Processing payments is a persistent challenge for marijuana retailers. Federal cannabis prohibition means banks are unwilling to service dispensaries which has led to many operating on a cash-only basis.

Not only is this inconvenient for customers, it also puts cannabis dispensaries at greater risk of burglary, which drives up insurance costs. What’s more, dealing primarily in cash ensures that financial recording-keeping is more complicated, which makes it harder to comply with federal tax requirements and to potentially benefit from certain tax deductions.

This is why many canna-businesses have sought out alternative payment processes for marijuana sales, with cashless ATMs proving to be one of the most popular options. Akerna, a point-of-sale and compliance software developer, estimates around half of the country’s 7,000 or so marijuana dispensaries use the cashless ATM method.

In essence, cashless ATMs disguise point-of-sale transactions as an ATM withdrawal. However, Visa recently issued a statement warning against the practice, with the threat of penalties or another unspecified sanction, which has sent many marijuana businesses into a tailspin as to how they should move forward with payment processing.

“Cashless ATMs are primarily marketed to merchant types that are unable to obtain payment services—whether due to the Visa Rules, the rules of other networks, or legal or regulatory prohibitions,” Visa’s statement reads. “Therefore, supporting this scheme affects the integrity of VisaNet and the Plus network, as well as the Visa payment system.”

Marijuana industry representatives have urged Visa to rethink its stance, at least until cannabis banking legislation is passed by Congress as a lasting solution to the problem.

In the meantime though, canna-businesses are once again scrambling for cashless payment processing alternatives.

One such alternative that’s generating interest at the moment is the use of the Automated Clearing House (ACH) method, otherwise known as ‘bank-to-bank’ or ‘account-to-account’ transfers.

ACH allows marijuana businesses to accept payments in-store or online through the use of a QR code which links to the customer’s bank account.

The process is simple, and growing in popularity. Payment volume using ACH increased by nearly 8 percent in the third quarter of 2021, with the value of those payments up nearly 14 percent to $18.1 trillion.

More and more cashless payment processing services are moving into the cannabis space to offer ACH as a payment method, including AeroPay, POSaBIT and Paybotic.

A few caveats exist, however, for marijuana business owners looking for alternative payment processes. It’s important to make sure that the ACH provider has regulatory approval in every state it operates in, meets due diligence requirements, including license and bank verification, and has the backing of a compliant, reputable bank.

About the Author: Brian Ellis

With 6 years' experience in business journalism, Brian is the person we turn to for anything related to the business of cannabis. His news coverage spans topics including marijuana business and finance. Brian's work features on themarijuanapages.com, marijuanareferral.com, , marijuanamerchantaccount.com and marijuanainsuranceagent.com.

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