Episode 62 of Utah in the Weeds deals with an issue that affects every Medical Cannabis patient and Pharmacy: payment options. As you know, almost all Medical Cannabis transactions are conducted with cash. A company known as Hypur is working to change that.
Hypur’s Tyler Beuerlein sat down with Tim and Chris to explain what his company does and how it affects the cannabis industry. [03:52] For starters, Beuerlein pointed out that Hypur is a technology platform rather than a payment service. It is a platform designed by bankers to solve the compliance issues they face in several restricted industries.
The biggest problem banks face is proving the origin of funds they accept.[09:50] If they cannot prove that deposits are the result of legitimate, legal transactions, they could be in hot water with regulators. This has led banks to stay away from high-risk industries, like cannabis, for no other reason than they don’t want the compliance hassles.
Beuerlein explained that Hypur has been working with regulators for the last seven years to come up with a framework for governing high-risk transactions.[06:18] To this point, regulators have just been “winging it”, as Beuerlein put it. That will not do for banks. They need rules and regulations on which they can depend. Hypur is working with regulators on that.
For the time being, Hypur acts as a platform for facilitating automatic clearinghouse (ACH) transactions.[13:33] Beuerlein says the company is getting ready to introduce some new products that will eventually lead to instantaneous ACH transactions. They eventually plan to include credit card transactions.
This podcast offers a lot of technical information on electronic payments and the banking industry. If you are curious about where the cannabis industry is in terms of credit and debit cards, you should find this podcast fascinating.
Chris Holifield:
Let’s get this podcast going. Let’s welcome everybody out today to episode 62 of Utah in the Weeds. My name’s Chris Holifield.
Tim Pickett:
I’m Tim Pickett, and today we basically announced we have a full house of open pharmacies in Utah.
Chris Holifield:
This is big. This is really big, Tim. This is big.
Tim Pickett:
Yeah. It’s kind of like day one again. And, for that announcement, it’s the perfect time to talk about how to pay for your cannabis with Tyler Beuerlein.
Chris Holifield:
He’s from Hypur, who, if you’ve been to any of the cannabis dispensaries here in Utah, or really anywhere, you probably are familiar. You’ve seen that as an option, as a way to pay for your products. It’s an interesting topic to be able to bring to the podcast and find out the backend of it, the ins and outs, and what’s coming, even some of the stuff of what’s coming up here in the next little while here in Utah.
Tim Pickett:
Exactly. Because, right now, if you buy cannabis anywhere in the US, most people know you have to use cash still, because Visa, MasterCard, they won’t accept those transactions. But Hypur has found a way to do that, and our conversation today explains that process, why it’s like that, and what things we could look forward to, to make that a little bit easier. I know there’s been a lot of listeners and a lot of patients of mine that have talked about how cumbersome it is to have to register and have to wait for those days, for the transaction to go through. So we go through all of that today. But, like I say, it’s a good day to go through it because you can buy cannabis now legally in 14 locations in Utah.
Chris Holifield:
When do they announce that 15th location, Tim? Do we know?
Tim Pickett:
I have talked to a few people about that. There’s not a date for the request. They do an application process, which hasn’t even started. The state has not, as far as I know, put out the request for a proposal yet. So no plans, no information on when that 15th pharmacy will be announced. I mean, come on. It’s going to be in Moab.
Chris Holifield:
Yeah. Well, it better be. I mean-
Tim Pickett:
Don’t you think?
Chris Holifield:
… it really needs to be. The fact that they haven’t even … We need to get this ball rolling. With how long it took them to get all the other pharmacies opened up, this is going to take forever. I mean, they’re going to need to have 18 locations and 20 by the time they get out the 15th.
Tim Pickett:
It’s totally true.
Chris Holifield:
But anything else? Let’s see. UtahMarijuana.org/podcast, you can listen to all the podcast episodes there. You can share them. Share them with your family and friends. Let’s get the word out about the podcast. There’s a lot of good information out there that a lot of people can benefit from. So let’s get the word out about the podcast. Anything else you want to mention before we get into the episode, Tim?
Tim Pickett:
The only other thing is if you want to reach out to us, use UtahMarijuana.org. Reach out to Chris or I if you know somebody with a great story that you think needs to be shared. We’ll love to have them on the podcast. Stay informed with our events because we’re going to be out there in the community at these events, as the place opens up, because apparently COVID is over.
Chris Holifield:
As the world opens up. Awesome. I’m excited, though. In Salt Lake City, their next issue’s coming out here soon, so we’ll keep everybody posted on that.
