In the article below from Cannabis Magazine, Tyler Beuerlein, Hypur EVP of Business Development, is interviewed about cannabis banking and how Hypur’s cannabis bank compliance technology helps financial institutions provide banking services to cannabis businesses.
Tyler discusses how the team that built Hypur used knowledge from working with other cash-intensive industries to solve the major gaps and pain points of Marijuana Related Businesses (MRBs), particularly by streamlining the paperwork and regulatory compliance elements.
CM: Tyler, we are excited to hear all about Hypur. We know you are a technology platform and you work with cannabis businesses. Can you tell us a little more about the role Hypur plays in the cannabis industry?
Tyler: Yes! It’s my pleasure to be here.
Hypur is a technology provider for banks and credit unions. They use our platform to bank highly regulated industries. One of those, is the state-legal cannabis industry. We’re used by banks and credit unions throughout the country to permissibly bank the cannabis space. We’ve gotten to know every single institution in the country that’s banking in the cannabis space; we’ve gotten to know the regulatory bodies very well; and, we’ve gotten to know the cannabis industry. We know most major operators throughout the country. We kinda touch everything, so we have a very unique view of what’s happening across the country.
CM: What role do you play on the team?
Tyler: I head up business development, but I engage in everything. With the industry one day. Meeting with a bank or credit union regulator another day and with a state government official the day after that. I am in our banks and credit unions on a daily basis. I hop around to every aspect of the business.
CM: Have you faced any significant challenges as head of business development?
Tyler: Yeah. We’re a very unique technology, and we’re very unique in the way that we’ve been built. So four plus years ago, we were selling a new technology to a financial institution that’s risk-averse by nature to bank an industry that they’re not even sure if they can really bank.
There have been a lot of challenges on that front. However, the dynamic has completely changed, especially in the last two years. With new markets coming online, we’re getting calls at least once a week from new banks and credit unions who know about us, who have heard about us, who’ve heard about our reputation, and they want to know what we can do for them and how they can bank the cannabis industry.
CM: That’s great to hear. You mentioned the major challenge when Hypur first launched. What’s the Hypur startup story? When was it founded? When did it launch?
Tyler: We went to market a little over four years ago, but we were built by bankers for bankers starting five years ago.
“Many of our team members had banked highly regulated industries outside of cannabis for years, and they saw major gaps and pain points that they wanted to solve.”
That was really the thought process behind founding Hypur. The cannabis industry proved to be a massive issue as Hypur was being built. It was very polarizing; everybody wanted to know about it. A lot of the same issues for most highly regulated industries that have had banking problems far before cannabis are the same for cannabis. We have specific feature sets for the industry and are used for other regulated industries outside of cannabis.
CM: It is an interesting point that some of the issues that the industry faces have been faced by industries before. Can you say more about some issues that the cannabis industry has which are similar to ones you have seen in other highly regulated industries?
Tyler: The cannabis industry is cash-intensive by nature. Any time you have a cash-rich environment, that poses significant potential risk and issues for any bank. Regulators want to know that cash is coming from legitimate sales. Regulators want to know that money is not being laundered through institutions. They want ultimate transparency.
Industries like check cashers, payday lenders, cross-border remittances, and pawn industries. Giant industries have been shut out of banking. They have had very limited access to it for years. Some of those industries, from a volume perspective, dwarf cannabis.
CM: It’s energizing to hear a banker’s perspective! How will the company play a role in the cannabis industry as it keeps growing? You mentioned Canopy investments moving forward with multi-billion-dollar investments; how are you guys going to play a role in sustaining that?
Tyler: We are working in close partnership with our bank and credit union clients to create a standard by which this industry can and should be banked. Our institutions are providing a level of transparency that we hope helps regulatory bodies feel more comfortable with banking these industries. From a commerce perspective, there are aspects of our technology that our banks and credit unions offer their member base on the payment side.
