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The Cannabis Payment Industry is Growing Like a Weed

There are few plants with such a rich history as cannabis. Through the ages it had run-ins with the law, continuing to circulate through the shadow economy. Cannabis was first regulated in the U.S. with the Marihuana Tax Act of 1937 and outlawed with the C...

05/11/2021 09:57

There are few plants with such a rich history as cannabis. Through the ages it had run-ins with the law, continuing to circulate through the shadow economy.

Cannabis was first regulated in the U.S. with the Marihuana Tax Act of 1937 and outlawed with the Controlled Substances Act of 1970. Yet, its medical benefits were undeniable. The pendulum swung back toward the green.

Now with cannabis legal in 17 states, the impact on the economy has been significant, and sector growth has outpaced even the plants themselves.

Yet, laws and regulations still remain an issue — this time through financing. As cannabis is still illegal under federal law, it’s difficult for a cannabis-associated business to operate its finances like a regular business.

In particular, there are two problems:

  • Lack of bank support: Banks are not legally allowed to accept money from cannabis businesses. Even if they do, they can close the accounts without prior warning. This leaves cannabis businesses to operate through cash payments.
  • Lack of traditional insurance: Cannabis businesses are not insurance-friendly. As the federal government continues to classify cannabis as a Schedule 1 narcotic, the insurance market remains thin. Compared to traditional businesses, insurance premiums are very high.

This means that the cannabis business, with a lot of cash on hand, will either have to pay a hefty insurance premium or face the potential theft and fraud risks.

As a cannabis industry specialist, Paybotic addresses these problems offering multiple solutions:

  • Cash advances: Cannabis businesses that struggle with traditional financing due to federal restrictions can get instant capital with a flexible repayment plan — structured to keep your operating cash flow unstrained. The application process is straightforward with a 95% approval rate within 48 hours.
  • Cashless ATMs: This innovation eases your operations by giving your clients the convenience of in-store ATM access. While it reduces cash handling and decreases compliance risks, it also accepts all payment types and has end-to-end encryption.
  • E-check / ACH: Processing electronic checks, email invoices and online payments (API integration) are low-cost options compared to traditional credit card processing fees. U.S. bank transactions are cleared on the same or the next day.
  • Retail dispensary debt processing: PIN debit is one of the most convenient payment solutions for marijuana dispensaries. It eliminates cash payments — reducing the cash handling risks. Furthermore, consumers tend to spend 30% more per transaction, thus increasing sales. Paybotic offers chip card-ready, up-to-date, PCI-compliant technology and hardware equipment.

According to Grand View Research, the global legal marijuana market will reach $84 billion by 2028, with the U.S. poised as a market leader. Yet in this legal environment, working with the specialized payments provider remains the best solution to quickly and efficiently operate a cannabis business.