Tim Pickett:
Cool. Enjoy this conversation.
Chris Holifield:
All right, guys. Here we go.
Chris Holifield:
First of all, let’s find out where you’re based out of, Tyler. Where are you based out of right now?
Tyler Beuerlein:
Scottsdale, Arizona.
Chris Holifield:
Now is that where Hypur, the complete organization, the company’s based out of, or is that just you?
Tyler Beuerlein:
It is. We’re based out of Scottsdale. We’ve got some remote C suite execs, and we live on planes. So I say I’m based in Scottsdale and Southwest Airlines.
Tim Pickett:
Oh, wow. Why all the travel?
Tyler Beuerlein:
We have institutions that are clients all over the country that bank the industry. And then that’s parlayed into becoming a resource for many of the state governments, federal government as well. And then I’ve been fortunate to speak at a number of events now. So just every week is different. Every day is different. It just depends on what’s going on during that time.
Tim Pickett:
Tell us what Hypur is. What is Hypur?
Tyler Beuerlein:
Yeah. Hypur is very different depending on where it’s facing. What I mean by that is Hypur is a technology that was built by bankers for bankers to solve their challenges with highly regulated industries. People think that this is just a cannabis issue. It’s really not. I would argue it’s as much of a cash intensive issue as a federal illegality issue, because from a compliance standpoint, for a bank or credit union to bank this industry, it’s very cumbersome. It’s very difficult, and there’s a ton of risk.
Tyler Beuerlein:
We were built to help institutions enter and scale within these markets. That led to the payment side of Hypur. We knew we had to start with compliance because, at the end of the day, this is a banking problem, not a payment problem. If you couldn’t solve the banking side of it, the payment mechanism would never survive. We’ve seen that play out year after year, and we’re about to see it play out with another product that’s become really popular in the industry, unfortunately.
Chris Holifield:
Whose idea was it for Hypur? Was it one person’s idea? I mean, to go against banking and cannabis, that just seems like there was a lot of … I mean, that’s a lot of legal problems. That’s a big can of worms to open up. I mean, was that a tough … I’m throwing a lot of questions out there, I guess.
Tyler Beuerlein:
No, that’s great.
Chris Holifield:
I mean, how did that work out in the very beginning, man? I mean to cannabis, first of all, and then you’re up against the federal government with money and banking. How did that work?
Tyler Beuerlein:
Well, it didn’t, to be honest. I mean, it was a very heavy lift, and I was very fortunate. Our founders, one of them in particular banked high-risk industries for 20-plus years with a community bank in California. Knew this inside out, had been through the regulatory hurdles in other industries. And then we had a team of founders that were all experts in their specific area. But I can tell you that when it first launched, I mean, I was there seven years ago when probably the first bank in the country started banking this in Colorado. I mean, I was literally in the building. What people don’t realize is not only were the institutions trying to understand how to do this, but regulators were trying to understand it, too. So you had this weird dynamic where it took a very unique type of bank to take the risk.
Tyler Beuerlein:
Then the regulators came in. They didn’t understand the industry. They didn’t want banks banking it because they didn’t know how to examine an institution. I’ll never forget. One of our founders asked the examiners, the first ever examination of a bank in this space, they asked him to lunch. And he asked them the question. He said, “Look, is there an FFIEC handbook which is essentially the advisory body to regulators on how to examine institution banking space?”
Tyler Beuerlein:
The regulator said, “No.”
Tyler Beuerlein:
He said, “Well, how do you examine an institution when you have no guidance?”
Tyler Beuerlein:
The regulator literally held up his hands. He said, “We’re winging it.”
Tyler Beuerlein:
That was very problematic for a number of reasons. One, they didn’t understand the industry, so they asked for things that were not attainable, and they held institutions to a standard that could not be checked by anybody. And then, even within the same regulatory body, different regions would take a different stance on it, so you had this dichotomy where every regulator looked at it differently. Even by region they looked at it differently. And so there was no real framework. There was no real set of rules.
Tyler Beuerlein:
So, over time, over the last seven years, and I’ve been forced to spend a lot of time with regulatory bodies, all of them, they’ve all come up with, I would say, a general standard of what their expectations are. That has propelled more institutions in over the years because it’s not just this floating, unattainable thing. They can permissibly bank this industry. It’s been done for seven years now, and there’s a model, and there’s a set expectation of what’s required of those institutions.
