Walking into the Planet 13 Entertainment Complex —the world’s largest cannabis dispensary—in Las Vegas, Nevada, is a luxury experience.Seventy-four registers line up as personal shoppers accompany customers, explaining the different types of premium cannabis in glass cases.Customers can also catch a glimpse of robots making infused HaHa gummies and fizzy beverages.It feels seamless, and for many, like going to an Apple store.
That is, until checkout time.
Cash is king by default.You won’t be able to Apple Pay your way out.Among the 19 states (and the District of Columbia) that have legalized recreational cannabis usage—37 states for medical marijuana usage—none of the operating dispensaries will take credit cards as a payment option.The dominance of cash has made dispensaries prime targets for theft.
Last year, the Los Angeles Police Department reported a twofold increase in burglaries, stickups, and armed assaults at legal cannabis dispensaries.
Operating a legal dispensary also means highly punitive taxes because owners cannot seek typical standard business deductions.
Classified as a Schedule I drug “with no currently accepted medical use and a high potential for abuse,” marijuana is part of a cohort that includes heroin, LSD, and ecstasy.Despite the debates over its (and the others’) medical usage, cannabis is still, at the federal level, illegal to buy, sell, and possess.
Major credit card processors like Visa and Mastercard will not authorize any credit purchases for cannabis products in the United States.To get around those challenges, about half of existing dispensaries use “cashless ATMs,” a method that miscodes a purchase at a point of sale (POS) as an ATM withdrawal.
It is an option that Visa has notably frowned upon.
These nuances have made cannabis banking a major challenge for the small-to-large businesses involved in the industry.The result is a patchwork of solutions for retailers to transfer money safely while guaranteeing a quality customer experience.
At Money 20/20 , an annual conference focusing on the latest trends within the fintech industry, a completely new set of panel proposals emerged this year focusing on cannabis banking.“From Illegal to Legal” was the overarching theme.Originally considered fringe, cannabis is now an industry with the potential to grow to over $30 billion by 2030.
Banks are reluctant to enter the cannabis space because of the lack of clear-cut regulations regarding cannabis’s legality and how it affects operating across state lines.
In what are typically known as KYC, or Know Your Customer, protocols, banks that want to work with cannabis dispensaries have to do a lot of due diligence with site visits.
Erin O’Donnell, the cofounder of Infused Banking , a learning platform for cannabis and banking professionals, emphasized looking for red flags: Do the number of employee lockers match the business’s claim for the size of their payroll? How do they handle cash flow? Similarly, dispensaries have to know about the Bank Secrecy Act and other regulations that banks have to follow.
“The bank has to reconcile your million dollars with your sales, or you are money laundering.It has to say to a regulator: ‘I know what this customer sells.
I know what this customer does.I know who it employs.’ So it’s really about transparency,” adds O’Donnell.Many banks also struggle with the stickiness of cannabis as a topic—and that doesn’t bode well for an industry that already faces stigma.“If you’re kind of embarrassed about banking them, that’s not a great relationship.”.