CM: What kind of services are available on the operator side? Assuming you are referring to dispensaries, cultivation facilities, production facilities, testing facilities, and distributors. Those services are something that a lot of operators out there who have vaults full of cash would love to know more about.
Tyler: Our banks offer two products to our member base: one is called Hypur Commerce, and that allows for permissible digital commerce between a consumer and a business. We never touch money. Our banks originate those transactions on behalf of their own merchants. We also have a product called Hypur Payments, which is essentially a full business-to-business, and accounts receivable platform.
You’ll start to see those products in every market.
Our goal is to enable this entire industry to thrive like a normal business would.
It starts heavily on the compliance side for the banks and credit unions banking the industry. Then it enables them to touch every single touchpoint in the industry, and most importantly enables the cannabis industry to thrive as a whole.
CM: A thriving cannabis industry is something we can get behind! You mentioned that Hypur would start popping up in every market. Are you in any specific markets more heavily than others right now?
Tyler: Arizona is a very strong market because it’s the largest medical market in the country. A lot of people don’t realize how much the AZ market is thriving. We are also in markets throughout the country and that will expand rapidly in the next few months.
CM: Yes! Completely agree that the Arizona market doesn’t get credit for how well it’s doing with a medical program. Many states struggle with business profitability in medical only markets. Is there any state which has been particularly difficult for Hypur to enter?
Tyler: Nevada is one of the only states in the country that has not had a transparent option from a banking perspective. However, that is soon going to change. I can’t disclose how or why I know that, but I do.
CM: Speaking of change, what about when cannabis becomes federally legal? How does the cannabis industry look for Hypur then? Is Hypur sustainable under those circumstances?
Tyler: I think a lot of folks think that if cannabis were to go to federally legal tomorrow, all of a sudden, every major bank would be banking the industry. At Hypur see the world very differently.
CM: How do you see the federally legalized cannabis world?
Tyler: If this were to go to federally legal tomorrow, there are going to be a very limited number of institutions that are willing to bank this market. Because it’s extremely burdensome from a financial compliance standpoint. The institutions have their charter at risk if something goes wrong, and the individual bank or credit union officers have risk by banking in a federally illegal industry.
CM: Besides that, are there any other insights for those of us who may not know as much about cannabis banking as we thought? What is some misinformation you’re eager to debunk?
Tyler: A lot of people on both sides, banks and consumers and businesses, tend to think there’s no way to do banking at all, to do it the right way at all, but that’s not the case. It’s mainly a paperwork problem.
CM: What is it which enables these banking institutions to service the cannabis industry?
Tyler: If a bank were to try to service the cannabis industry without Hypur, they would have to heavily hire, and use a lot of company hours. Hypur provides a benefit from a productivity and efficiency standpoint.
Most importantly we help keep their staff minimal, we help them provide a level of transparency that they’ve never had access to; we put institutions in a constantly proactive, not reactive, approach.
We give banks new streams of revenue that they wouldn’t otherwise have access to without our technology platform.
CM: Is it be possible for a banking institution to do this on their own, without Hypur? If the whole issue is paperwork as you say, then are you saying that banks which could do cannabis banking just don’t because it would be too much work?
Tyler:If a banking institution is going to try to do this manually, they’re going to have to hire a very large staff; they’re going to have to develop manual processes internally that can be extremely burdensome; they have to file a SAR, which is a Suspicious Activity Report the second they onboard a cannabis account and every ninety days thereafter.
Hypur enables banking institutions to provide data sets to their regulatory bodies that they would not otherwise have access to.
CM: Cannabis banking is possible, it’s just daunting.
Tyler: Yes (laughs)
CM: Thank you for talking with me today. This was really interesting, and I hope it proves helpful for some cannabis industry businesses out there.
Tyler: You got it. Anytime. Hopefully we’ll see you at MJ Biz Con. Take care!
This interview originally appeared on cannabismagazine.com.