Tim Pickett:
This comes because you basically … I think people, they don’t really understand that this, at its core, you can’t just go down to the bank with a pile of cash and deposit it, and then come back the next day with another pile of cash and deposit it, selling quote-unquote “legal cannabis” or another type of product that is what you would call high risk. But we’re in the cannabis space, so we can just use that as a good example. Even you could say like California has a legal medical market. I can legally sell it in California like we can here. You can legally sell it. You can’t just go to the bank. And you’re saying because there’s no regulation, the bank can’t really accept your money.
Tyler Beuerlein:
No, it’s not even that. Going back to the cash intensive nature, when you’re dealing in a cash intensive environment, if I’m a bank, and I accept $100,000 in cash, and my regulator comes to me and says, “Hey, prove to me that $100,000 in cash came from legitimate transactions and not a terrorist organization.” If you can’t prove beyond a shadow of a doubt that those monies came from a verifiable transaction or verifiable business, you’re in the hot seat.
Tyler Beuerlein:
What people don’t realize is not only the bank or credit union charter on the line, but the officers of the institutions have personal liability. So if I were chief compliance officer of a bank and something goes wrong, and my regulator determines that it was my fault, I can have a civil money penalty imposed on me personally that can’t be covered by the insurance policy of the institution. So it’s not just liability on the institution side. Everybody involved has liability at this point.
Tyler Beuerlein:
One other thing I’ll touch on. In California, I was involved in that state at, I would say, the government level, from an advisory standpoint, for a long time. One thing we tried to preach to them over time was, look, the reason institutions aren’t banking your market and the reason you have a cash crisis is because you haven’t come up with a finite regulatory framework for your program. So California, 20 years ago, passed this, I’m going to say, great medical market. None of the municipalities followed. And so, as a bank or credit union or from a regulator’s standpoint, how do I bank in industry if I can’t even determine whether or not an operator’s complying with state or local law? And so, when they implemented their regulatory framework January 1, 2018, we saw a whole slew of institutions come in to bank it. I would argue no matter where you’re at in the country at this point, if you can’t or you’re not banked and you’re in the cannabis industry, you either just don’t want to pay any fees, or you’re doing something nefarious. This industry’s banked regardless of what’s published in the media.
Tim Pickett:
Interesting. In Utah, the institution that’s decided to step up in Utah was Utah First Credit Union, right? Why credit union, not a city bank or a-
Tyler Beuerlein:
It doesn’t matter. It doesn’t matter what type of institution it is. It doesn’t matter if they’re nationally chartered. It doesn’t matter if they’re state chartered. Every one of those regulatory bodies has experience with the state legal cannabis space. Now I will say this. The NCUA has been, I would say, the pinnacle as far as trying to help institutions behind the scenes, trying to be open-minded about it with the thought that, look, our communities are much safer with this cash off the streets than it being out there. I would say that they’ve done some things progressively that other regulators just haven’t. So if I’m a credit union, I take comfort in that, whereas many banks don’t necessarily have that comfort level.
Tim Pickett:
Interesting.
Chris Holifield:
I got a couple of questions here. I want to make sure that we ask them. I asked online here, Tyler, if any of our listeners had any questions, that we’d be chatting with you. And one of our listeners, actually Zac King, he was on the podcast before, so he’s a former guest, his first question is, he says, “One question I have is what is it that takes the process longer than the day or two when some other transactions are instantaneous?”
Tyler Beuerlein:
It’s an ACH, so it depends on when a transaction is run through a financial institution. Hypur doesn’t, I’m going to say, touch money, right? So our banks that openly bank the state legal cannabis industry move the funds from the consumer’s account into the merchant’s. That is subject to the Fed processing time for ACH. So if a transaction’s run on a Saturday and it’s after 5:00, it’s not going to hit until the following Monday. And then there are situations where a transaction is pulled from a consumer’s account. Maybe they went through monies after the time that we validated the funds were available in their account, so there’s an overdraft. And so we represent to collect those funds on the 1st and the 15th. So those things are not ideal. But I can tell you that we are about to launch a product that’s much more mainstream and will really help mitigate some of those issues.
Chris Holifield:
Can you talk about this product, or is it top secret, kind of?
Tyler Beuerlein:
Not too much. I can tell you that it’s been approved at the state level, and it’s going to be, again, much more mainstream, and it will not have any of those delays in transaction processing.
Tim Pickett:
Because when you go to Nevada, it’s my understanding that it’s essentially like an ATM system at the terminal.
