Whether you live in a state where medical or recreational marijuana is permissible, there are plenty of dispensaries with a large selection of products for you to choose from. After you decide on a product, you have another decision to make, how are you going to pay for your cannabis?
Because cannabis is federally illegal, the major card networks don’t permit cannabis transactions. If you’re like most shoppers, you don’t want to pay with cash and luckily most dispensaries offer some form of electronic payments.
Cannabis payments are a fragmented, and always evolving, mess for consumers. Below we explain the various cannabis payment options and the pros and cons of each.
There’s a reason why news outlets continually cover the ridiculous piles of cash on hand at dispensaries and other cannabis businesses. All dispensaries will accept cash, so you can always make use of it if you prefer. It’s a straight-forward solution that you’re already familiar with.
But, if you’re anything like us, you probably think that in general cash is a problem. Here are just some of our top gripes about using cash to pay for marijuana:
- It’s inconvenient. Who carries cash these days? You probably don’t have a routine of regularly withdrawing money from an ATM, which means that you’ll need to get cashback at a store or find your local ATM before you head to the dispensary. Or worse, you’ll have to use the ATM at the dispensary and pay hefty fees.
- It’s dirty. No, it’s not dirty money as a sign of corruption, but rather actual, literal dirt. There’s a reason bank tellers wear gloves. Cash is gross, carrying tons of germs and bacteria. Seriously, wash your hands after touching it.
- Carrying cash is risky. Whether you lose it, or someone steals it from you, there are serious risks involved in carrying large amounts of cash.
- Cash is costly for retailers, which can drive up the price of your products. Merchants need to spend hours counting and processing cash transactions, which means that they may pass those added expenses onto customers like you.ACH – Directly from your bank account
When you’re ready to make a payment at dispensaries, the easiest and safest way is with a direct bank transfer. Using a solution like Hypur, funds are transferred directly from your bank account into the dispensary’s bank account. It’s the same principal as writing a check.
By signing up with Hypur Pay, you verify your identity and then login to your bank using secure and compliant means. Hypur never holds your login information. By enabling auto-check-in, as soon as you enter a certain radius of the dispensary, the Hypur app will check you in at the location. Then you simply shop for what you want. When you’re ready to pay for cannabis, the budtender asks you to enter your Personal Access Code (PAC) and you automatically pay.
The advantage of this system is it adheres to bank-level compliance and security. Because all you’re doing is making a direct transfer from your bank account, you won’t need to worry about loading funds or losing money, like you do with pre-paid cards and cashless ATMs (we’ll cover those next).
Credit or debit cards
Most of us are used to using plastic when buying anything. From shopping on Amazon to picking up groceries, we’re all used to swiping, tapping or inserting our cards and moving on with our lives. It’s quick and convenient, so it’s no wonder people prefer to use it for most everything.
However, it gets complicated when you’re ready to pay for marijuana at a dispensary. The reality is that card networks, like Visa and MasterCard, don’t permit cannabis transactions. This is because of laws that make cannabis illegal at the federal level in the US.
Cannabis debit card processing is available but most solutions, like cashless ATMs (discussed below), are work-arounds that require consumers to pay a convenience fee (an ATM fee) and their legality is questionable.
Some dispensaries will let you pay for cannabis using your credit card, but there are some issues with this method. Often, these transactions are processed by offshore companies, essentially sending your personal data to countries you might not want to have that information. Additionally, as the card processors pick up on the true nature of the transactions, they often terminate service, leaving you wondering again how to pay at a dispensary and possibly out hundreds of thousands of dollars in reserves and unsettled transactions.
In order to get around the rules for credit card transactions, some payment solutions use cashless ATMs. Imagine your normal ATM, where you insert your card and give your PIN, only instead of getting cash out of the machine, you get a ticket which says that you can use that amount of money at the dispensary.
For example, you might get a ticket for $100, and then buy $85 worth of product. The dispensary will then add tax and a fee for using the cashless ATM, usually $2-5. You’ll then be paid out any change.
This form of dispensary payments can be a lot more convenient than cash, but still has some risks and concerns. The main thing to be aware of is what that ATM is calling itself. When you check your bank statement, you might see it listed at a health food store or flower shop. By lying about what the business actually is, there’s a high risk that the payment option could get shut down. But not before they’ve already potentially had access to your personal data.Pre-paid debit cards
Some dispensaries have started using pre-paid cards. In theory, this sounds like a great solution. The funds go into pre-paid cards, like what you might buy at your local supermarket, which you then use to pay for cannabis. Some options let you load funds into a virtual pre-paid card or account.
It’s important to note, though, that these cards aren’t quite as convenient or compliant as they first appear. Unlike the pre-paid cards you might buy in a store, pre-paid cards or accounts to pay for marijuana have a waiting period. You load the funds onto the card, and then wait 3-5 days for them to clear. Only then can you start buying cannabis at your dispensary. Usually these prepaid cards are running on a branded card network, most of which have banned the sale of cannabis on their platforms. This means that pre-paid cards aren’t just inconvenient, in most cases, they’re not allowed.
There’s also the similar risk of cash when using a pre-paid card. If you lose the card, or it is stolen, all the money that was loaded onto it is probably gone. Similarly, if the payment solution disappears or is shut down, it could be next to impossible to get your money out of the pre-paid card or account.
Thanks to the popularity of cryptocurrencies like Bitcoin, they are becoming more prevalent at dispensaries, too. Some cryptocurrency providers offer services that are fairly similar to the pre-paid card idea above. You visit your dispensary, and when it’s time to pay for your products, you actually purchase cryptocurrency. Those “coins” are then used to pay for cannabis.
These work arounds combine some of the risks we saw above with credit card transactions, as well as some pre-paid card problems. Just like credit card transactions, cryptocurrency cannabis payments aren’t necessarily compliant. As a result, they could be terminated at any point. If you’ve loaded a large amount of money into the cryptocurrency account, those funds could be gone, or useless to you.