4.6 SR 05-06-2024The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
4.6
Meeting Date
May 6, 2024
Prepared By
Joe Stremcha, Business Services Director/Assistant
City Administrator
Item Description
Memorandum of Understanding Agreement 24-12
for Hemp-based THC Payment Processing
Reviewed by:
Lori Stich
Joe Stremcha
Cal Portner
Tina Allard
Action Requested
Approve, by motion, the Memorandum of Understanding Agreement 24-12 for hemp-based THC payment
processing with PayProtec.
Background/Discussion
Hemp-based THC sales continue to grow every month. This trend is in spite of being a cash-only operation,
as customers routinely seek to make payments with debit and credit cards. Staff have considered installing an
ATM, but a negative time-consuming customer experience with cash-only would still remain. Staff feel this
modern form of payment processing is a vital component in maximizing our operational growth potential.
Westbound and Northbound's credit card payment processor (Heartland) does not allow hemp-based THC
product transactions. Heartland has made no efforts to make policy changes to enable the credit card
payments for this federally legal product authorized by both the state and federal law. PayProTec is the most
compatible vendor that works with our current point-of-sale software that will enable hemp-based THC
credit card payments.
Financial Impact
PayProTec has a 0.20% processing fee on all transactions. Staff estimates a $5,788.78 increase in annual credit
card processing fees resulting from the switch from Heartland based on the 2023 sales history for all products
sold through our POS.
Mission/Policy/Goal
Good stewards.
Attachments
1. Hemp based THC Payment Processing MOU with PayProTec (May 2024)
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230701v2
Memorandum of Understanding
This MEMORANDUM OF UNDERSTANDING (“MOU”) is made and entered into as
of the ___ day of _______________, 2024 by and between the CITY OF ELK RIVER, a
Minnesota municipal corporation (“City”) and the PAYPROTEC, a Delaware limited liability
company, 250 Stephenson Hwy, Troy, MI 48083 (“PPT”).
RECITALS
WHEREAS, the City has applied for merchant payment processing services through PPT,
and the parties have entered into a Merchant Processing Agreement, relating to the City’s
municipal liquor stores located at 13484 185th Ave. NW, Elk River, MN, 55330, and 19348 Evans
St. NW, Elk River, MN 55330 (collectively, the “Stores”); and
WHEREAS, the City has completed PPT’s CBD Attestation and High Risk Attestation;
and
WHEREAS, the City desires to sell hemp-derived cannabinoid products at the Stores as
allowed under Federal and Minnesota law; and
WHEREAS, the Parties wish to memorialize their collective understanding of the types of
products covered by and allowed under the CBD Attestation and High Risk Attestation.
NOW, THEREFORE, the City and PPT have reached the following understandings:
1. Purpose. The purpose of this MOU is to establish a mutual understanding of the parties’
understanding.
2. Products. The City intends to sell products containing hemp-derived THC from the Stores,
as allowed under Minn. Stat. § 151.72 and Minn. Stat. Chapter 342, as amended (“Cannabinoid
Products”). Cannabinoid Products shall contain less than 0.3% dry weight of any
tetrahydrocannabinol.
3. Compliance with Law. The City shall ensure that all Cannabinoid Products sold from the
Stores shall comply with all relevant Minnesota laws and regulations.
4. Definition of “Ingestible CBD.” The term “ingestible CBD,” as used in the Merchant
Processing Applications, Merchant Processing Agreement, Attestations, and any other agreement,
attestation, or form containing terms of any agreement between the parties related to payment
processing, shall include Cannabinoid Products. It is expressly understood and agreed to by the
parties that the City may sell Cannabinoid Products from the Stores, subject to the general terms
and conditions of all agreements between the parties.
5. Representation of Authority. The undersigned executing this agreement represent and
warrant that they have been duly authorized to execute this agreement and that this agreement shall
bind it to the terms and obligations contained herein.
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230701v2
6. Full Agreement, Modification. This MOU supersedes any prior or contemporaneous
representations or agreements, whether written or oral, between the Parties related to the terms
herein. Any modification to this MOU must be in writing and be signed by both parties.
City of Elk River, MN PayProTec
By:
John J. Dietz, Mayor Its: ___________________________
Tina Allard, City Clerk
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