Tyler Beuerlein:
They’re about to go down nationwide. The cashless ATMs, they’ve become really popular in the state legal cannabis industry. They’re not permissible. They’re not sustainable. I don’t want to say too much, but I would expect those products to be gone within the next 60 days.
Tim Pickett:
All together, right? I mean, I was literally there-
Tyler Beuerlein:
All together.
Tim Pickett:
… three or four weeks ago. You put your card in, and essentially like a cashless ATM. I’m thinking, oh, well, they’re getting around-
Tyler Beuerlein:
Correct.
Tim Pickett:
… the merchant piece and this sort of thing. Wow. So what you’re saying is there are products-
Tyler Beuerlein:
Let’s talk about that for a second. What I’m saying is the cashless ATM model in its own right is fraudulent because you’re representing to an acquiring bank that this is an on premise physical ATM that’s not being used at the point of purchase for a federally illegal product. Above and beyond that, there are some network issues. There are some documentation issues. I’ll just say that it’s not above board, regardless of what’s being presented to the merchants, and there are some things that work that are going to be here very soon.
Chris Holifield:
Well, that leads me to a question that Zac had. He had one more question here. He wants to know if the MORE Act gets signed, in what way will that affect Hypur, if any? If it will affect it in any way.
Tyler Beuerlein:
Yeah. We’ve gotten a lot questions about MORE, and we’ve gotten a lot of questions about SAFE. I’ve actually spent a lot of time with some lobbyists and politicians on these things. It doesn’t have much of an effect, unfortunately. So if you’re talking about the SAFE Act or MORE, again, the industry’s already banked. Regulators and institutions have worked together in the last seven years to really, I’m going to say, solve this problem. But, more importantly, people want credit cards, understandably so. It’s convenient. They know it. People want that ease of transaction. The branded card networks have been very specific about federal legality. They’re not going to enter the market until the product is federally legal, and there are a number of reasons behind that. It’s interesting.
Tyler Beuerlein:
I’ve been forced to be on the board of MJBiz, and they did a poll. When the SAFE Act got passed in the House, and they said, “What are you most excited about?” Probably 80% of the people that reacted said, “We’re so excited to run credit cards.” Well, that’s not in the realm of possibility until federal legality. Those two acts don’t change the federal legal status of product, and so, unfortunately, I don’t see that having much of an impact from a payment banking standpoint. Even when this goes federally legal, yes, credit cards will be there. But this will still be a highly regulated cash intensive industry, and your banking options are going to remain limited.
Tim Pickett:
See, I think that it’s important for us to talk about this because it’s important to keep these expectations in the scope of reality. There’s just so much misinformation, and it’s not intentional. It’s just that we all just kind of make it up, I guess. We’re all making up what we want and what we want to see.
Tyler Beuerlein:
Well, you have expectations of how things should work in a mainstream industry. People get frustrated, and they say, “Well, why can’t I do this?” We have to tell them, “Look. I mean, again, this is still a federally illegal industry.” Even though states have approved it and even though it’s spreading like wildfire, you’ve got to contend with that. But then people don’t understand the cash intensive business issues. I mean, I’ve probably sent over a thousand merchants to a bank or credit union that will bank them over the years. But I get calls from the gun and ammo industry, payday lenders, check cashing companies, all of these companies that have banking issues just like cannabis. The topic’s not as polarizing, so people don’t really talk about it, right? So it’s just one of those things. And, to your point, it’s grossly misinformed. Combine that with all of the bad actors that see dollar signs come sprinting towards the cannabis market and misinform merchants intentionally because they want to make money. And so you got this dichotomy that just it’s not ideal.
Tim Pickett:
To change this a little bit, if you go to a discussion about crypto and blockchain, you’ve got a growing … this same kind of hype, and you bypass the banking industry a little bit. You keep your money offline. I mean, do you see a place for that to come up?
Tyler Beuerlein:
No. No, I’ll tell you a story. I was with the … I won’t say who. But I was with a very large regulatory body, and it was somebody very high up in that regulatory body, in a full room of examiners. They wanted to know what was happening on the ground floor in certain states within the region, and the question was posed by this person: “What do you think of cryptocurrency being involved in payments in this space?”
Tyler Beuerlein:
I said, “Honestly, I don’t think it has any place. You’re trying to combine one highly regulated industry that banks and credit unions already have a nightmare trying to handle with another.” I said, “From a compliance standpoint, it scares the heck out of me. There are taxation issues that are awful.”
