Replies to post #55142 on NSAV Holding Inc (NSAV)

[JPS02]

NSAV value catalyst #6: Tracking cash & RICO - 60 Minutes did an episode from Jan. 11/15, 'The Marijuana Effect'.

http://www.cbsnews.com/news/colorado-pot-marijuana-60-minutes

The video shows how the growers use RFID tags, see 6:30 in the video, and notice how the grower has to manually log the tags into the state system. NSAV's integrated POS will avoid this duplication.

Tracking Cash

1. More importantly is the issue of having to complete all transactions in cash, see 11:10 in the 60 Minutes video and the corruption risks presented as a result of having an industry deal in cash only.

2. Due to the risks of having an industry deal in cash, having a lot of cash is risky for the stakeholders. For instance, see the extracts below from the article titled "Banks shy away from medical marijuana businesses" dated August 10/14 from the Boston Globe:

http://www.bostonglobe.com/metro/regionals/north/2014/08/09/marijuana-dispensaries-will-cash-businesses-unless-banks-let-them-customers/d8rSbyZcEwYBxC4WJT76cP/story.html

1) Dispensaries are scurrying to find a bank to accept deposits, which would allow them to avoid having to accept cash for their products and allow them to pay bills with checking accounts.

2) The big problem in this industry is the bank,” said Chris Edwards, executive director of Alternative Therapies Group of Salem, which plans to open by next spring. “It’s a public safety concern to say the least. This is an all-cash business and it would certainly be beneficial for dispensaries, patients, and the host communities if banks could participate in this industry.”

3) “I don’t want managers walking around with piles of cash,” he said. “I don’t want criminal elements in the area knowing about it; it’s really time we see some change.”

3. A Dec. 29/14 Phoenix New Times article titled "Banking on Pot: Arizona's Banks and Medical-Marijuana Dispensaries Seek an Unprosecutable Relationship" identified issues with banking the cash from MJ industry and possible solutions developing from different banks. More importantly, the article highlighted the following risk extracted from the article link below:

1) It's a Catch-22 for the cannabis companies: They can't legally operate bank accounts, and they can't operate their businesses without bank accounts.

2) Like Encanto Green Cross, most dispensaries in the Phoenix metro area take credit and debit cards and utilize banks. It's impossible for a small business to make regular payments in cash to the IRS, utilities, municipalities, vendors, suppliers, and employees. For the patients/customers, the convenience of payment cards is nothing more than they expect at every other retail outlet.

3) So every dispensary does all this without any overt and open relationship with a bank. This method of banking, arguably, could be defined as money laundering.

http://www.phoenixnewtimes.com/news/banking-on-pot-arizonas-banks-and-medical-marijuana-dispensaries-seek-an-unprosecutable-relationship-6666923

The extracts above point to a growing risk for state and federal governments of having a lot of cash sitting around which causes a risk of increased criminal activity.

> An integrated POS system using RFID to track the seed to sale would help governments not only track the seed but also the movement cash to ensure safety and security of cities and neighbourhoods, especially if banks eventually allow MJ cash to be deposited.

RICO

1. The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.

http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act

2. The cash challenges of the MJ industry and the perceived money laundering implications both create a risk that the cash being used could have indictment implications under RICO.

3. To support #2, check out this statement in a March 17, 2015 article titled "Are Credit Unions the Answer to the Marijuana Banking Question?":

It's no wonder national banks didn't step in: Marijuana was, and still is, criminalized on the federal level, and major banks are federally regulated. If they were to pool marijuana business money, they could be subject to federal RICO statutes.

http://blogs.findlaw.com/free_enterprise/2015/03/are-credit-unions-the-answer-to-the-marijuana-banking-question.html

> I am thinking that having a system such as NSAV's integrated POS would help the state and federal governments track and secure the growing MJ cash through accurate tracking and avoid required indictments under RICO by tracking back to seed. Do you agree?

I think this is where the federal and state governments demand for NSAV's systems can come from.


Go NSAV!