Increased public approval for cannabis, including marijuana products, has led to widespread legalization in the United States. More than 60% of all states have legalized medical marijuana, with more states approving recreational uses each year.

Because statewide legalization stands in contrast to federal criminalization of marijuana, the gray areas in this industry expand on an annual basis. This is good news for dispensaries who now have more banking options than ever before. If you are considering opening a dispensary, you should consider both cash and electronic forms of collecting payment.

Cash Payment Processing Solutions

Cash is the most common form of payment in the cannabis industry. Historically, this was the only way that dispensaries could collect a payment, given that banks would not work with them. Benefits of cash payment processing include:

• You do not have to pay fees to a broker.
• It is convenient for customers who do not have electronic methods of payment.
• It eliminates all the intermediaries and allows you to exchange goods and payments directly with the customer.

Of course, the downside of these solutions is that cash is harder to track. Unlike electronic software that can record transaction information and build earnings reports, cash payment processing is less dynamic. Cash also increases security concerns. Storing money in a physical location puts it at risk for theft, so you may have to spend more on security hardware than if you were to use an electronic system.

Electronic Payment Processing Solutions

A growing sector of the industry is electronic payment processing. These solutions involve direct transfers between customers’ bank accounts and your business. They often come in the form of an online portal or an app where users can create a profile.

This is beneficial because it requires less oversight from you while making the payment process more convenient for repeat customers. Electronic payment services often come with the ability to track and record customer data, as well as business trends.

This type of payment system is good for businesses that do a lot of sales. That is because the payments can take some time to process. You will usually see a delay between the transaction and the payment due to the time it takes funds to move from one account to another.

The Future of Cannabis Payment Processing: Crypto and Credit Cards

Restrictions on card payment processing still limit the cannabis market. Paying for marijuana directly with credit is illegal, but some companies have found a way around this.

New service providers offer an app where customers can input their credit card details. Instead of charging the funds straight to a credit card, however, the money gets put in an FDIC-insured bank account where it can then move to the right place.

It is important to note that these business models are operating in a very gray area. Although they are appealing to some marijuana dispensaries, the risk is not worth it to many others. As more states legalize medical marijuana and retail products, it is likely that this form of payment processing will grow in popularity.

One of the most exciting possibilities in the industry’s future is the potential for crypto payment processing. As of 2021, an estimated 3.9% of the global population owns any form of cryptocurrency. It is currently limited because:

• Cryptocurrency is confusing to much of the general population.
• The infrastructure to freely trade cryptocurrency is not easy for many to navigate, making it less appealing.
• It is growing quicker in African and Asian countries than in North America or Europe.

Couple the average consumer’s reservations with the cannabis industry’s barriers to entry, and it is no surprise why most dispensaries don’t accept cryptocurrency as a form of payment. Still, the potential is there.

Some businesses are turning to specialized forms of marijuana cryptocurrency to process customer payments. PotCoin, CannabisCoin, and DopeCoin are just three examples of currency that exist solely for marijuana dispensaries.

This is an interesting solution for businesses that cannot use banking services from traditional banks. It allows them to eliminate reliance on cash transactions and provides a level of security for compliance reporting that other payment processing services may not provide.

When it comes to running a marijuana dispensary, you must always toe the line between providing a great customer experience and following strict regulations. No matter which form of payment processing you choose, it is important that you understand how to properly record and track your transactions. You will need this data for tax purposes and financial reporting in case of any regulatory issues.

Consider all your options before choosing a payment solution for your dispensary. Depending on factors like your customer base or geographic location, one option may make more sense than the other. And, of course, continue to keep updated on the future of payment processing in the industry. As more states legalize marijuana, the opportunities for more seamless transactions will grow as well.