Breaching credit card rules using incorrect merchant codes and shell companies are just a few ways dispensaries have attempted to set up payment processing for their venture. While credit payments can be difficult to work around due to Visa and MasterCard’s networks, debit has served as an easier processing method for many in the space. Companies set up their debit-only payment methods using a point of banking system. In this system, instead of making a sale, the customer authorizes a cash withdrawal from their account. Once approved, the dispensary will take the withdrawal receipt and then give the customer any change they are due in cash from the register.
How do you pay for cannabis when visiting your favorite dispensary? Share your experiences in the comments below!
D epending on where you shop, your cannabis dispensary may or may not have options for how you can buy your product. In some cases, you better have cash. Meanwhile, others allow for debit and sometimes credit. Some are even going more progressive than that. The payment options aren’t a matter of convenience. No shop making customers pay in cash-only are doing it by choice. Instead, they are bound by several sticking points that continue to affect businesses, banks, credit unions and the customer all in one fell swoop.
More so, the SAFE Banking Act would also make it so that financial institutions could do business with cannabis companies. In May, a group of 38 attorneys general came out in support of the SAFE Act. The following month saw a U.S. House panel approve a spending bill which protects banks working with legal cannabis ventures from any repercussions. However, the current provision would only cover banks for one year. If passed, the SAFE Act would provide a much longer solution.
As such, cash is the most often used form of payment at most dispensaries. Certified legal tender works in just about any transaction, cannabis included. Unfortunately, working in cash becomes quite tricky when banks won’t work with your business. With no banking to turn to, dispensaries and other cannabis businesses can find themselves holding thousands, sometimes millions, in cash.
The end result leaves the industry largely unbanked, resulting in significant risk for anyone working in what is already becoming a global market. Some data and reports suggest that banks and credit unions are quietly doing business with cannabis despite the federal instructions. However, even if a bank accepts a cannabis business one day, it does not mean the company will have that relationship with their bank for long.
Wednesday September 18, 2019
Cannabis has also attached itself to another global market disruptor to remedy its payment concerns. As Vice detailed, some dispensaries rely on services that inject cryptocurrency into the transaction by taking hard currency and moving to crypto before converting back to cash.
Not all dispensaries accept the same forms of payment due to the volatile nature of cannabis banking. Current federal laws leave many dispensaries limited, if not outright blocked, from using cards of any kind to process payments.
Depending on the dispensary, you may or may not have options for how you can buy your product. Federal law creates a difficult situation that leaves cannabis businesses stuck with limited options to accept payments. Read more about this tough situation as we explore payment options in dispensaries.