The Legal Market Was Never Built for Payments, Why Cannabis Still Breaks the Rules ft. Aubrey Amatelli

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[Cold open clip] Aubrey Amatelli: Visa, Mastercard, billion-dollar companies — they can come in and squash whatever they want to squash. Even if it's, you know, we can fight and say, "But look, we're doing it the right way." [music] Bryan Fields: Aubrey, you came in with a traditional payments background and believed that if you followed the rules, aligned with card brand requirements, and structured things correctly, you could build something stable. Where did that myth come from? Aubrey Amatelli: Oh man, great question to kick it off. Coming from JP Morgan, the largest payment processor in the world, but obviously by the books, right? So I'm thinking, okay, if I come into cannabis payments and support these dispensaries with credit and debit card processing, as long as my solution is following the Visa and Mastercard rules, following the proper funds flow, and has the proper merchant category code for the type of transaction we're doing, this is a bulletproof solution. So we came out the gate with this incredible product — it worked similar to a wallet technology, like a Venmo. We thought, well, it's following all the rules, Visa, Mastercard, the proper MCC code — there's no way it could be shut down. Little did I know what I was getting myself into with cannabis payments, because that just doesn't fly. Visa, Mastercard, billion-dollar companies — they can come in and squash whatever they want to squash, even if we can fight and say, "But look, we're doing it the right way." Bryan Fields: Explain that a little more. You came out with this product, really excited, checked all the boxes, followed the business plan exactly — then what happened? Did you go to market and get a notice? Aubrey Amatelli: Yeah, we were in market for about a year and a half. It's really what helped PayRio get on the map supporting dispensaries across the country. Everything was going great, and all of a sudden we had to pause Mastercard, because Mastercard came and wanted to understand how the funds were flowing and how we were processing payments. It was a bit of a preview of what I think the industry is seeing today. Fast forward to today, Mastercard has shut down one of the larger payment processors in the industry, and over 5,000 dispensaries have been out of payments for weeks. It's been a battle I never expected, because from my traditional background I thought if we're following all the rules — we can't process payments blatantly through Visa and Mastercard rails for cannabis, that doesn't exist, but there are compliant ways to do it — I thought we'd be bulletproof. That's not the case, and it hasn't been. It's been a wild ride in cannabis payments. Bryan Fields: So Mastercard says, "We're not allowing you to use this anymore" — is there an appeals process, or do you have to immediately remove them from your program? Explain how that works. Aubrey Amatelli: Mastercard actually goes to the bank — in payments we have bank sponsors for all our processing. They go to the banks and say, "We're not comfortable with the way you're processing payments, we need you to shut down the use of Mastercard with this solution." You immediately have to turn it off. All the funds are frozen at that bank, so merchants won't get paid for an allotted amount of time. What I learned very early is the importance of redundancy in payments — never having all your eggs in one basket. With our terminals, for example, we have multiple rails in one terminal, so if one gets shut down, another automatically turns on — you don't miss a beat, and our dispensaries don't even know anything happened. But it's the way of the world, and there's no fighting it — we can't go up against the payment brands, so we just work with it. Bryan Fields: Is there an appeals process, or do you internally shut it down and then explain to the businesses that their funds are currently frozen? Aubrey Amatelli: Yes. The funds are frozen at the bank level, and the bank pays the merchants. That's the same in any industry — if a bank shuts down your merchant account, funds in flight are frozen for 180 days to account for chargebacks, fraud, returns, and risk. Whether you're in cannabis or selling something totally legal, like hemp or t-shirts, if your account is under investigation, funds are frozen for risk. Bryan Fields: Just to be clear, 180 days is almost half the year. Aubrey Amatelli: Yes, it is. It applies across all industries, but it hurts the most in cannabis because operators rely on those funds. Funds in flight could range from 24-hour, one-day funding to seven-day funding depending on the product — so that could be one day's worth of funds or a full week's. Bryan Fields: So how do you build in redundancy