Tyler Beuerlein:
Before I could even finish what I was saying, this person slammed their fist on the table and said, “You’re damn effing right! If we find out our institutions are banking payment companies that participate in both crypto and cannabis, they’re either going to have to shut down those accounts or fold their program entirely.” So, one, I don’t know what benefit it really provides at the end of the day. Two, I think it’s a long way off. Plus, you also got same day ACH coming. It’s already being implemented. A lot of the argument about instant transfers or things being cheaper, I think you’re going to see go by the wayside. So, yeah, it’s an interesting topic. People naturally relate the two. But there’s really no place for it.
Tim Pickett:
Sure. Because if you don’t have the name merchant like the Visa, the MasterCard, the American Express, you’re essentially … What I’ve heard was you basically bypass that, right? And you just pay with some other type of currency than cash. But, like you say, eventually you have to put your money somewhere. Just like with cash, you cannot have a business that’s that big-
Tyler Beuerlein:
Correct. The other part of it is, too, and I try and explain this to people, your most valuable asset in this industry is your licensure. So if you’re doing something nefarious or you’re trying to get around the system or skirt rules and regulations, you’re only hurting yourself. I mean, your goal in this industry, I mean, essentially, you’re in the compliance business now. Everything you do should be in that vein, and everything that your bank or credit union is asking you for is because they’re trying to do things right to sustainably bank the market and help you. I know it can be cumbersome. I know it can be difficult. I get calls from merchants all the time saying, “Why is my bank or credit union asking for this?” And my response to them is, “Because they’re doing it right, and you should be thankful for that.”
Chris Holifield:
Where do you see things going with Hypur? Where do you see this in five years? Or is it hard to see where things will be in five years?
Tyler Beuerlein:
This industry’s so nascent. We jokingly refer to it … I tell people I’m seven years in the industry, but they’re really dog years, so I’m approaching 50 in cannabis. There’s so much that happens. I don’t think that federal legality is coming any time soon, unfortunately. I know that goes against what many people say. I’ve just been around too many politicians that they’re going to tell you what you want to hear. At the end of the day, getting something to move that’s that major, I don’t see happening any time soon. Even if it does, it’s going to remain a highly regulated industry.
Tyler Beuerlein:
And so, for us, I think we understand the branded card networks will come eventually, and I think for us it’s getting ourselves in a position where we can provide that service … I don’t mean to oversimplify it, but at the flip of a switch, for our ecosystem, at a rate that’s comparable to what mainstream industry operates in, and really just help the industry be transparent and thrive. We’re a battleship, so we move quick. We adjust quickly because we know that we have to, and we expect change quickly. So I don’t know if I can answer that succinctly. But that’s how we think about this world. We’re also going to be going into other industries shortly as well.
Chris Holifield:
Do you care to share anything more on that, other industries as far as what kind of industries?
Tyler Beuerlein:
Yeah. I think, again, we’re seeing the pain points in other highly regulated industries, and people are coming to us naturally saying, “Hey, you’ve been able to quote-unquote ‘conquer’ that, and that’s kind of the pinnacle of, I would say, compliance issues. So can you help us with this?” Whether it be … And I’m just throwing some things out there that are high risk. Again, all your money service businesses, that’s how they’re referred to, check cashers, payday lenders, cross-border admittance, potentially online gaming, things that have present major issues to institutions trying to bank them, I think all of those things are in play for us.
Tim Pickett:
Do you find that Hypur does some things really well, and some things, you’re just not built for?
Tyler Beuerlein:
Yeah. I think you can’t be everything to everyone. Because we deal with so many different aspects of the industry, it’s been a challenge for us. We’ve tried to make adjustments quickly. We’re always trying to grow, and much of what we’ve become is as a result of regulators asking questions of institutions that they couldn’t answer, or us, can we provide this level of data on these certain things? So, yeah, I think to say that we’ve operated in a flawless manner is just not accurate. We’re trying to grow, we’re always trying to improve, and we’re trying to do that based off market feedback. So the answer is no, but those things have also helped us get better.
Tim Pickett:
Do you find that now you’ve seen opportunities for, like, boy, Hypur is getting pretty good at helping people with the banking side of things, helping people with that transaction from the consumer, to making those transactions happen seamlessly. But we’ve noticed that, man, there’s a gap here. We would love some help, if somebody would just come in and do this other thing. I guess I’m asking an open-ended question here. But you’re just at the forefront of something that, really, we don’t know anybody else who’s there.
