Marijuana Dispensaries and Federal Banking Restrictions

As marijuana legalization spreads across the nation, more and more dispensaries are running into a cash-or-credit problem. Today, most consumers are used to plastic instead of cash in their pockets. Many of these businesses want to go legitimate and accept card payments, but they are up against a formidable opponent – the Federal Government.

As it stands, marijuana is not legal on the Federal level in the United States. Marijuana legalization is at the state level, giving each state the opportunity to vote for or against legalization. As of 2019, 33 states have passed laws for medical and/or recreational use. With Canada legalizing recreational marijuana at the national level just to the north of the States, marijuana dispensary owners are growing increasingly frustrated at lost sales and customers who simply choose not to carry or use cash. Some owners, however, are finding solutions to this ongoing issue.

Enter the dispensary-based credit card. Columbia Care, a company that owns many dispensaries in 12 states, as well as in Puerto Rico and Washington, D.C. CEO of Columbia Care, Nicholas Vita, announced in June that the card is set to debut sometime in July of 2019. Citing the out-of-date payment system and the limitations that cash-only payments bring, Vita is charging interest rates between 15%-19% for most qualified candidates. The card can be used on-the-spot as soon as the applicant receives their approval, which they apply for via tablet inside the dispensary. The average customer spends $145 per dispensary visit, and for those who are disabled or ill, this can mean frequent trips limited by immediate cash-flow. With the credit card, Vita states, they will be able to spend more at once and make less trips.

Forward-thinking dispensaries in Hawaii have asked customers to forego cards and cash altogether. A Colorado-based payment app called CanPay (which routes payments much like PayPal or CashApp does , from one bank account to another) would deposit funds from customers straight into the dispensary bank accounts located in Colorado. This idea is also being rolled out by Zodaka, a high-risk payment processing platform, all throughout California.

The question lingers for many lawmakers and major credit card companies: Does this set a precedence for illegal activities on a Federal level finding a home in private banking corporations that will give a platform for other illicit drugs or activities? Will there be a way for a private drug dealer to use an app to link sales of hard drugs from one bank account to another? Will adult-oriented industries have their own credit cards to purchase services?

Or will this go the other way, with the Federal government legalizing marijuana as they see the potential revenue benefits these cards and apps create?

We want to know what you think. Leave a comment and let us know if these cards and apps are a good idea, or should marijuana-buyers stick to good ol’ cash?