so teams feel comfortable using these solutions? People know they have a solution but aren't sure what happens when something goes wrong, like Mastercard having "a bad day." Aubrey Amatelli: These are basic terminals, and we do this on the e-commerce side too — many of our e-commerce customers have multiple merchant IDs with different banks, in case something happens with THCA or hemp, which is facing a lot of scrutiny right now. In one terminal we have two processors, two different bank sponsors, two merchant or terminal IDs, on different rails. So if Mastercard shuts down one rail for cashless ATM, for example, we have another rail integrated into the terminal. Behind the scenes we just switch the train track to the new rail so customers see no downtime. Bryan Fields: Was redundancy built into the original business plan? Aubrey Amatelli: No. [laughs] I came in thinking everything checked my boxes — why would it be shut down? At JP Morgan, over a decade, we had 99.999% uptime. I didn't even understand what a shutdown looked like. In the cannabis world, we see it a lot, unfortunately. Bryan Fields: Can you go back to Mastercard and say, "You've known me a long time, this is what I've built" — can you have conversations about the current state of the industry? Aubrey Amatelli: No. Ultimately, Visa and Mastercard, as payment providers, are our governing body — they follow what the federal government deems legal or illegal. As long as cannabis is federally illegal, Visa and Mastercard won't support those payments on their direct rails. Once we have federal legalization, my whole world changes — my non-integrated terminals will likely become extinct, because point-of-sale systems like Dutchie, Blaze, and Treez will just integrate payments directly, like you see at a grocery store. That'll take a while, but it's where things are headed. Bryan Fields: And this was the initial target — understanding the pain points of the industry and building a solution in case federal legalization doesn't happen for a while? Aubrey Amatelli: Exactly. I came in wanting to find a solution for an industry I was passionate about, found great technology partners, and to this day I keep bringing new, innovative solutions to market. That's my passion. Bryan Fields: What don't consumers or users of PayRio understand about what goes on behind the scenes? Aubrey Amatelli: Payments aren't easy. Consumers still walk into dispensaries with an Amex card wondering why they can't use it, or why there's no Apple Pay or Google Pay. Even operators ask why we haven't launched that. It's not simple, because we value the safety of our clients — we won't bring something to market that falsifies an MCC code or risks a client being fined by Visa or Mastercard, or placed on a MATCH list, which bars a merchant from processing payments for six years. Once cannabis is federally legal, we want our clients to have the same easy, beautiful payment experience every other industry gets. Bryan Fields: Those must be difficult conversations — customers ask for something specific, and you have to explain the risk of ending up on those lists. Aubrey Amatelli: Yeah, and I actually enjoy those conversations — I've spoken with every operator on PayRio about it, educating them on why we do things a certain way, what redundancy we have, and the worst-case scenarios. I want customers to make a fully educated decision about whether they want to risk funds in flight for seven days. It's gotten easier over the years — when I started the company in 2022, credit and debit processing was brand new in cannabis, so it was taken for granted, and when it got shut off people asked why. Now the conversation is more like, "I understand the risk, let's just stick to debit." Bryan Fields: And for a consumer who just wants to buy like normal, they have to go through this whole process instead of using the Amex card they wanted. Aubrey Amatelli: Right — our consumer-facing solution has a big KYC component. Customers upload a picture of their ID and do a facial recognition scan at the dispensary, which keeps the dispensary safe from fraud and chargebacks. Bryan Fields: Walk me through that — you said KYC? Aubrey Amatelli: KYC — know your customer. Bryan Fields: So they're taking a selfie with their Amex card? Aubrey Amatelli: The dispensary displays a QR code through our technology, the consumer scans it, and goes through an onboarding process. Once onboarded, they don't have to repeat it on future purchases — only the first time. That onboarding includes a photo of their card and a face scan to match everything and keep our customers safe. Bryan Fields: What I'm hearing is, I, Bryan Fields, am consenting to spend $300 on edibles — I'm choosing that, and the funds flow accordingly. Bryan Fields: So what goes into building a product like this? Do you have an internal dev