Tyler Beuerlein:
Yeah.
Tim Pickett:
Right? You don’t just go in, right? If I need my medicine delivered, I have to go through Hypur in Utah. That’s how this works, because the statute won’t allow cash.
Tyler Beuerlein:
Well, that’s also a testament to the state governments having an extensive background in banking, and not wanting to see the industry go through the same hardship that’s happened in every other market. I know that’s a little bit of a challenge for the industry, but at the end of the day, it’s the best thing they could’ve done. Again, going back to the compliance side of this, they really understood the challenges and wanted to mitigate that exposure and that hardship.
Tyler Beuerlein:
So I guess I would answer your question like this. I think that, again, the cannabis industry is so nascent. Every market’s its own planet. You can’t compare Utah to Oklahoma. You can’t compare Arizona to New York. They’re all so different. We’ve really tried to integrate with the right partners that have solved problems in those areas to make the process for the consumer more seamless. And I think that, to that question, the product that we’re about to launch I think addresses a lot of those things and has been developed based on consumer demand, merchant need, and providing the industry with something that’s much more mainstream.
Tim Pickett:
Yeah. I think the patients here, the customer here, there’s been some talk that 30% to 50% of the transactions have hiccups because of the onboarding process. It’s not necessarily Hypur. It’s the onboarding process to make sure that your bank is connected to the system so that they can withdraw funds and transfer funds. And that has been quite cumbersome. But just like with the EVS, the electronic verification system in Utah, that system is also extremely cumbersome. It just seems like at every turn … In fact, a lot of patients will tell you this. “It seems like Utah doesn’t want me to smoke weed at every turn. They’re just making it hard at every turn.”
Tyler Beuerlein:
Yeah. From our standpoint, I mean, I’ll be very candid with you. One of the things that happened, probably nine months ago, is when Plaid was about to get acquired by Visa, they went out to any operator that was using Plaid for verification, that had any tie to cannabis, and said, “You’re gone. You’re off the platform.” That’s a big part of Hypur pay. We’ve got to verify those funds. Again, you’re getting into compliance, and so we’ve had to shift to another provider. That’s been challenging.
Tyler Beuerlein:
And then there’s some smaller institutions in Utah that maybe aren’t up to speed from a technology standpoint, which also complicates this thing. Those are things that our team is very aware of. We’re working through them on a daily basis and trying to mitigate those issues. But, again, the new product that’s coming out, I think you’re going to find that really addresses a lot of those pain points, and I think that it will be very, very beneficial to not only the merchants, but the consumers, first and foremost, in the Utah market. I’m sorry to be vague, guys. Just we’re probably two weeks out, and so I’ll be able to share more at that time.
Chris Holifield:
Now, with your background, Tyler, I mean, we didn’t even go there, really. Have you always been involved in cannabis, or is it more financial that your background is, or?
Tyler Beuerlein:
Yeah. I grew up in Arizona. I went to school in northern California. I was a baseball player. So I did that for a number of years. On the East Coast, I was in the Mets organization for a long time. And then, when I got out, I word for a private equity real estate firm in Arizona, cut my teeth on the investment side, and then I started a sports drink company with the founders of Four Loko, ironically.
Chris Holifield:
Yeah.
Tyler Beuerlein:
Remember that-
Chris Holifield:
Yeah, that’s a good beverage.
Tyler Beuerlein:
… back in the day?
Chris Holifield:
Yeah.
Tyler Beuerlein:
Yeah. One of the founders is a close friend of mine. And so really dove into that, the beverage world, CPG, dealing with retailers, dealing with distributors. After about six years of that, I transitioned right into Hypur day one. So I’ve been on the front lines of this industry in a very unique way. Really, I’ve been very lucky to see it from the front of the front lines. We see everything from the financial institutions out, but that gives us transparency into who’s doing what, what markets are doing what. What are regulators looking for? What are state governments looking for? What’s the federal government trying to do? So it’s been a rocket ride, and I’m very thankful just to be in it. It’s been amazing.
Tim Pickett:
Do you feel like you have a better or … I mean, certainly, you have a different insight. But, to me, it seems like you might have a better insight as to what’s happening nationally because of … Well, how many states is Hypur in?
Tyler Beuerlein:
We’re in every state with a market. But even then, at this point, typically, if a state’s considering it, we’re typically involved, or I’m typically involved, at least, just to be a sounding board or be a resource.
