Jaimee was excited about her first trip to a legal, regulated cannabis dispensary. She couldn’t wait to talk with a real budtender about two cannabis strains that she wanted to try hoping they’d help her relax and sleep better. She’d done her research online and this was her chance to buy the real thing; Skywalker OG and a Purple Punch strain were her menu choices that day. While getting her wallet out of her purse Jaimee noticed the Cash Only sign at the register. “Are credit and debit cards accepted in marijuana dispensaries?” she asked. “No ma’am, I’m sorry, but most dispensaries are cash only, sorry,” said the young budtender behind the counter. Since Jaimee didn’t have the $85.00 in cash on hand and didn’t want to incur banking fees from the in-store ATM machine, she left empty-handed and disappointed.
This is not an uncommon occurrence. Many patients and customers new to buying legal cannabis naturally assume that marijuana dispensaries accept credit and debit cards like any other business. Unfortunately, as most experienced cannabis consumers know, cash is king at the dispensary. This is because cannabis remains illegal at the federal level, and most banks need to comply with federal law and regulations. While there are a few workarounds if banks are willing to jump through flaming hoops, providing credit and debit card services remains out of reach for most dispensaries. While this ridiculous situation of discordant marijuana payment solutions may be changing and hope is on the horizon, most marijuana dispensaries have strained relationships with banks and payment processors. They know that the bank or credit union may close their cannabis merchant account at a moment’s notice, sometimes without warning.
If a dispensary can open a bank account it has a better chance of providing debit and credit card transactions in the store. In the case of debit cards, the transaction often mimics an ATM cash withdrawal which the cashier applies to the customer’s purchase in the form of an electronic voucher. This voucher-based system is commonly known as a “cashless ATM” or Point of Banking transaction.
On the off chance that a dispensary accepts credit cards, this is often the result of the merchant account residing in the name of the dispensary’s parent company that does not touch cannabis products itself. However, it’s a risk as the major credit card companies do not have a merchant code for cannabis transactions. According to a report at Creditcard.com, a Visa® representative stated in an email that “Transactions in the U.S. involving the purchase or trade of marijuana are not permitted on the Visa network, until such time as federal law allows.”
With a cannabis merchant account in place, BLAZEPAY provides Point of Banking debit card processing that fully integrates with the BLAZE Retail Point of Sale (POS) platform. Point of Banking supports authorized PIN-based card transactions. Dispensary (and delivery) customers can pay with their ATM/debit cards and credit cards (with a PIN). In the store, BLAZEPAY integrates with the current BLAZE Retail cash drawer functionality to account for money as it leaves the drawer. This reduces the number of human errors and ensures the numbers are correct at the end of each shift. BLAZEPAY also provides tipping options for budtenders, so they are on board with Point of Banking transactions.
Congress Must Act Safely
In September 2019, the U.S. House of Representatives passed the Secure and Fair Enforcement Banking Act of 2019, known as The Safe Banking Act. The Act openly permits banks to work with cannabis businesses without fear of federal banking enforcement actions. The Act’s purpose is “to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.” Attorneys General from 38 states urged Congress to pass The Safe Banking Act While the legislation died in the Senate, the House later included parts of the Act within a COVID-19 stimulus bill but Senate Republicans stripped the Act’s language from the stimulus bill. As many states deemed cannabis as “essential businesses” during the pandemic, the Senate’s refusal to take action and help small businesses was a lost opportunity for everyone.
Customers greatly benefit when the use of debit and credit cards is routinely accepted in marijuana dispensaries. After all, what could be more normal than using a card or payment app (like Apple Pay®) to purchase legal products from a legal store? Customers using electronic payments tend to spend more per visit as they are not limited to the amount of cash in their wallets. Congress has the power to change this unseemly status quo. Let’s be sure to vote for congressional and U.S Senate candidates who support the Safe Act and federal legalization of some kind. Our guess is that Jaimee will, so let’s all follow her lead and vote in November.