Cannabis Credit Card Processing for Dispensaries and CBD Businesses

Cannabis and CBD dispensaries are doing amazing business in the US now that they’re legal in 33 states for medical marijuana and 11 states for recreational marijuana. In the United States in 2019, the marijuana market was worth more than $52 billion, and it’s expected to triple by 2025. But the problem is that marijuana is still illegal on a federal level and is, therefore, a nightmare when it comes to finding cannabis credit card processing and merchant banking solutions to sell the products, both online and in person. In many places, banks that accept funds from a marijuana dispensary–even a legal one–can be considered money laundering. 

This results in all kinds of troublesome practices, such as needing cannabis dispensaries to be all-cash businesses (which means keeping large amounts of cash on hand in the dispensary and thus making them a prime target for robberies). What should just be a simple transaction requires the use of large amounts of paper money, armed guards, and armored trucks. 

But there are some merchant services that are willing to work with cannabis retailers and have taken the steps to navigate the minefield that is cannabis credit card processing. 

Cannabis Payment Processing Services and the Cannabis Industry

In states with the most permissive laws regarding cannabis sales, such as Colorado, cannabis credit card processing is doing great business. CBD oil businesses, which are seen as more mainstream as they don’t produce the high that THC products do, are easier to manage with federal law as well. 

In many states, there are specific regulations that affect who exactly can buy cannabis products, and these can include registration identification cards for anyone who grows, transports, handles, or consumes the cannabis product. In these cases, it’s easier for merchant systems to work with the cannabis dispensaries, as they use the same medical processes that medical facilities use, connecting them with Medical Marijuana Verification Systems (MMV) to let sellers verify these cards. 

Payment processing solutions such as virtual terminals are also a growing area of interest in the cannabis community. A virtual terminal doesn’t accept physical cards but rather uses the information from the card to process payments, which makes online processes seamless, and makes a good workaround for in-store purchases. The dispensary can use the card and compare it to the MMV system to run verification when processing payments.

This also makes it easy to take orders over the phone as well as online.

Other benefits of virtual terminals and online payment processing include the cost efficiency, because the dispensary doesn’t have to pay for any physical equipment. It’s also easy to set up for both over-the-phone and in-store purchases. You can accommodate many types of customers, including recreational, medical, and CBD users, and ultimately it’s the most efficient system.

Marijuana and the Traditional Banking Services

Without the virtual terminals, credit card banking services for marijuana usage have blacklisted the industry. It’s nearly impossible to find a vendor that allows marijuana purchases from one of the Big Four credit cards (Discover, American Express, Mastercard, and Visa). It’s not that no bank will help you, you just have to search high and low. Banks are bound by federal laws, and federal law is still against legalization of marijauna–they don’t want to risk the ire of the federal government. 

According to the Treasury’s Federal Crimes Enforcement Network, more than 630 financial institutions were doing business with cannabis purveyors by the end of 2018. (Unfortunately, we only know about this because complaints were filed against all 630 of those banks.)

You need to be careful of these institutions, as some of them flat-out lie about their ability to off cannabis credit card processing–often they are only registered to provide service for smoke shops. 

Another option is using a non-FDIC insured institution as your bank, but being FDIC insured is a pretty big deal, as it guarantees that if the institution collapses you’ll be insured for up to $250,000. Currently there are no FDIC-insured institutions that process any payments for the marijuana industry–not as long as it’s still illegal on the federal level.

Cannabis Credit Card Processing: The Future

With the speed at which marijuana sales are growing, and the increasing deregulation of marijuana, it’s easy to see how new cannabis credit card processing solutions are going to become commonplace in a very short time, probably within the next four to five years. Given the overall shift in public opinion–a recent poll from the Pew Research center said that 91% of Americans believe that cannabis should be legalized in at least some forms, while only 6% said it should be banned across the board. And this change is relatively recent and growing like wildfire. In 2010, 54% of Americans felt that marijuana should be banned in most cases, whereas only a decade later that number has dropped to less than thirty percent.

To learn more about cannabis credit card processing and merchant services, explore VMS Cannabis Credit Card Processing Solutions Today!

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