team or partners? Walk us through that design process. Aubrey Amatelli: This isn't well known from the outside — internally, PayRio doesn't build any products. I wish I had that developer mind, but what I do is source and find great products for the market, then partner with those companies to develop them uniquely for cannabis and bring them to market. We just launched a cryptocurrency solution, but otherwise everything is in partnership with tech companies I've sourced. Bryan Fields: Before crypto, let's talk product roadmap — a customer expresses a need, you validate market fit, source a tech partner who lays out the roadmap, then you manage and push it to customers. How do you balance new feature integrations given how unique cannabis customer requests can be? Aubrey Amatelli: It's really based on customer need. We launched with credit and debit processing, then customers needed help with hemp or THCA websites, or point-of-sale payment setup. Every product since — a B2B solution plugging into QuickBooks, or the new cryptocurrency product — has been based on customer need. When we get a lot of the same request, that's when we build or partner for it, rather than wasting time on things customers aren't really asking for. Bryan Fields: And it's a balance — investing in building a solution versus finding the right price point, because overinvesting in something the market doesn't want puts you in a tough spot. Aubrey Amatelli: Oh yeah, that's happened to me. One of the biggest lessons of my career happened at PayRio — I partnered with the wrong business that brought a product to market that wasn't compliant, without our knowledge, and it was shut down. It was financially detrimental because of our investment, and it hurt our customers, who had to wait the 180 days. Even though I'm not building the tech myself, I'm investing a lot of resources into these partnerships, and if it doesn't work out, you could be out six figures or more. Bryan Fields: And the customers trust you and PayRio regardless of what's under the hood — they just want to know if it does what it says. Aubrey Amatelli: Right, and one thing we've always done is stay transparent and build in redundancy — being upfront about beta products with new customers. It's an art, and I'm still learning it — how to launch smoothly and connect all the teams from onboarding to go-live. As we grow, our product line and the industries we support grow too. It's an imperfect science. Bryan Fields: Right — a product can work well for a while, then customers gradually want something different, and you iterate with market feedback. There's never a perfect product, just one constantly evolving. Aubrey Amatelli: Exactly — we all dream of a perfect product, but markets don't even operate the same. They have similar North Star goals but very different challenges market to market, which makes it more complicated. Bryan Fields: Ultra complicated. Aubrey Amatelli: But that's why we're here — a one-stop shop. A lot of e-commerce customers get shut off from Shopify, Stripe, or Square, then go to Google or ChatGPT for processor recommendations and just pick the first one, which might not support THCA flower, cannabis seeds, or clones. When they come to us, we have strong bank relationships that love those verticals, so we can place them quickly with the right solution instead of them applying and getting denied over and over. Bryan Fields: I've had issues with Stripe too, on a non-touching media business — they shut us down just for the association with THC, with no real explanation or appeals process. Is that mostly a federal legality issue for them, or something else? Aubrey Amatelli: It is federal. When I started at JP Morgan, Stripe was new and willing to take risks — now they're a huge company unwilling to take any risk, and you're just a number to them; zero tolerance, even though they never get to know your business. We and our bank partners actually get to know your business — we know you're not touching the plant, just supporting it. Visa and Mastercard have no rules against having cannabis on your website, as long as you're not selling it directly online. That personal approach is why PayRio only focuses on cannabis and alternative medicine, while other high-risk processors spread across many verticals and don't dive deep into any one industry with their banking partners. Bryan Fields: You mentioned cryptocurrency earlier — tell me more about that newer product. Aubrey Amatelli: A big surging industry in alternative medicine is peptides — we've all seen how GLP-1s and Ozempic have taken over. Those are federally regulated by the FDA, and Visa and Mastercard treat peptides similarly to cannabis without specific licenses. Through a blog that Chase, who you've met, wrote for our website, we've become one of the top payment names recommended by