In addition to Steep Hill and Herbal Compliance’s unorthodox investment vehicles looking to enter Arkansas’ medical marijuana industry that is projected to grow to nearly $70 million in the next seven years, a host of other local and out-of-state investors, entrepreneurs and speculators also want to get in on the front end of the state’s newest hybrid healthcare sector.
A review of business filings with the Arkansas Secretary of State’s office shows there are more than 50 new companies that have incorporated in Arkansas in 2017 with corporate monikers associated with the legal pot industry, such as cannabis, marijuana, hemp, herb or associated terms.
Chris Powell, spokesman for Secretary of State Mark Martin, said the state does not keep information on companies planning to enter the state’s medical marijuana business, including those that have names directly or indirectly associated with fledging industry.
“Companies are not categorized that way when they file,” Powell told Talk Business & Politics.
Besides the spike in corporate filings, some enterprising entrepreneurs hoping to enter Arkansas’ newest business sector are also snapping up websites and Internet domain names related to the legal marijuana industry. One such entrepreneur is William Carpenter, managing director of a company called TR Global Capital. Carpenter said TR Global Capital is a private equity and project development firm organized in June 2016, operating under another Maumelle limited liability partnership called Carpenter Holdings LLC. Three other companies, Business by Design, Quest Educational Consulting and Yoga by The Lake, also are businesses that operate as a part of Carpenter Holdings, according to corporate filings at the Secretary of State’s office.
Carpenter also formed another separate LLC startup in April called Biometric Payment Systems that will provide medical marijuana businesses, including cultivators and dispensaries, a way to accept digital, electronic payments, and other payment process methods for the legal cannabis industry.
“We have no employees because we need no employees at this point. I’m the sole investor and also the sole manager, however there really isn’t much to manage until dispensary licenses are awarded,” he said.
According to Washington, D.C.-based New Frontier Data and other cannabis industry analysts, one of the biggest problems facing pot farmers and retailers and other marijuana-related business (MRBs) is that most operate cash-only business models because production and the sale of pot is still illegal at the federal level, which opens FDIC-operated banks up to government seizure. Under federal law, banks must disclose marijuana-related transactions as suspicious activity. Carpenter said this could mean bringing unwanted federal attention and regulatory scrutiny if they choose to service the cannabis industry.
After the November election in which Arkansas voters approved medical marijuana, Robert Smith and Blake Lewis of Little Rock law firm Friday, Eldredge & Clark sent out an alert to Arkansas bankers that even though voters approved Amendment 6, local financial institutions providing financial services to a marijuana business could face charges of aiding and abetting money laundering and racketeering. They also said banks could be at risk when approached by marijuana related businesses.
“The cultivation and dispensary facilities to be licensed under the Amendment will need bank accounts. Unfortunately, Marijuana remains illegal under federal law,” Smith and Lewis wrote.
To solve this cash-only problem specifically in Arkansas, Carpenter said he formed Biometric Payment Systems to work “with a worldwide leader in electronic payment processing.” Not divulging further details, the Maumelle businessman said his other company, TR Global Capital, is an investor and also providing project development support to Biometric Payment Systems.
“When cash is the only way to pay for any product or service, there are associated risks of crime and tax avoidance. Cash is notoriously difficult to trace, track and tax,” Carpenter said. “Electronic payment accounts and card processing services can help solve these ‘cash-only’ problems because a transaction can be traced to the originating deposit account.”
Carpenter said the company also is in “discussions with a handful of Arkansas-based banks and credit unions” to offer licensed pot growers and dispensaries in Arkansas a way to settle electronic payments that originate between registered patients and licensed dispensaries. Those bank accounts, he said, will allow MRBs to manage electronic transactions and conduct other financial activities, such as payroll, paying bills and other expenses.
“Cash-only is also unsafe for customers and expensive for businesses and tax agencies. They need more security for storage and transport, and need more people for cash handling, management and reconciliation,” Carpenter said.
If Arkansas does not find ways to mitigate the costs and risks associated with cash as the only method of payment available at licensed medical marijuana retail locations, “this will create additional burdens on enforcement and tax agencies given the historically associated risks of both physical and financial crimes,” Carpenter said.
To support TR Global and Biometric Payment Systems, Carpenter already has set up two websites, www.trglobalcap.com and www.biopaysystems.com, to promote his business enterprises.
Prior to TR Global, Carpenter was also involved with the highly-touted $3.7 billion gas-to-liquids industrial project announced by Energy Security Partners LLC and Pine Bluff economic development officials in February 2016. That super project, which is being developed by former ExxonMobil executive Roger Williams and past Clinton Administration officials Rodney Slater and Gen. Wesley Clark, has yet to move beyond the development stage.
Editor’s note: This story is the fourth in a series of stories on implementation of medical marijuana in Arkansas. The stories are scheduled to be published prior to June 30. Link here for the first story in the series, link here for the second story, and link here for the third story.