Most, if not all, Americans are more than used to making purchases using plastic. Whether pulling out a credit card at a grocery store to buy bread or paying for a cup of coffee, most Americans prefer using plastic. That is why many people find it unusual that cannabis sellers or dispensaries rarely don’t accept plastic. While just about every dispensary would like to accept credit cards and may be able to as regulations change over the next few years, unless they have unique solutions such as those provided by FLEX Payment Solutions, they can’t at the moment.
Marijuana payment processing is tricky to say the least. Which is why cannabis payment options are limited for buyers. Legal cannabis sellers are often creating work arounds to find their own cannabis banking solutions because very few legal solutions are easily available.
Apart from the cannabis business being seen as high risk by payment processors, the fact is that cannabis is still federally illegal. Sure, it may be legalized across many states, but despite that, it is still classified as a Schedule 1 controlled substance. That has significant credit card companies like American Express, VISA and MasterCard openly declaring that they don’t want customers using their network or cards, for that matter, to buy cannabis.
Even though the cannabis industry wants to, for the most part, provide people with a quick and easy way to buy their marijuana, the regulation does not permit it. While that may put off many consumers, especially Americans programmed to use their mobile phone wallets to pay for items, it is a hard reality that consumers and business owners in this industry need to deal with for now.
Are There Any Cannabis Merchant Solutions?
There certainly are, but there are also many not complying with federal law and thus may be open to criminal penalties and fines. That said because these companies are taking such a massive risk, the cost associated with these merchant services is extraordinarily high for businesses in the cannabis industry. Furthermore, these companies may face issues like having their money stuck in escrow, active lawsuits, MID masking and other problems just because they are processing payments for businesses in the cannabis industry.
While it may be tempting to accept credit cards processing from any provider that will offer it at this point, it is critical to ensure you are working with a company such as FLEX Payment Solutions that has deep experience within high-risk industries, and fully understands the regulations related to cannabis payment processing.
Should Cannabis Merchants Consider Payment Processing Workarounds?
There are many workarounds and even ways to bypass having to accept cash and wire transfers, which many cannabis companies have started to employ. Some of these tactics include cashless ATMs and the use of smartphone payment apps. Others have special merchant account types. However, a cannabis-related business can’t use a bank like a regular retail business would like to acquire financing and even execute various transactions.
How Should Cannabis Dispensaries Handle Their Cash Transactions?
Cannabis dispensaries will admit that accepting cash is not ideal, but the only resort if the buyer can’t do a bank transfer and does not have an ATM card because cannabis merchant accounts are quite rare. Since we’ve established why cannabis dispensaries can’t take plastic, cash is often the next best thing. However, the problem with cash is security. Handling cash will require that cannabis businesses have a standard operating procedure that all employees follow. They should also have a reinforced vault where the revenue is dropped.
A modern point-of-sale system and intuitive cash protection are also essential. It is also highly imperative that dispensaries maintain meticulous records of their sales or transactions for tax purposes. If anything, businesses in the cannabis industry usually receive more scrutiny from the IRS than other businesses.
Should Cannabis Companies Accept Crypto As Alternative Cannabis Payment Processing?
There are many cannabis businesses in the US accepting crypto, if nothing more than out of sheer frustration. The inability to process credit cards makes it hard for dispensaries to sell online and even in person, with so many people relying on electronic payments for ease. But these types of cannabis payments are tricky.
The problem with crypto is that everything from Bitcoin (the most popular one) to some of the later ones is highly volatile. If anything, a business could lose several hundred dollars in a matter of seconds if the prices of the crypto they accept plummets and they are holding a few thousand dollars’ worth. This loss of money makes it harder to restock inventory and thus creates a financial situation that may be hard to recover from.
You also need to factor in reporting cryptocurrency sales. This is a little trickier than reporting cash sales or even credit card sales. So, before a cannabis business starts accepting crypto, it should have the right SOPs to ensure contingencies are set up for when something goes wrong. Some cannabis payment processing companies may also have crypto as an option.
Final Word About Cannabis Credit Card Payments
Until cannabis remains an illegal substance at a federal level, most credit or debit card companies will want to have anything to do with it. Unless credit card processors have a proven system and deep experience, for the most part they will not want to risk it, even for what is a growing industry. This is where FLEX Payment Solutions can play a pivotal role for your cannabis-related business.
If you would like to learn more about securing a safe, reliable method to process payments for your cannabis-related business, contact FLEX Payment Solutions for a complimentary consultation today at (844) 353-9768 or [email protected].