Marijuana

Cannabis Retailers Allegedly Owed Millions by Californian Payment Provider

http://www.marijuanadrugfacts.com/marijuana/cannabis-retailers-allegedly-owed-millions-by-californian-payment-provider

Californian payment provider, Linx Card, has fielded a spate of lawsuits from cannabis businesses in recent months, who claim the primary provider of debit merchant services to marijuana retail stores, owes them millions.

Linx offers customers a platform where they can purchase Linx gift cards, or pre-paid debit cards, that can then be used to make in-store cannabis product purchases using those cards. Terminals within select retail stores sell the Linx gift cards, as does the Linx website.

marijuana bankingCourt Filing Woes
Court filings made across the country allege that Linx owes at least four marijuana businesses money. Those sums include:

  • $40,092 to Universal Herbal Center and Pineapple Express (who operate marijuana stores in California);
  • $114,962 to Colorado retailer, Silver Stem Fine Cannabis;
  • $939,010 to Las Vegas superstore retailer, Planet 13; and
  • $1.5 million to Arizona and Nevada Reef Dispensaries.

In a statement, Linx CEO Patrick Hammond, acknowledged the company is working to resolve these issues and plans to ensure retailers are paid in full.

If you need legal advice on retrieving outstanding payments for your cannabis business, our Orange County marijuana business lawyers can help.

GTR Source Payout
Separately, court documents show Linx was also ordered to pay $5 million to GTR Source, a private lender out of New York.

According to Hammond, that case was a “disputed claim” concerning a loan, and said Linx and GTR are in negotiations to significantly reduce that claim.

First Data Merchant Partnership Crumbles
Court documents show that between the end of 2008 and early 2019, payment card transactions were processed by First Data Merchant Services for Linx entities, Pelican and GiVV, until the relationship was terminated.

In his statement, Hammond explained that Linx and First Data shared a close relationship until a competitor disseminated a fabricated “dossier” that Linx was banking and processing offshore. As a result, the joint Linx and First Data processing was closed down.

Court documents reveal First Data claimed it ended the relationship when it found Pelican improperly used its account to make transactions on Linx Card’s behalf.

New York Court Proceedings
Just this November, First Data lodged a lawsuit with New York federal court claiming it was holding $619,560 in funds that various parties had claimed. Within the lawsuit, First Data asked the court to determine how to allocate those funds.

But Hammond explained Linx contends an even greater amount is actually being held by First Data. To that end, its legal team is working with First Data to “agree on the amount of held funds and to get them released to the retailers” who are awaiting outstanding payment.

Arizona Court Proceedings
Also late last year, Reef Dispensaries corporate parent filed a case in Arizona’s U.S. District Court requesting that Linx be placed into receivership.

In it’s court filing response, Linx claimed receivership was neither appropriate nor necessary.

Instead, Hammond stated that Linx is up and running again, now using an updated platform, and has switched First Data out with another payment processing facility.

Legal Implications
As banking systems have been a difficult challenge for marijuana retail stores to traverse, seeing firms like Linx find solutions to operating within the cannabis industry is an important factor in helping to see the legal cannabis industry grow and thrive.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:
First Data Merchant Services LLC v. MM DEVELOPMENT COMPANY d/b/a PLANET 13 et al