The burgeoning cannabis industry has encountered myriad obstacles, particularly in the realm of payment processing. Regulatory hurdles and federal restrictions have made traditional banking and payment methods elusive for cannabis businesses. As recently as December 29th, 2023, a major payments processing business that serviced approximately 1500 merchants officially announced a shut down. Amidst these challenges, one of our most experienced payment processing associates, Ian Rassman, has stated that “In the current situation, opting for Cashless ATMs is an excellent payment choice. This method has consistently proven to be among the most dependable solutions, addressing the cash-oriented nature of the industry very effectively.”
Working with Ian over the years has given me a better understanding of the complexities of payment processing for the cannabis industry. Despite the legalization of cannabis in various states, it remains illegal at the federal level. This dichotomy between state and federal laws poses considerable challenges for cannabis businesses, creating ambiguity and hindering access to banking services and payment processors.
Cannabis Payment Processing Is A Complex Issue
Limited Access To Normal Financial Tools: Due to a mix of federal regulations, the risk of money laundering a Schedule 1 narcotic, or lack of internal awareness or know-how, many banks and financial institutions refrain from serving cannabis-related businesses. The Card Brands (Visa, MC, Amex, Disc, etc) have followed suit and expressly prohibited cannabis transactions across their networks. This leaves many dispensaries and retailers operating as cash-only businesses, which can be inconvenient and risky.
Cash-Heavy Operations: The cash-intensive nature of cannabis transactions poses several issues, including security concerns, operational inefficiencies, and customer inconvenience. Handling large sums of cash exposes businesses to security risks and complicates financial record-keeping.
What Are Cannabis Businesses Doing To Accept Payments?
Accepting card payments can significantly boost customer spending as they provide convenience and security, making it easier for customers to make larger purchases without the need for cash, typically resulting in as much as a 30% increase in basket size at checkout.
One way to continue accepting “card payments” is through Cashless ATMs. Over the years Cashless ATMs have been a reliable solution for cannabis businesses seeking to transition away from cash transactions. These countertop terminals facilitate debit card transactions for cannabis purchases, enabling businesses to accept electronic payments at the register or on the road when making mobile deliveries.
Cashless ATMs enable customers to use their debit cards for purchases at dispensaries or cannabis retailers. Customers select the desired amount, swipe their card, enter their PIN, and receive a receipt indicating a cash withdrawal.
Despite the term “ATM,” these machines do not dispense physical cash. Instead, the transaction is processed as a cash withdrawal on the customer’s bank statement, converting the transaction into a cashless form that is then deposited directly into the retailer’s account the next business day.
By reducing reliance on cash, Cashless ATMs mitigate security risks associated with cash-heavy operations. This minimizes the potential for theft and enhances overall safety for both businesses and customers. These cashless transactions streamline operational processes by eliminating the need for extensive cash handling and management. This results in increased operational efficiency, increased customer purchasing, and reduced resources allocated to cash-related tasks.
Important Things To Consider
Fees: As opposed to traditional credit card processing where processing fees are absorbed by the retailers, Cashless ATM fees are borne by the customer in the form of a transaction fee added to the final purchase price.
Regulatory Compliance: Cannabis businesses must ensure compliance with state and federal regulations when implementing cashless ATM solutions. While cashless ATMs today offer a very viable solution, the landscape of cannabis payment processing continues to evolve.
Continued advocacy for federal reform, technological innovations, and strategic collaborations between financial institutions and cannabis businesses may pave the way for more accessible and efficient payment solutions in the future but that doesn’t mean that your current payment processing solution will remain unchanged.
One can expect that even after federal legalization, rescheduling, or SAFE Banking, cannabis will likely continue to be a high-risk commodity and be treated as such by the payments industry. Therefore, it is crucial to partner with an experienced provider knowledgeable about the complexities of the cannabis industry and one that will help you grow as the payments industry evolves and not lock you into long-term contracts.
We rock with Ian Rassman for payment processing because he has 35+ years immersed in the cannabis culture, 15+ years in the financial industry, a massive network of reliable cannabis solutions, and he’s the Executive Director of NORML in Los Angeles. I’ve personally spent hours working with him to build and uplift the community, most notably through his Medical Cannabis Donation Program where his team has facilitated the donation of over $6 Million of medical cannabis products to veterans and other patients in need in California. When something happens, you can trust that he’ll be there to solve the problem with you.
Reach out to Ian for payment processing help via email at [email protected] or 310-466-9292 Be sure to mention this Respect My Region article for a special deal.
