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Payment Processing

With the legalization of cannabis, high-risk businesses are gaining momentum across the U.S., the industry is becoming a prosperous addition to the retail space. In fact, it is predicted to grow to $30 billion by 2025, and that growth has seen retailers rushing to take advantage of this boom, opening eCommerce and brick-and-mortar dispensaries where cannabis is legal on the state level.

However, as with any relatively new industry, the cannabis space has its share of challenges to overcome. Specifically, such businesses are still figuring out how to operate financially while remaining in compliance with multiple levels of government. Because cannabis is still a Schedule I-controlled substance at the federal level, there are numerous regulations in place wherever it is legal to sell this substance.

Traditional banks are not yet equipped to handle the federal and state regulations surrounding cannabis, making it difficult for high-risk companies to obtain small business loans or process transactions through these institutions.

That is also why cannabis is not currently eligible for purchase using credit cards. Although many Americans use this method of payment for its convenience, the fact that cannabis is still illegal at the federal level prevents credit card companies from accepting payments for this substance — even in places where it is legal at the state level.

Although taking this payment method off the table can be inconvenient for some, there are several other ways high-risk companies can effectively process payments. This guide will delve into each one so that your business can better understand its options.

Payment Types

Cash

With credit card purchases off the table, cash is one of the simplest and most obvious methods of payment that can be used to purchase high-risk goods and services.

However, returning to the days of “cash is king” does present some obstacles and considerations for your company. For one, physical cash payments tend to be less secure and more prone to miscalculations than payments made digitally.

Unfortunately, cash can also decrease sales at your store, since customers can only spend the money they have on hand. Many brick-and-mortar dispensaries install ATM machines to address this challenge, but it still offers less convenience than accepting a card.

Another consideration is that high-risk eCommerce hardly uses cash as payment, given their payments must be accepted online. Online businesses are limited to the other types of legal payments on this list.

Debit Cards

Although credit cards cannot be used as payment for cannabis, debit cards can, making them a relatively safe compromise for companies and customers looking to streamline the payment process.

Because debit cards only allow customers to spend funds that are physically available, customers will still be limited to using only the funds available to them. Still, it presents a faster, simpler payment method that is easier to track.

ACH/Bank Transfers

Despite the convenience of debit cards, many high-risk companies have yet to start accepting them. For those businesses, using Automated Clearing House (ACH) or bank transfers has proven effective for accepting and processing electronic payments. ACH enables customers to move funds from their bank account directly to another—including that of a high-risk company.

ACH payments are secure and reliable. Because they can be done electronically, companies do not need to worry about the money not being available. Much like debit payments, transfers can only be made using existing funds.

The only requirement to make ACH payments possible is a third-party provider, which a dispensary will need to enlist in order to set this system up. Given its convenience and popularity, however, it is a worthwhile investment.

Using Crypto

Cryptocurrency is another method of accepting payment, though it is not the most common—or the most popular for that matter. Although crypto is becoming more commonplace in today’s economy, it could be a long time before it receives adoption on a wider scale.

Crypto offers a digital payment method, but customers may not want to assume the risk of placing money in a currency they may not be comfortable with. With crypto, there are also few regulatory options for addressing problems when they arise.

Your high-risk company can certainly consider accepting crypto as a form of payment; however, it is best not to depend solely on this method. That would risk reducing the number of customers able to purchase your products, which is not something any business wants.

Choosing Your Payment Processing Methods

When it comes to deciding on how your high-risk company will accept payments from customers, there are a few crucial things to consider.

  • Security: Customers and businesses alike are concerned with making secure payments, so whichever method your dispensary chooses to accept, it is important to ensure it is safe and secure.
  • Transparency: Regulations surrounding cannabis require legal sellers to maintain a certain standard of transparency when accepting payments, so you will need to set up a system that can be tracked.
  • Convenience: The easier it is to purchase products from you, the more likely customers will do so. That is why making payment options as convenient as possible is in your company’s favor, even if it requires extra steps on your end.
  • Scalability: Depending on the size of your business, you may need a payment platform that is scalable and able to cover multiple locations.
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