The Cannabis industry in the United States faces legal challenges, unlike in places like Canada. Due to federal regulations, most banks (nearly all) will not work with any cannabis business. Even in states where both medical and recreational cannabis are legalized, banks are primarily unwilling to approve merchant accounts despite full legalization. This poses significant business challenges, forcing them to work with cash-only sales. This opens these businesses up to the greater risk of theft, fraud, tax issues, and more. But, a working solution that innovative dispensaries are taking advantage of is the Cashless ATM.
Cashless ATM, What is it?
Cannabis Dispensary Cashless ATM
In the cannabis industry, a “cashless ATM” is a payment solution developed to lawfully avoid the challenges faced due to the federal status of cannabis in the United States. It operates differently from traditional debit and credit card processing. Here’s a breakdown of how it works and how it differs from regular card processing:
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Cashless ATM:
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- How It Works: A cashless ATM is set up like a point-of-banking system. When a customer makes a purchase, they use their debit card to withdraw a round amount of cash (e.g., $60, $80, $100) close to the purchase amount. The transaction gets processed as a cash withdrawal rather than a direct payment for goods or services. The customer then receives a voucher for the withdrawn amount, which they use to pay for their purchase. The difference, if any, is given back in cash or store credit.
- Why It’s Used: This system is employed because many banks and credit card companies are hesitant to engage directly with cannabis-related businesses due to the federal illegality of cannabis in the U.S., even though it may be legal at the state level. Cashless ATMs help businesses avoid direct sales transactions that might otherwise be flagged or rejected by financial institutions.
- Limitations: These systems can sometimes have higher transaction fees and may not be as straightforward for the customer. Also, there are regulatory grey areas since this method is essentially a workaround to existing banking restrictions.
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Traditional Debit and Credit Card Processing:
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- How It Works: In standard retail environments, customers can pay the exact amount for their purchases using debit or credit cards. These transactions are processed through banks and credit card networks, facilitating the transfer of funds from the customer’s account to the business’s account.
- Direct Engagement with Financial Institutions: Unlike the cannabis industry, traditional businesses don’t face the same legal ambiguities, so banks and card companies readily process these transactions.
- Ease of Use and Transparency: These systems are straightforward, with the exact purchase amount being charged and reflected in the customer’s bank statement.
The critical difference between the two lies in their processing method and the reasons behind their use. Cashless ATMs are a creative solution to navigate the complex legal and financial landscape of the cannabis industry. In contrast, traditional card processing is a direct and transparent method used widely in most other industries.
Getting Approval for Your Dispensary
Approval for a Cannabis Dispensary cashless ATM doesn’t have to be complicated or risky. Working with the right merchant service provider who has a long-standing relationship with regional banks offering this service is a must. Big banks like JP Morgan Chase will not even field your application, so working with a qualified cannabis processor is necessary.
BrotherProcessing.com has specialized in the Cannabis industry for more than ten years, getting approval for hundreds of dispensaries in Canada and the USA. Give us a call, and let’s get started on your application. We have approval in as little as 24 hours; you accept cards the next day.
