The Chief Revenue Officer of Hypur Inc, Tyler Beuerlein, joined us last year to talk about the payment landscape in the US cannabis industry and how his company filled the void. We’re pleased to welcome Beuerlein back to discuss what sort of changes that federal legalization and the long-discussed SAFE Banking Act might have on the landscape of the cannabis industry.
Here’s some highlights from the interview.
Cannabis cultivation is a race to the bottom, says Beuerlein
It’s estimated that in Massachusetts, the cannabis industry is using up to 10% of the state’s electrical capacity. Even if you take the power usage out of the discussion from an environmental perspective, Beuerlein says, the cost associated with cultivating in states like Massachusetts is so onerous that they won’t be able to compete.
Beuerlein: federal cannabis legalization a political tool to make money, garner attention
Beuerlein doesn’t believe that federal cannabis legalization will have the impact many people think it will. One reason why is that interstate commerce will be one of the “biggest caveats.” And even should federal legalization happen, he says, state regimes will want to control programs and how things happen.
“[Federal legalization has] been used as a political tool without maybe the true will to bring it all the way to fruition,” Beuerleinsays. “My concern is I see politicians on both side of the fence use topics like cannabis essentially to raise money and garner attention. I wonder how serious they really are about getting these things across the finish line. I don’t know. I hope it happens sooner rather than later, but I don’t really see it happening for years.”
SAFE Banking alone likely won’t let people use credit cards, he warns
Citing a survey done by MJBizDaily, Beuerlein said that most respondents said that in the event of the SAFE Banking Act being passed, they were most excited to be able to use credit cards for cannabis purchases. On the compliance side, however, Beuerlein says that the branded card networks have been very specific about federal legality being the catalyst to bring them in.
Beuerlein cautions folks to temper their expectations that the SAFE Banking Act will change much. In fact, he says, from a banking perspective, the problem has “already solved itself in the U.S.”
Canadian cannabis market never really had an opportunity
“I’m not trying to be critical of anybody, but they’re melting ice cubes. And that’s proven out through their financial reporting,” says Beuerlein. From a revenue standpoint, the true market that matters is the U.S. market right now, he says.
Beuerlein believes that as they continue to bleed money up in Canada “with really no remedy, I don’t care what anyone says, export is not a business model up there,” MSOs from the U.S. will go back and pick up those assets for pennies on the dollar. “And it will happen faster than people realize.”
U.S. cannabis market in full consolidation mode – and this is just the tip of the iceberg
Over the last 18 months, Beuerlein says, the liquidity in the cannabis markets has “absolutely exploded.” He goes on to explain that he can’t say too much, but investors should expect to see multiple major announcements on the consolidation front stateside relatively soon.