CASHING IN ON TRUMP AND CONSERVATIVE POT PHOBIA
Young entrepreneur finds a way around odd problem faced by U.S. cannabis retailers
Edmonton entrepreneur Kam Nemec is hoping to make his fortune based on U.S. president Donald Trump and the social conservative wing of the Republican Party’s dislike of legalized pot.
Nemec’s boutique credit company GreenGreen will launch this December in Colorado cannabis shops, a place where pot has a strange legal status, perfectly OK at the state level but illegal at the federal level.
This murkiness combines with the belief of many social conservatives that weed brings on reefer madness to create a bad vibe around business. It all adds up to major credit-card companies generally not being willing to do business with legal U.S. cannabis retailers. Almost all of these storefront businesses are left to deal in cash only, which is far from ideal for any business.
Enter Nemec, 36, and GreenGreen, which offer a specialized electronic lending system for cannabis buyers and sellers.
It’s an easy pitch to get merchants on board, Nemec says. “They’re thinking, ‘Hallelujah! Finally!’”
Born in 1982 in Prague, Nemec’s family escaped the repressive Marxist state of Czechoslovakia in 1987, settling first in B.C., then in Alberta. After high school, Nemec spent a dozen years working and earning his first university degree in urban geography. He had dozens of different jobs, everything from a medic on the rigs to flooring installation, from retail sales to oil-well inspection.
In 2014 he started his MBA at the University of Alberta while also working in construction management.
He got interested in money lending while working on a university project where he delved into how simple it was to obtain credit in some situations but difficult in others. For example, in Hong Kong, you can load up money onto an “Octopus” card, which is then used for transit and to buy goods at most stores and restaurants, Nemec says. In the U.S., however, there are a number of industries that struggle to get credit-card service, namely the cannabis and vaping businesses, along with adult entertainment and porn. Big credit-card companies like Visa and MasterCard won’t touch most of that, Nemec says.
“If they’re opposed to you, it’s very difficult to get started in business. They have very strict regulations about how you can start your transactions, who you can deal with, is this particular business or industry ‘branddamaging ’ (to the lender), which is really a catch-all term for: ‘We don’t like you. We don’t want you to be able to process payments.’”
GreenGreen is keen to take on this business.
“It’s not that we want to be the vice card, but in terms of the markets that Visa and Mastercard won’t serve, we have no problem with them.”
Nemec’s GreenGreen is an app which will facilitate phone-tophone money transfers, with customers buying on credit from GreenGreen and the vendor getting paid by GreenGreen, with the transaction fee significantly less than what credit-card companies charge.
Nemec has been working on the legalities of this plan for 18 months, hiring top Washington D.C. lawyers and experts.
“It’s been a very fruitful relationship with the lawyers. It’s been expensive but it helps us be one of the legitimate players in the industry.”
Retailers are keen to sign up to GreenGreen because they don’t like dealing with so much cash, Nemec says. Along with all the hassles of counting and moving cash, there are the issues of theft and security. Merchants often complain to Nemec: “They say, ‘I don’t have enough cameras to keep people from stealing my money.’”
GreenGreen is well on its way to raising the $5 million it needs to get started, though Nemec has had more success raising money in the United States than in Alberta, where investors tend to have shallower pockets and a more conservative bent. But capitalization is key for a startup company to take off globally, Nemec says. “If we want to compete with companies in California, we have to raise money like companies in California.”
I suggest to Nemec the key for him is to get going before some new U.S. administration legalizes marijuana at the federal level.
“We think it will get legalized eventually, but for now we think we have a very good window of opportunity to get established,” he says. “By the time legalization rolls around, we could be as big as American Express.”
He’s loving the challenge. “I don’t get a lot of sleep. Sometimes you’ll see emails from me from 3 a.m. It’s stressful, obviously, but it’s still better than having a real job. I’m doing something that’s exciting, that’s interesting. We’re solving a big, stupid problem and it’s fun.”
It’s not that we want to be the vice card, but in terms of the markets that Visa and Mastercard won’t serve, we have no problem with them.