As the cannabis industry evolves, new solutions are helping solve dispensary managers’ most vexing problems. Among these are services designed to avoid the cash-only model that dominates the industry. Two companies have products that let dispensaries accept non-cash payments and alleviate hassles for customers and retailers.
CanPay of Littleton, Colo., lets customers make payments directly from their checking accounts. The key is the CanPay app, which generates a secure, single-use token that customers use to pay for their purchase.
Here’s how it works: Customers apply for CanPay and link it to their checking account. Then they download a free mobile app that’s compatible with Apple and Android devices. When customers make a purchase at an approved dispensary, the budtender rings it up on the point-of-sale system. Then they enter the amount into the CanPay terminal. The app generates a random token, which is used to run the transaction. The token doesn’t contain any personally identifiable information, “so it’s a really secure way to pay,” CEO Dustin Eide said.
The company relies on a network of state-chartered and community banks to process transactions between customers and retailers. These institutions are openly banking with the industry in states where cannabis is legal. Financial institutions in the network participate in a “closed-banking feedback loop,” in which each transaction processed through CanPay is examined for compliance purposes, he said.
To accept CanPay transactions, retailers must have a bank account with an approved CanPay institution. Currently, the company has partnerships with financial institutions in Washington and Colorado. The company is scheduled to soon expand into Oregon, Eide said.
Unlike cash, the CanPay system doesn’t require customers to predetermine their spending limits, which often prevents customers from buying as much as they would with a debit card. Cash-only customers are limited by what they have in their wallet. Buying items that exceed their cash on hand requires an ATM withdrawal, which includes additional fees, he said.
When using a cashless system like CanPay, “it allows you to essentially determine what you want to buy, and then pay,” Eide said. “You think about the purchase price after you determine that you want to buy.”
The banking woes that beset many dispensary operators also aren’t lost on Mellissa Boyts, CEO of Denver-based RSG Resources.
“Banking is really tough,” she said, referring to the difficulties many cannabis-based businesses encounter when trying to access traditional financial services.
RSG offers a processing program to enable dispensaries, online stores and delivery services to accept Visa and MasterCard transactions. The program has a U.S. bank settlement and is currently available in Colorado, California and Oregon, Boyts said.
The program is scheduled to roll out in Washington and Nevada by the end of the year, and it should be available in Canada by February. The program has been beta tested for six months and has been in the works for nearly two years, she said.
The processor has worked with attorneys and “other various specialty groups to ensure the legality of the program,” Boyts said. She added that, to her knowledge, it’s the only legal, transparent credit card processing platform currently available in the U.S. for the cannabis industry.
The program can be used alone or as a backup to an existing system. “Shutdowns are fairly commonplace in the industry, and backup solutions can quickly bridge this gap,” she said.
Payments made through the system are delivered to merchants via a weekly digital check, which can be deposited into a business or personal bank account. “When you have a digital check, you have a lot more flexibility,” Boyts said.
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