Google, ChatGPT, and Reddit for peptide payments, applying solutions we built for other industries. As for the cryptocurrency product — it's a credit and debit card solution using a crypto on-ramp, similar to Robinhood, MoonPay, or Stripe's on-ramp — it takes credit and debit cards and deposits into USDT or USDC for the merchant instantly. It's highly regulated on our underwriting side, but it's a new way to accept payment. We also have a solution where consumers pay in cryptocurrency directly and the merchant is deposited in USD. Our first choice is always the traditional banking route, but if we can't find one, this is an option so every customer ends up with a way to accept payments. Bryan Fields: So with crypto, I could potentially pay with Bitcoin at a dispensary? Aubrey Amatelli: Yes, you can. Bryan Fields: How many people actually do that? Aubrey Amatelli: It's really rare — mainly for e-commerce customers, and it's less than 1% of transactions. We wanted to be ahead of the curve since we kept getting asked about it. It took about a year and a half to find a solution that deposits crypto into USD so merchants don't need wallets or to deal with converting USDC to USD. It was hard to find a tech partner for that, but it's available now. Bryan Fields: I've heard from friends outside the industry who always ask, "Why not crypto?" But given how few people actually hold crypto, let alone use it as currency, the pool of cannabis consumers using it is probably tiny. Aubrey Amatelli: Very, very small, but available. It's bigger on the e-commerce side — brick-and-mortar is much harder. On our website, customers can choose crypto, an eCheck option through Plaid, or credit and debit processing — we say offer all three and let the consumer choose, for optionality, as long as you're not doubling up with five of each. Bryan Fields: That's good for customers to see — it shows you're ahead of the curve. Speaking of forward focus, does rescheduling influence your business? Are you preparing for it, or is it a wait-and-see approach? Aubrey Amatelli: I'm actually the committee chair for banking and financial services for the NCIA, so we talk about rescheduling constantly — it comes up and goes back down. From the payments and banking standpoint specifically, it won't change our world much, because we need federal legalization. Rescheduling would be great for dispensaries from a 280E and cost-of-business standpoint, but for payments, we're really waiting on federal legalization, since that's what Visa and Mastercard are also waiting for. Bryan Fields: Do you think there's any world where they come in before that? Aubrey Amatelli: [sighs] I'm hopeful. JP Morgan, my alma mater, won't touch cannabis banking or payments in the U.S., but in Canada they're one of the largest cannabis payment processors, because it's federally legal there. With rescheduling, if banks deem it safe, maybe we'd see a merchant category code created for cannabis, some dabbling — but a full launch like other industries will take a while, unless it moves behind a pharmacy model, like ketamine therapy or peptides with a prescription. That would completely change the cannabis world — we wouldn't have dispensaries, we'd go to a pharmacy. It's complicated, and I don't think the card brands are in a rush, because coming in too early risks getting slapped on the wrist and made an example of, which is exactly what they want to avoid. Bryan Fields: Right — they're probably thinking, "We're not missing much; when we're ready, we'll come in and take the market share anyway." Aubrey Amatelli: Exactly. The opportunity is massive — Visa and Mastercard take about 12-13 basis points plus two cents on every single transaction. Huge market for them, but they want to stay in good graces with the federal government. Bryan Fields: Just thinking through those numbers is hard to wrap your head around. Aubrey Amatelli: Yeah — that's why Visa sponsors every major sporting event. There's a lot of money moving around. Bryan Fields: Even things like getting $20 off at Madison Square Garden if you pay with a Chase card — how does that deal even work? The math clearly checks out for them. Aubrey Amatelli: I'm sure they're happy to have your business — that was actually a program I helped build, way back when. Bryan Fields: What about AI — are you exploring that at all? Aubrey Amatelli: Internally, AI has been a big topic for me — what products to use, and what policy to have around it. ChatGPT makes it easy to just plug in and generate a response, but I don't want that; I want real responses from my team. Nothing on the payment side yet, but as a business owner I think a lot about what policy to have, because I want to keep our business real — our customers are part of our community, not just a number. We do use a chatbot on our website, trained over six-plus months, to