Interview by Jaime Lubin, written by Alexa Nasiedlak
Meet Staack Founders Adam and Alexander Harowicz
Meet the Harowicz brothers, Alexander and Adam, co-founders of Staack, a payment solutions and banking company that provides financial solutions for the cannabis industry. Unlike other payment systems developed for the cannabis space, Staack can aggregate third-party applications into a single hub for easy transactions. Using blockchain technology, Staack facilitates seed-to-sale business, establishes a “credit score” for users to evaluate trustworthiness in different providers, and allows for an open-source banking model that seeks to unite all industry participants.
As CEO Alexander likes to say, “The idea begins with social equity. We come from a minority, social equity background, and we’re in New York City where 50 percent of all cannabis licenses will be awarded to victims of the War on Drugs and people from lower-income backgrounds who have a past of incarceration for marijuana. We realized [those business owners] aren’t being provided the tools to thrive… and when you have data gaps, people can’t make smart decisions. That’s what we’re working to address with Staack.”
From Criminal Injustice To Cannabis Industry
However, their journey towards the creation of Staack is literally one of trial and tribulation. On a night out in 2008, the twins were involved in– what seemed to them– a somewhat typical bar fight. But as the cops arrived to halt the chaos, arresting nearly thirty people, they would change Adam and Alexander’s lives forever. A young man involved in the melee was stabbed that night, and Adam, who was involved in the fight and had a wound on his face, was selected as a likely suspect despite not realizing a stabbing had even occurred. Alexander, who was waiting outside the bar for his brother, also got apprehended because the police couldn’t tell the twins apart. The night would end with murder charges filed against both Adam and Alexander Harowicz.
The twins explain aspects of the “justice” system that we know all too well: from fake testimonies and dirty cops to awaiting trial in prison for three years with no bail and having to plead guilty to charges that were falsified out of fear that a guilty verdict would result in a life sentence.
After four and five years’ incarceration for Alexander and Adam respectively, the two were released and began to reinvent themselves. Adam got his undergraduate degree from Baruch College in New York City. An aspiring EMT, he was denied access to the state exam by the Department of Health after having graduated top of his program from SUNY Farmingdale. Alexander, who couldn’t get a job nor be accepted into college, decided to change his name, graduated summa cum laude from Baruch College in NYC, and went on to Cornell University and The Wharton School for graduate programs before spending some time working in the private equity sector.
With Alexander away at graduate school, Adam, who’d dabbled in the cannabis legacy market from a young age, began investing in cannabis cultivation. He very quickly discovered the industry’s main Achilles heel: fraud. Trusting the wrong people, who lied about either having licenses or legitimate business, led to 28 months of making no money and Adam having to live off his credit upon discovering he was $1.4 million in the hole. By then he had moved to California, and just when all seemed lost, he made some contacts who were serious about buying a license and went into operations with them.
Creating Staack: Financial Services For Cannabis Business Owners
Fast-forward to 2020, when Adam invited Alexander to join the team as Chief Financial Officer, and the brothers quickly discovered that the business that seemed to be making upwards of $50 million a year was, in fact, failing. As the then-business partners showed their true colors, asking Alexander to hide the losses from his brother, the Harowiczes realized they could develop their own business to help others avoid the situation the twins had found themselves in time and time again.
“Our original idea was to bring back Budgify just for the cannabis industry,” explains Adam. Budgify, the twins’ first entrepreneurial business venture, is an online platform that allows for small businesses access to smart bookkeeping, streamlined business reports, and ultimately, aims to bridge the gap in financial literacy seen amongst entrepreneurs in minority communities.
“We figured out we could add the banking feature and that ended up becoming Staack,” Adam adds. Inspired by the overall fraudulent system that is both the cannabis industry and the government finance systems, Staack actively works to provide small cannabis business owners “access to stable, secure, transparent, state-of-the-art financial services.”
