October 2, 2023

Cannabis Banking and Payments

Jay Rosenthal
October 2, 2023

If you are new to the cannabis industry, it’s easy to get overwhelmed by the unique and complicated nature of cannabis banking and cashless payments. 

Remember, cannabis is one of the most regulated industries in the world and you have Dutchie as your guide.  

This post is part of a series on key cannabis retail topics, including compliance and regulations, banking and payments, point-of-sale, e-commerce, and insurance.

Read Compliance for Cannabis Retailers.

Here are some cannabis banking basics to get you started: 

Finding a Cannabis-Friendly Bank

Cannabis is not yet federally legal in the United States, which means big, national banks will not accept plant-touching businesses as customers. But the good news is that more and more smaller, state chartered banks and credit unions are looking towards the future and understand the long-term benefits of working with cannabis businesses, in fact over 700 banks currently support cannabis. At Dutchie, we maintain lists by State that work with cannabis companies and can help make connections where and when the time is right.

Accounting for Banking Fees

Even as more and more smaller, regional banks and credit unions bank cannabis businesses, the fees can be higher due to the heightened compliance requirements banks must comply with and the level of cash transactions at cannabis dispensaries. The volume of cash transactions  in a dispensary is higher than any other retail vertical in the US because credit card companies have not been open to processing cannabis payments while cannabis is still a scheduled narcotic. This means most cannabis dispensaries must operate in whole or in part in cash. And because cannabis retail has more cash transactions, the financial cost of banking is often higher for cannabis businesses than other retail sectors to account for the higher level of compliance and audits of banks. 

Selecting Payment Options

There are ways that cannabis retailers can offer cashless payments to their customers online and in-store. Dutchie offers an array of cashless payment methods for customers that have been vetted by its payments and compliance team that allow for smoother business operations. Non-cash payments have led to larger spends by customers on each transaction in traditional retail and the trend appears to be continuing in the cannabis industry. But whatever payment option you decide, it’s vital that it’s integrated into your point-of-sale to quicken the speed of transaction for your consumer, create ease of use for your staff, to drive down errors at the register, and to ensure your business and compliance reporting is automatic.

Understanding How Payments Impact Average Order Value

One key metric for any retail business - and one which Dutchie helps track in real time - is the Average Order Value, or AOV. The average order value is the total amount of each transaction or purchase. Dutchie has witnessed an increased AOV (read: more profitable transaction) when cannabis retailers offer cashless payment methods to their customers. Astro Buds, an organic vertically-integrated cannabis retailer based in New Mexico, increased AOV by 24% just by adding an integrated, cashless payment solution. 

These are just some of the first banking and payments considerations that are unique to the cannabis industry. Explore more cannabis banking and payments educational resources from Dutchie.

About the author
Jay Rosenthal
Lead Content Producer @ Dutchie