help customers get quick answers or reach a live rep. But I need my younger employees to influence me here, since I'm a bit old school. Bryan Fields: Tier-one AI responses are really helpful for customer service — you can offload maybe half of it — and I've seen companies build internal knowledge bases, like an internal PayRio specialist, that helps flag which customer issues are most common or most urgent, giving you another data point for forward-looking decisions. Aubrey Amatelli: Totally — it's an untapped resource I need to double down on. We're on the precipice of that. I recently joined a Founders Club, meeting founders in and outside cannabis, and they have a big AI webinar coming up. It's a hot topic all around. Bryan Fields: Do you ever share the industry's challenges with other founders and they're just shocked, like, "That can't be real"? Aubrey Amatelli: Yes — I went to a forum in LA with a group of founders, and their eyes just widened hearing that your entire revenue stream can get shut off for weeks. It's wild, but everyone was very supportive. They just hadn't realized these were real challenges we face. Bryan Fields: There's this specific, almost absurd internal challenge that outside founders never have to think about. Aubrey Amatelli: Yeah, we're in a federally illegal market that's also legal state by state, and the plant itself is such a beautiful medicine — it's almost bipolar in that way. Bryan Fields: Do people ever ask you about data — collection, attachment, anything like that? Aubrey Amatelli: We work with high-level data — average ticket, average ticket growth. We put together three case studies last year: when a dispensary moves from cash to debit, ticket size grows over 25%; adding credit on top of debit adds another 20%. Our tipping solution also increases bud tender tips by 67% — a real stat we use to talk to dispensaries about employee and bud tender retention. It's all high-level — average ticket, transaction counts, ticket growth — but it's clear: cash spending is lower, card spending accelerates. Bryan Fields: For sure. Aubrey Amatelli: Within a month of a cash-only dispensary coming to us, we can show almost 30% growth immediately in a case study. Bryan Fields: What percentage of dispensaries are still cash-only? Aubrey Amatelli: It's rare now — maybe 10 to 15% of dispensaries we onboard are cash-only when we first meet them. It's low these days. Bryan Fields: If you're cash-only and staying that way, you've probably been burned before PayRio even started. Aubrey Amatelli: Early on, that's the mentality — "we're old school, we like cash." But once we show the average ticket growth and the option of ATM versus turning consumers away, they take the leap of faith and are always happy with the outcome. Bryan Fields: It's interesting — those cash-only operators are locked in, comfortable, and probably turn away customers who want other options, figuring people will just deal with it or go elsewhere. Aubrey Amatelli: Exactly, so getting a cash-only dispensary to trust us and move to card is a beautiful thing, because we're helping the business grow — but they have to place a lot of trust in it, and we make sure they understand all the potential risks. Bryan Fields: What's one idea or statistic you think most of the industry doesn't understand about payment processing? Aubrey Amatelli: I think the biggest stat is revenue growth or average ticket growth — a lot of operators don't believe it until they see it, which is why we built the case studies. I don't know, that's a great question — but ultimately, average ticket and revenue growth for the dispensary is the biggest one, since everyone is looking to grow revenue and gain market share, and payments is a great lever for that. Bryan Fields: Last question — what question do you wish more people asked you? Aubrey Amatelli: [laughs] Oh my gosh — probably, "What do you do for fun?" As business owners, we're real people too, not just operating machines. I have three young kids running around and I like to play soccer on weekends. I'd love for people to talk more about life than business sometimes and find those connections — like we both worked at Madison Square Garden, which is such a random, cool connection we never would have known about without this conversation. I just think humanizing what we do in this space matters. Bryan Fields: 100%, and I think that's a great way to end. Aubrey, for our listeners who want to learn more about PayRio, where can they find you? Aubrey Amatelli: I run the Instagram myself — it's a mix of me and the company — @PayRio_HQ. I'm always on LinkedIn as Aubrey Amatelli, and on our website there's a "Meet the Team" page where you can actually book a meeting directly on my calendar. Bryan Fields: Three great places. Thanks for chatting — this was a lot of fun. Aubrey Amatelli: Thank you.