Cannabis legalization is relatively new in Canada and brand new in various states of the USA (with NY, NJ, and CT being the most recent to add recreational legalization). But that doesn’t mean banking in the industry has become any easier. It is more difficult to get a merchant account approved and accepting credit & debit card purchases in places like the United States where Cannabis is still federally illegal. Let’s take a look at some of the difficulties marijuana dispensaries, producers, accessory businesses, and CBD shops all face in 2021.
USA Federal Criminalization Stands
Cannabis Credit Card Processing Service
A lack of USA federal legalization is the most important factor in the difficulties businesses are facing. Large banks like Chase or Bank of America are unwilling to offer credit and debit card processing services to businesses in the Cannabis field. It stems entirely from the lack of federal laws legalizing it which ties their hands as they are nationally operating banks.
Local and regional banks, which can offer approval, don’t have the scale to provide every cannabis retailer a merchant account. This is despite the fact their states have legalized it entirely. So as you can imagine, it’s a bit of a hodgepodge for dispensaries and retailers looking to offer their customers more than cash-only payments. With a new Democratic government, there has been talking of a federal legalization law in the USA, but it doesn’t look like that will happen anytime soon.
High-Risk Accounts are the Norm
So you run a dispensary and you’ve found a merchant service willing to offer you an account. But as you find out more you come to learn they are only willing to do so by labeling your business as “high-risk”. This allows them to charge expensive processing fee rates, require a large cash reserve placed on the account, and a higher monthly merchant maintenance fee. You think to yourself, “high risk? Cannabis is a fully legal business in my state what gives?”.
Therein lies the problem with banking and merchant services in the marijuana industry. If you do find a local bank willing to offer an account, they have some fine print regarding what they require. This sort of thing cuts into your profit margin in a big way and considering the high sales tax for Cannabis companies, this can eliminate your profit margins. Therefore, many retailers are being left behind from square one.
Working with a Qualified Merchant Service
As we saw above you may be able to find multiple merchant services that will approve your account but with the “high-risk” marker. This should not be the case considering the state of legalization in Canada and the United States. For the best Cannabis Credit Card Processing Service, look no further than Brother Processing.
Call us today and let’s go over your business’s individual needs. We are not a large anonymous agency we work closely with every retailer we work with.
