MediPays, the Little Rock-financial technology firm that emerged nearly a year ago as the state’s first banking option for the fledgling medical marijuana industry, announced Tuesday (Dec. 11) a name change to Abaca.
Company officials say they hope to offer their closed-loop, cashless payment system to medical marijuana dispensaries, cultivators and processors that are expected to begin operations across Arkansas in the first and second quarter of next year. The new branding outreach is intended to coincide with the release of a host of new offerings on its cannabis banking platform, officials said.
“We are looking forward to the upcoming award of Arkansas dispensary licenses and growing our business here at home in Arkansas,” said co-founder Dan Roda, who is based in Little Rock. “At the same time, we have been working on expansions into Oklahoma, Louisiana, Michigan and Colorado.”
Roda recently told Talk Business & Politics that Abaca’s cannabis banking platform went live this past summer and is already servicing licensed and ancillary cannabis businesses in Arkansas and Oklahoma. Under federal rules released in 2014 by the U.S. Department of Justice and federal banking regulators, the Controlled Substances Act makes it illegal under federal law to manufacture, distribute or dispense marijuana.
A guidance subsequently issued by the Financial Crimes Enforcement Network (FinCEN) provides expectations for banks seeking to provide financial services to marijuana-related businesses, including minimum due diligence procedures that banks should follow for marijuana-related businesses and file regular “suspicious activity reports” with banking regulators. That federal guidance, however, does not hinder state laws that legalize marijuana-related activity.
Because of those legal, regulatory and reputational concerns, only a very small number of banks and credit unions across the country service the cannabis industry. MediPays plans to assist banks and partner financial institution with the enhanced due diligence and compliance obligations that prevent most banks from working with the industry.
“We are excited to expand access to secure and compliant financial services for this $10 billion underserved industry,” said co-founder Brian Bauer. “Our solution enables the industry to operate more efficiently, but, most importantly, it allows businesses to secure their deposits and significantly reduce the burden of cash.”