Tim Pickett:
I mean, like I said, I was thinking that you’re probably in a position to where you can see the shifting in a different way than everybody else, because you have visibility essentially into every marketplace and what the nation is doing, even more so than huge cannabis companies like Curaleaf or huge retail operators like MedMen. They can only see as far as they reach.
Tyler Beuerlein:
Yeah. I’ve helped a lot of those companies as well, just with maybe certain points of information that are general in certain markets. But, yeah, again, going back to being fortunate, I mean, not only that, we’ve been able to see most transactions from a consolidation standpoint because when there’s a change in beneficial ownership, typically, we know about it first. So it’s been really fascinating to watch not only the consolidation, but also the public markets have been very interesting.
Tyler Beuerlein:
You saw this big influx of money into the Canadian companies, because the Canadian companies were going to operate in the first legal market. Then they were going to come down and acquire everything in the US. I think, actually, I posted about this on LinkedIn the other day. I actually think it’s going to happen in reverse. I think the Canadian companies, they’re losing money at an unsustainable rate. They have no exit. The notion that exports is going to be a viable business model is, I think, a fallacy.
Tyler Beuerlein:
I think that the Canadian market as a whole, I think the tax revenue’s generated by the state of California alone are greater than the entire Canadian cannabis market today. I think that’s a huge problem for them, right? And then the massive influx of money into those companies, with the notion that they’re going to come down and acquire the USMSOs upon federal legalization, that may not happen any time soon. They’re bleeding money like crazy.
Tyler Beuerlein:
The USMSOs continue to gobble up assets, and the revenues are going through the roof, and the point that so few talk about is if federal legalization falls, all of the USMSOs uplist to the US markets, and the whole advantage for the Canadian companies is gone. So it’s really interesting to see the public sentiment about different companies as opposed to what’s really happening on the ground floor.
Tyler Beuerlein:
And then, state by state, investors, they always want to know what’s happening. There are certain states that I wouldn’t touch with a 10-foot pole, from an investment standpoint. Oklahoma comes to mind as number one. I think they’ve issued a retail license for every 80 patients in the state, which is a giant sprint to the bottom. And then you’ve got markets like, candidly, Utah, from an investment standpoint, I don’t know that there’s a better market in the country. You’ve got a very limited regime. You’ve only got 14 retail licenses, about to be 15, as you know. You’ve only got eight cultivators. Chronic pain’s an approved condition. These guys are doing revenues that are healthy, even for a rec market already. So very bullish about Utah specifically for those reasons.
Tim Pickett:
That’s really interesting because there’s a lot of different opinions here. One of the things I was thinking of when you were talking about Canada and exporting cannabis to the United States, I had talked about this to somebody else. Chris, we’ve talked about it, too. There is an army, a legit army, of cannabis growers in the US. Disparate systems, but there are so many people and so much infrastructure being built, all separated, all not together. There’s no scale, per se, but all you’ve got to do is inject a little bit of money, and there will be instant scale. And in 37-40 states. All grow. They’re all grow.
Tyler Beuerlein:
Yeah. I think we’ll see the operators that have dominated the California cannabis industry … You’ve got premium flower being grown there, outdoor, and it costs … I’m sorry. I don’t see anybody in Canada even getting remotely close to competing with. And they’re only going to expand scale, right?
Tim Pickett:
Yeah.
Tyler Beuerlein:
You’re seeing it in other markets already. It’s going to become commoditized. And then the other part of it is even if the federal legal status changes, I don’t see interstate commerce occurring any time soon, either. That’s a whole other issue that’s got to be addressed. It wouldn’t surprise me if, in the next two years, you saw the USMSOs acquire the Canadian assets at pennies on the dollar, and the whole dynamic in reverse, because what they’re doing right now is not sustainable, and the US market just continues to thrive.
Tim Pickett:
Hmm. Wow. In the meantime, instant ACH kind of solves a lot of the problems for the consumer, really. And-
Tyler Beuerlein:
And our new product will, too.
Tim Pickett:
And your new product will, too. And so that’s just going to get easier for essentially people in every state. Now, if I’m registered at Hypur, can I purchase cannabis in other states using that same system? Or are they separate?
Tyler Beuerlein:
You can. Yeah. No, you can, if any state you’re in. Like if you’re in California, you could go to Caliva and purchase with Hypur. So it doesn’t matter what state you’re in. If it’s a legal transaction, you can consummate it at those retailers.
Tim Pickett:
Just give people another incentive to walk through the process, even if they think it’s just one extra step. Right?