Staack, The SAFE Banking Act, and New York Public Banking
Staack is coming to the New York market at just the right time for cannabis consumers and business owners. For the third time, the Senate failed in December to pass the SAFE Banking Act– a bill that would allow mainstream financial institutions (big finance groups like Wells Fargo and JP Morgan) to provide services to cannabis companies, despite the plant remaining illegal on the federal level. Yet according to Alexander, passing the act , “Would only address the issue of banking access for cannabis businesses and would not impact the tax code or remove the 280E provision.” It’s this combination of lacking banking access and the 280E tax provision– the tax code prohibiting businesses dealing with controlled substances (like cannabis) from writing off general business expenses on their taxes– that Staack is addressing.
Ultimately aiming to remove “the friction of operating in the legal market and within the constraints of [New York’s] Office of Cannabis Management,” the Harowicz brothers “firmly believe that we can protect the industry with code,” Alexander says.
“Data is the equalizer,” Alex notes. “The cannabis industry requires trust, not just between businesses and technology providers but also with the state.”
Trust with the state is a big one, especially because the Harowicz brothers aim to be the state-chartered cannabis payment solution. If the New York Public Banking Act, a legislative bill introduced by Senator James Sanders Jr. last year to create a statewide public banking system, passes the state senate and comes to fruition, it would exist to serve public interest. It would “invest in community needs,” Alexander clarifies, as opposed to “large investment banks required by law to protect the interest of their shareholders.”
A public bank would be the ideal answer to the promise of putting cannabis profits back into the communities that were most disproportionately impacted by the War on Drugs precisely because of its focus on community interests over private shareholders. Thanks to their lobbying efforts for fair housing, state public banking, criminal justice reform, and their donations to fair housing projects, the Harowicz twins have landed meetings with senators and Congressional representatives with similar interests– the same policy leaders working to push through the bill that would make a public bank a reality.
This is the big picture that Staack keeps its founders moving toward. What differentiates the system from all others is its framework as a “closed loop payment rail,” meaning that only verified and licensed businesses can transact through the technology. And just as significantly, it offers an alternative to COBOL, the programming system in use at most major financial institutions today which has become overwhelmed and outdated with age. Have to wait 48 hours for a wire transfer you needed today? Blame COBOL. Can’t get your unemployment check processed in a timely manner? Blame COBOL. Staack’s easy-to-use segmentation of data, however, allows for quick processing that enables users to send up to $1 million per transaction, with no limits on transactions per day.
Now in beta testing, Staack aims to be the technology that is the trustworthy equalizer for small cannabis businesses and the go-to financial system for New York state and cannabis business, streamlining an otherwise convoluted process.
Staack’s Pre-420 Hash Hole Bash: What’s Next For New York?
Like many other cannabis brands around this time of the year, Staack is producing an event in celebration of 4/20, National Cannabis Day. On April 19th, Staack is hosting a solventless, rosin-infused cannabis dinner (The Hash Hole Bash) with California-based brand CGO Lyfestyle and New York’s Kakes. Co-founded by Karol Zapata–acclaimed pastry chef and master infusion chef– and Raymon Ricco Ruiz–serial New York entrepreneur and childhood best friend of Adam’s– Kakes is a New York City-based consumption cafe and lounge that features an entirely infused menu.
At the exclusive, four-hour event, Kakes, CGO and Staack will host the cannabis community and introduce New York and California brands to each other. Among some of the key vendors and players are recognizable brands like TerpHogz, VIBES Rolling Papers, Dee Thai, Sluggers Hit, and Golden State Banana. Honeysuckle is proud to be a media partner for this special occasion, alongside acclaimed cannabis podcast First Smoke of the Day.
It’s obvious that the Harowicz twins have a desire to connect, a vision The Hash Hole Bash will surely embody. On the business side, Staack will play a key part in connecting real people to real financial services; it will connect the banking and taxation system from these larger institutions to small businesses and communities, creating a beneficial symbiosis for all.
Alexander and Adam Harowicz want nothing more than to help others who have been in their position– forced to reinvent themselves in a system that actively works against them. Only this time, with a new system that offers genuine data, trust, and accessibility, these business owners can create a reality that works for them. As we move toward that future, it seems the cards are Staacked in their favor.
For more about Staack, visit staack.co. Staack's Hash Hole Bash with CGO Lyfestyle and Kakes takes place on Wednesday, April 19th, from 5-9PM at a secret location in New York City. Click here for tickets.
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Featured image: Staack founders Adam and Alexander Harowicz (C) Staack