How Cannabis Dispensaries Accept Card Payments

Cannabis dispensaries are part of a $10 billion and growing legal marijuana industry in the United States. Analysts expect this market to surge past $24 billion by 2021. However, while states, counties, and municipalities continue to legalize medical and recreational cannabis use, businesses remain in legal limbo as the plant is still considered illegal at the Federal level.

While dispensaries operate within local legal and state laws, banks are often afraid to take on any cannabis related business as a customer. That lack of traditional business banking access leads many cannabis businesses to operate in cash and use other workarounds to accept customer payments, but it is far from ideal.

Cash-only dispensaries risk losing the millions of Americans who prefer to pay with credit or debit cards and don’t carry cash and adds a risk of robberies and employee theft. For dispensary owners and managers, It is essential to understand those risks along with alternate options for cannabis businesses to accept debit cards and other forms of payment.
How most dispensaries deal with payments. 

How Most Dispensaries Deal With Payments Today

Most dispensaries look to cash as a primary payment method. To make it work, that may require a combination of cash and ATMs. Requiring customers to complete extra steps is far from an ideal customer experience.

With both traditional ATMs and cashless ATMs, customers are required to take an extra step for the purchase. In some cases, dispensaries that can’t find an on-site ATM operator willing to work with cannabis businesses may register it with a false name or under a neighboring business address. Outside of that, some dispensaries have to send customers to ATMs elsewhere, risking they won’t come back at all.

Any business that carries a significant amount of cash or a valuable product has to be careful with security. That puts legal marijuana businesses in the same camp as liquor stores, pawn shops, and payday lending businesses as a target for robberies. Regardless of whether or not your business runs entirely on cash, you should take steps to secure your facility and insure against losses.

What do you do with all of that cash? If you can get a bank account, you’ll have to pay sizeable fees for cash deposits. If you can’t, you’re stuck in a difficult position of paying employees, vendors, and even yourself with cash instead of the traditional paychecks, paper checks, and electronic funds transfers.

Between the real risks of losing cash to criminal activity, including employee theft, and the costs and hassles of running entirely on cash, you may be wondering what else you can use for payments. Even in the challenging legal landscape in the cannabis industry, there are some excellent financial companies ready to work with you.

Accepting Debit Cards at Check Out

The vast majority of Americans prefer to pay with plastic. According to 2017 data from Statista, only 8% of Americans prefer to pay with cash or check. That means cash is used for less than 8% of transactions as checks make up a small part of that figure.

On the flip side, credit cards and debit cards combined make up nearly 40% of payments. It can’t be understated how important debit and credit payments are in the United States. If you don’t take cards, you may be losing sales!

The most recent and reliable way to accept plastic in a dispensary is pinless debit. This solution that allows your customers to swipe their cards just like they do at the grocery store, gas station, or any other business. You can choose between stand-alone terminals or integrated payments with a POS and inventory management system. It’s up to you to decide what makes the most sense for your business.

Depending on your location, Colorado, for example, an integrated inventory system may help you meet state inventory tracking requirements. Upgrading to a system that handles inventory and payments may save you money in the long-run.

Payment Processing in a Questionable Legal Environment

While cash may feel “safer” in the current legal world for the cannabis industry, Federal officials can enforce actions against marijuana businesses in cash or your bank account. If you have any doubt, work with a legal expert to address your concerns.

While most big banks won’t come anywhere near cannabis-related businesses until Federal laws change, most cannabis payment processors operate in a legal gray area. This is why so many dispensaries choose to act as cash-only enterprises.

Trying to skirt the rules with some of the dishonest tactics above can lead to permanent problems with payments. For example, if you work with a merchant provider that lists your business as a tobacco business with the acquiring bank, you run a significant risk. If the truth comes out you could end up on the payments industry blacklist, the Terminated Merchant File (TMF) or MATCH file depending on the processor.

Dispensaries that do adopt debit or credit card payments should be sure to list their payment options on sites like Weedmaps, an app for cannabis users to find local dispensaries. They can filter by dispensaries that accept card-based payments and might choose your business over a competitor for that reason alone.

Major credit cards may still be a ways away for most marijuana businesses. Visa shared that it will not allow any marijuana transactions on its network until Federal laws enable them to do so, according to CreditCards.com, and it may be a long while before banks and card processors get on board, particularly under the current administration.

You deal with many of the same legal challenges regardless of the payment methods you choose to accept. Selecting the payment methods your customers want to use is the best route to more sales and larger profits.

Want to Accept Debit for Your Dispensary?

If you operate a dispensary within your state’s legal framework, pinless debit transactions are a great way to improve your customer experience while lessening your reliance on cash.

With the right vendors and partners, you can start taking cards with less cost and effort than you may realize. Get in touch with our payment specialists today to get a free quote and learn more about accepting debit cards at your dispensary or delivery service.