In certain states (not currently including Massachusetts), cannabis-related businesses have been deemed “essential” businesses by local governments. In those states, medical and/or adult-use programs have continued to operate during the COVID-19 pandemic. Nevertheless, cannabis business operators have had to quickly adapt to the changing environment and implement new safety protocols, including limiting the number of patients and customers in retail shops at one time, and providing new online and telephone ordering channels for products that can now be delivered and/or picked up curbside. Changes to standard operating procedures bring new challenges to the industry, including how to accept payment for purchased products.
Historically, state-licensed cannabis-related businesses have been cash intensive because marijuana remains illegal under federal law. Not only has the conflict between state and federal law caused banks and credit unions to stay away from marijuana-related business relationships, but it has also caused the largest payment card networks to prohibit cannabis credit card transactions.
Cash intensive businesses are often considered higher risk entities, in part, because of safety concerns that include being easy targets for theft. These concerns are heightened with the COVID-19 pandemic and worries about viral transmission via cash. Regardless of whether the new COVID-19 cash concerns are justified, cannabis operators are exposing their businesses and employees to unnecessary safety risks if they do not implement cashless payment solutions—especially in those states that allow deliveries and/or curbside pickup. Moreover, operators without cashless payment solutions are missing out on the higher value sales transactions that cashless payment solutions provide.
Because identifying and implementing reliable cashless payment solution(s) are not easy tasks, now is the time to evaluate available options in order to determine the solution that best fits a particular business and its customers. However, before any cashless payment solution can be implemented, a cannabis merchant must have a bank account. Prospective merchants should contact their financial services provider to verify whether potential payment solutions can be used and deposits will be accepted. Certain compliant cannabis banking providers already have relationships established with cashless payment solution providers thereby making implementation and compliance easier. In fact, Green Check Verified, LLC has solutions integrated into its automated platform, and will assist prospective cannabis related businesses in finding banking services that fit their needs.
Some considerations, and currently available solutions, related to cashless payment solutions are outlined below. The list is not extensive and prospective merchants should conduct their own due diligence, as well as, review any service agreements carefully. Additionally, it may be advisable to utilize more than one solution in case one is not available in a certain region or discontinues servicing the marijuana industry. Generally, effective cashless payment solutions fall into two broad categories: cashless ATMs/PIN debit and digital payment applications.
Like the cannabis industry, the electronic payments space is constantly evolving and developing new solutions that cannabis related businesses and consumers can use despite the continued conflict in federal and state marijuana law. Right now, cannabis businesses are deemed essential businesses and utilizing cashless payment solutions is one way the industry can mitigate risks associated with cash transactions—both to allay concerns related to theft, and those related to possible viral transmission.