Why Won’t Dispensaries Take Credit Cards?
Estimated 5-minute read
I remember the first time I went to a dispensary in Seattle. It was back in 2020 and I was pretty excited. I had just moved to the city, and a couple of days back, some friends had given me some very delicious weed gummies that made me have a great time, so I was ready to get my own. I got to the nearest pot shop I found, which happened to be one of the best dispensaries in Seattle. I showed my ID, asked the very kind budtender for the particular brand that I wanted, she showed me the variety of flavors they had, and she told me about her favorite… Everything was going great, until it was time to pay. I took out my shiny new Amex Gold, which in my experience works pretty much everywhere in this city, and the cashier told me they didn’t take credit cards. I couldn’t believe it–– this is Seattle! The famous tech city! To be asked to pay with cash seemed so… vintage.
I think I had like 20 bucks in my wallet that I always kept for emergencies, although I always thought of it as mug money (you know, cash you keep in your wallet to throw and run in case you get mugged). My husband had about 10 dollars, so in the end I was able to get the gummies. But it still felt so weird. It’s been two years, and I haven’t been asked to pay with cash in a single other place in the whole city. Even the vendors at the Farmers Market take credit cards and Apple Pay. So that night when I got home, I started researching why I couldn’t use my credit card. Here’s an updated summary of what I found.
Is the Cannabis Industry Generating a Significant Amount of Revenue?
Yes! At least in Washington State, ever since it legalized the recreational use of marihuana back in 2012, the growth of the cannabis industry has been astonishing, now giving rise to well above half-billion dollars in annual state revenue, according to a Seattle Times report by Mike Pellicciotti.
The evergoing rise of Washington's cannabis industry is really something, especially considering the fact that federal drug and banking laws still forbid the agricultural, processing and retail cannabis industries from using financial institutions, forcing business owners to conduct business almost entirely in cash.
Why Won’t Dispensaries Take Credit Cards as a Payment Method?
Trust me, I’m pretty sure they’ll love to take our credit cards, but unfortunately they can’t. After finding out that cannabis amounted to a significant revenue, it only made sense that they should be able to take credit cards. And although the U.S. Treasury pretty much allows state-legalized cannabis sales, almost all financial institutions are still banned from the cannabis market, and that is because of federal policy, which of course goes above state policy.
This is not only a burden for consumers like you and I, who are only looking to get a little bit of weed to grind and smoke in the perfect pipe. It’s a major issue for the businesses themselves, because, as Mike Pellicciotti puts it: “This ban on banking denies access to small business loans, blocks equitable access to capital and complicates life for industry workers whose income is based on cannabis sales.” Not to mention the dangers for the dispensaries employees themselves, who are at risk just for being known to manage lots of cash in their registers and are therefore susceptible to violent robberies.
Which Payment Methods are Generally Available at Dispensaries?
According to an article published by Flowhub, these are some of the most popular forms of payments that are commonly accepted at dispensaries, aside from cash, obviously.
3. ACH (Automated Clearing House)
As its name implies, this is a digital payment process that transfers money between banks without checks, wire transfers, or cards. They’re helpful because businesses can instantly verify that the funds exist–– it’s simple, fast and legal. The downside of this is that these types of payments require a third party system, and therefore an extra fee to be paid.
2. POB (Point of Banking)
Although not quite as common as ACH, Point of Banking is what is mistakenly referred to as “cashless ATMs”. This form of payment works by allowing consumers to access their bank account at the dispensary (by inserting their card and entering their PIN), and forwarding it directly to the dispensary account––without any cash being dispensed as an ATM would do.
Are There any Dangers in Being a Cash-Based Industry?
Yes. There’s no doubt about that. Aside from being a logistical nightmare, as I mentioned above, cash-based industries tend to be more susceptible to crime. According to Uncle Ike’s (a Seattle-based dispensary) i502 Robbery Tracker, violent crime in the cannabis sector has catastrophically risen more than 675% in the first few months of 2022, compared to all of 2017, some of which have even turned out to be lethal.
These crimes are of course not particular to Seattle. As a matter of fact, Crosstown reported that burglary and robbery made up 71% of all cannabis crimes in Los Angeles reported in the first two months of 2022, and it’s all because of the same reason. People know there’s lots of cash at dispensaries. It’s an easy target.
So, What Should Change?
Denying a whole legal industry from financial institutions is clearly an act of discrimination. Failing to do something about it when people have been killed because of it is simply horrific.
Therefore, the obvious solution is to change the legislation through the Secure and Fair Enforcement Banking Act of 2021, also known as the SAFE Banking Act of 2021. The goal of this bill is to “prohibit a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business.” This Act has now been passed six times by the House of Representatives, but unfortunately it has repeatedly stalled in the Senate Banking Committee.
We are really looking forward to the SAFE Banking Act being fully passed, but as for now, watch out and bring some cash when you visit your dispensary of choice.
Pellicciotti, M. (2022). How to stop pot-shop robberies: Allow stores access to banking. Webpage. Retrieved from https://www.seattletimes.com/opinion/how-to-stop-pot-shop-robberies-allow-stores-access-to-banking/
Kang, H. (2022). A spike in crime at cannabis dispensaries. Webpage. Retrieved from: https://xtown.la/2022/03/28/cannabis-crime-los-angeles/