Innovative tech is revolutionizing how cannabis businesses operate. As customers migrate from physical shops to e-commerce platforms, the industry needs banking solutions that allow it to digitalize its business operations.
Current cash transactions between cannabis businesses can be time consuming and create inefficiencies in revenue tracking, tax reporting, payroll processing and accounting processes. Therefore, this industry needs a system which is reliable, secure and compliant.
1. Payment Gateways
As cannabis-related businesses expand, it’s crucial that they have access to legitimate banking solutions. Without such access, companies risk shutting down or facing serious consequences due to noncompliance with state and federal regulations.
Companies looking to enhance transparency may provide ACH transfers that integrate with their POS system and allow customers to easily purchase products at the counter and have funds directly deposited into their accounts – saving fees associated with PIN debit transactions.
Not only can these solutions increase revenue growth, but they can also attract and retain clients that may otherwise be disenfranchised by traditional banks. This can create long-term partnerships that extend beyond basic banking services to include advisory and investment opportunities – strengthening a financial institution’s status as an essential partner.
2. Fintech
Fintech companies are providing cannabis businesses with secure banking solutions online. This is crucial, since many activities related to cannabis cannot be accomplished using Visa and Mastercard due to how payments networks screen transactions for potential money laundering risks.
These solutions also assist cannabis-related businesses to save both time and effort by handling all accounting, payroll and business transaction processes on their own using these systems. This enables businesses to operate more efficiently while remaining compliant with regulations.
These fintechs also enable cannabis-related businesses to use cryptocurrencies, like Bitcoin, which provide greater transparency and security. Some even provide their own cryptocurrency that’s tailored specifically for cannabis businesses to reduce money laundering risks while providing consumers with a smoother experience.
3. Wallets
COVID-19’s pandemic has caused many consumers to switch shopping methods in favor of those which offer convenience-driven solutions, including P2P payments and mobile closed-loop digital transactions. Cannabis businesses can capitalize on this change in purchasing habits with payment technology which eliminates cash exchanges while simultaneously improving consumer experiences.
Fintechs such as Dutchie and Mobius Pay offer wallet solutions as an example of how fintechs can address the cannabis banking gap by offering safe and secure payment solutions that circumvent banking regulations. Customers can purchase products online before having them delivered through closed-loop ACH bank transfer.
CanPay has developed a cashless ATM system, similar to traditional ATMs but enabling debit card purchases without breaking banking regulations. By eliminating physical exchange of cash transactions with physical cash machines, CanPay’s cashless ATM provides another solution that enables dispensaries to accept credit cards while adhering to banking regulations.
4. Mobile Apps
Fintechs have emerged to address banks’ legal and compliance concerns regarding cannabis-related businesses (CRBs). Companies such as Infused Banking, Dutchie Pay and Mobius Payments offer CRBs the ability to accept online payments while depositing them directly into their merchant bank accounts.
Safeguarding large sums of cash can be challenging for dispensaries, making them susceptible to theft and robbery. Furthermore, as customers increasingly pay with cards rather than cash-intensive businesses risk losing market share.
Financial institutions can accelerate revenue growth by offering cannabis banking solutions. Beyond low-cost deposit growth, cannabis banking solutions also offer lending, wealth management and investment opportunities – prioritising efficiency while meeting compliance is the key to long-term relationships between financial institutions and their target audiences.
5. ATMs
Cannabis related businesses (CRBs) need a banking system that meets their consumer, regulatory, and merchant processing needs. As with other high-risk industries that cannot secure traditional bank services, fintechs are providing viable solutions.
Some dispensaries have relied on an illegal workaround that makes sales payments look similar to ATM cash withdrawals; however, Visa recently issued a statement noting these systems violate its core rules and product/service rules, and could contribute to money laundering activities.
Another option available to commercial cannabis businesses is renting or owning an ATM on-site so their customers can make purchases using cash. This allows the business to better track these transactions against its seed-to-sale records in order to avoid potential money laundering issues.