachusetts, and I did bring cash, but they said they take debit cards too. I donāt use debit cards, but they said as long as there is a PIN number that can be entered, they are accepted there. Is this a new thing?
Thank you for your response.
How do you get around the legal hurdles that are currently holding back prominent Gateways, Processors and other types of Merchant Service Providers such as Braintree and First Data?
We were kicked off both Braintree and First Data, so how are we legally able to use Zodaka instead to process our various types of recurring and non-recurring transactions? Essentially, if they canāt do it, how can you? Eager to hear the high level of your secret sauce that makes this all work.
Just listened to the podcast and have another question about your actual transaction method that Jordan described. Do you have plans to implement debit and credit card use or will it mainly be bank transfers/eCheck?
It is relatively new but has been used in some states for a year or so. Generally the solution you are describing is referred to as a āpoint of banking solutionā which works by coding the transaction as an ATM withdrawal, they usually only work in increments of $5 and the change has to be rebated to you. On your statement as a consumer they show up as a simple ATM withdrawal. This is an illegal use of the ATM network and as such these are not compliant solutions. When businesses try to come into full compliance they are supposed to ditch this form of processing. This shows just how desperate merchants are to have electronic payment in their business. There are less common forms of payment with a similar workflow which is generally backed by a foreign bank. Recently, some companies have started advertising domestic pin-based debit that are not on the ATM network, but these solutions are at risk of sudden shut down.
As of now, in Cannabis, we have made the decision to not incorporate any card based solutions. The reason for this is that card solutions lack the reliability we feel is necessary for our merchants. We would hate to build a network on something that will eventually fall through. Reliability has been one of the biggest issues in this industry, and building in a card solution would be a short-sighted cash grab which is the opposite of how we do business! Down the road as legality progresses we will likely incorporate cards but it will take years to get to a point where we feel we can rely on a card solution to work for both consumers and merchants.
Where do you see the future of the cannabis industry? How do you feel your products will evolve with the changing market?
Hi Kareen! Thanks for the question. I would say that the top three benefits we provide merchants are reliability, scalability, and ease of use.
The reliability comes from our ability to provide clients with a secure, long-term platform for accepting electronic cannabis payment. Everyone in this industry has been through the ringer financially, whether that means dealing with a cash-only policy or bouncing from merchant account to merchant account trying to cope with shutdowns. This is why Zodakaās status as āthe last cannabis payment system you will ever needā is a real game-changer. Zodaka also allows merchants to cut much of their overhead (normally sent to cash management and extra security) while paying lower rates for their processing, so this increased profitability can ensure a merchantās future success.
Regarding scalability, Zodaka is built with enterprise-level service in mind. This means that we can scale to work with any business in the world, and in an exploding market like cannabis this degree of scalability presents a massive advantage to both established and up-and-coming merchants. Finally, Zodakaās ease of use is the best in the high risk payment space. Merchants can sign up and start processing in less than two business days while customers can create an account and pay in less than a minute, on-boarding speeds unparalleled throughout the rest of our industry. Paying is simple and requires no added cards or cash, so our simple sign up and pay process can speed up in-store operations tremendously, increasing the value per square foot to the merchant.
The answer to this question can be very long, or very short, so Iāll do my best. Simply put, we do not use Credit/Debit cards or ACH (another form of heavily regulated money movement) as they are not allowed for cannabis. Many companies in the high risk space use these forms of money movement and simply try to hide the origin of these transactions from regulatory bodies. While they have found some pretty interesting ways to do so, these solutions never last forever. Because Zodaka payments are direct transfers pushed by the consumer they fall outside of the regulations that limit Braintree and FirstData from the industry and is instead regulated like cash. Unlike cash however our system is digital, allowing us to build a streamlined Paypal-like user experience around it.
Thank you! I am new to this network, but plan to open a dispensary when medical becomes legal here in South Carolina. I also have a home in Connecticut. I qualified for a medical card there, and Iām trying to learn as much about everything as possible. Iām a Master Gardener, so I may also become involved with growing. I am getting online medical marijuana certification, basically for the knowledge. I donāt know what good it might do me when applying for a dispensary license, but I do own the office building I would be using.
Great questions! And apologies for the late response here!
The future of the industry is both extremely promising and bright, but with an uncertain path forward. From a regulatory perspective the future is really anyoneās guess. From what Iāve seen, the solution that will satisfy the most competing interests is making cannabis a states rights issue. This makes the most sense because there are certain states that truly believe cannabis is equivalent to other Schedule One drugs. Thereās a bill currently making its way through Congress called the STATES ACT that effectively leaves cannabis policy up to the states, although federal laws will still play a huge role in how the industry forms and evolves over the next handful of years.
The momentum and broad public support for cannabis is undeniable, and I think our industry is at the very early stages of becoming āBig Cannabisā. Since last year there has been a huge influx of money, high level professionals, and large corporations moving into the industry by making acquisitions and other sorts of large scale, multi-state plays. Recent examples of this would be Constellation Brands and Altria investing billions of dollars into infrastructure. The medical side of the industry is also growing rapidly, as more research is being conducted into the benefits of cannabis. In 5-10 years there will likely be a very significant segment of cannabis that is concentrated on shifting medical marijuana to a more pharmaceutical focus. I expect the cannabis industry of 2028 will look much, much more corporate and consolidated than our current climate.
Regarding our products, our goal is to continue to offer our clients a better and better cannabis payment system. A perfect product should grow as its industry grows, and Zodaka is on track to do just that. We have some very exciting ideas on where to take Zodaka and how to increase our functionality, and it feels good when every addition we make to our system improves the lives of cannabis customers and merchants, if even just a little bit. The salient point for how our product evolves is that we are going to listen closely to the industries that have been neglected, so that we are serving our original mission of solving problems that no one else will.
Thank you to everybody that participated in our AMA! This experience has been fantastic, and I hope that weāve helped everybody understand Zodakaās role in the cannabis world a little bit better. If anyone has follow-up questions or had something to ask but didnāt, please shoot us a direct message or send an email to David@Zodaka.com. Thanks again everyone!
@davidehrlich and the whole Zodaka team, thanks so much for participating in our AMA and for being a valued part of our growing forum! Thanks to everyone who asked questions as well!