Tyler Beuerlein:
Sure. I know it’s not ideal. Look, I mean, we’re always trying to improve it, but if we could mitigate those things and make it just a mainstream credit card transaction, we would. But, unfortunately, we can’t today. So we’re doing the best we can, and we’re trying to get it. We’re always trying to improve.
Chris Holifield:
I think it’s a great alternative. I think it’s a great choice. I think it’s great to have that as an option for people to purchase.
Tim Pickett:
Yeah. I do, too. From the provider’s standpoint, I mean, we are only looking for expansion of the information, destigmatizing cannabis as a tool in the medicine toolbox, right? If I can get somebody off of opioids, and they’re in Moab, and they need delivery, or they’re in some rural area, or they can’t get out of bed … Frankly, we have tons of patients who just can’t get to the dispensary or the pharmacy. So they need that home delivery.
Tim Pickett:
I agree, cash is not a good idea for home delivery because you end up with drivers who have $40,000 driving around every day, and that’s not safe. In fact, I just had a DEA prosecutor over at my house this last week that was talking about how much they hate cannabis because they hate guns, and the black market includes guns. People get shot because they have too much cash on them.
Tyler Beuerlein:
Going back to highly regulated industries. Yeah. It’s a challenge. I think, also, in going into delivery, I think one thing we’ve found in some large sophisticated operators were already getting this before COVID. COVID just sped it up. But I think that as markets expand, these retailers are realizing that the biggest addressable market now is the fringe consumer that maybe doesn’t know they love edibles yet, but they’re going to. But those people expect an Amazon-like experience. They expect convenience. They expect it to be mainstream, and they’re not going to stand for a non-mainstream mechanism.
Tyler Beuerlein:
And so, again, going back to what we’re about to do, it’s much more in that vein. And, again, same concept. I mean, yes, we’re in this for profit, but we also want to provide a compliance sustainable means of transaction to an industry that’s the cat’s out of the bag. It’s here. It’s thriving. And, to your point, if we can get people off of opioids and all of these other awful pharma products that have just ruined lives over and over, we can’t do it fast enough.
Chris Holifield:
I agree 100%. Anything else you want to ask him, Tim, while we have him? I mean, I don’t want to hold him up here all day. I’m sure Tyler’s got other things he wants to go do. Anything else you want to talk about, Tyler, while we got you here, or?
Tyler Beuerlein:
I don’t think so.
Chris Holifield:
I feel like we kind of skimmed the surface with a lot of things and gave the overall-
Tim Pickett:
Yeah. I think that-
Chris Holifield:
… idea.
Tim Pickett:
… this is an important conversation, like I’ve said, and I’m excited to have you on. I think it explains a lot to people who are willing to listen to this interview and to dig in a little bit about the process of payments, why it’s this way, and what you’re working on to try to help. For the most part, the bankers … Yeah. People, they need a place to put … The retailers need a place to put their money. They need to be able to be legal, so they don’t get shut down. And, on our side, we deal with so many consumers who just need access, need better access. Yeah. Thanks for coming on. It’s been really exciting.
Tyler Beuerlein:
One other thing I’d just throw out there, just as a resource, if people want to contact us or me, they can find that at LinkedIn, or they can get ahold of me. My phone number is out there, I think, at this point. So if anybody has any questions or needs a referral to a bank or credit union that will bank them, one thing we’ve done since the beginning is any time somebody calls us, it doesn’t matter where they’re at, it doesn’t matter what their situation is, hemp, CBD, cannabis, any of those other highly regulated industries, we will always refer them directly to an institution that will bank them. And we’ve never asked for anything in return. We just want to help. We want to be that resource. So if anybody needs it, please have them reach out.
Chris Holifield:
And then I guess just people could check out the Hypur app. Go download it at any app player or app store on their phone’s app, iPhone, Android, whatnot.
Tim Pickett:
You’re going to need it in Utah if you want home delivery, or you don’t want to go to the ATM at the pharmacy, or use cash. I mean, that is the option.
Tyler Beuerlein:
And there’s no cost to the consumer.
Chris Holifield:
Well, we’ll wrap this episode. Thank you so much, Tyler. Really quickly, while we’re recording here, we want to mention that you can download all the episodes of the podcast. You can listen to those at UtahMarijuana.org/podcast. Anything else you want to add? Anything else you want to say and tell the listeners, Tim, before we wrap this episode up?
Tim Pickett:
No, I don’t think so. Thanks, guys, for listening. Stay safe out there.
