21 Feb 2024

Blog Post

Medical Marijuana’s Big Problem with Cash

Medical Marijuana’s Big Problem with Cash 


Imagine running a successful business that takes in thousands of dollars per day. Everything is fine and dandy except for one thing: you cannot find a local bank willing to take your business. Thus, all of your transactions are in cash. While the rest of the world enjoys electronic payments, you are stuck with wads of bills.

This is the very situation cannabis dispensaries around the country find themselves in. Theirs is largely a cash-only business. This post will discuss why that is and a possible solution just starting to emerge. In the absence of such a solution, an all-cash business dealing in thousands of dollars in daily transactions faces a lot of risks.


  • Why the Problem Exists


You might think a business as lucrative as medical marijuana would have no trouble with banking. But you would be wrong. Under federal law, marijuana is still a controlled substance. Washington still views production, distribution, and possession of marijuana illegal. This, despite the fact that 33 states and the District of Columbia have approved medical marijuana use.

Washington’s stance on marijuana strikes fear in the hearts of banks and credit card companies. They know they risk federal action if someone on Capitol Hill gets his britches in a bind. They do not want that risk. As such, financial institutions tend to shy away from cannabis businesses.


  • Risks for Cannabis Dispensaries


Banks and credit card companies are not the only ones at risk. Dispensaries are also at risk in the sense that their bank accounts could be seized by federal authorities. So even if banks would service them, there is some measure of fear. Yet going all-cash isn’t any safer.

Criminals are smart enough to know that cannabis dispensaries keep large amounts of cash on hand. They know that when a store closes up at the end of the night, the owner or manager is likely carrying a large amount of cash on his person. And where does that cash go if the proprietor cannot deposit it at a bank?


  • A Possible Solution


Dispensary owners will be happy to know that a possible solution is emerging. It is an app-based solution being rolled out on a gradual basis. Deseret Wellness in Provo, Utah is among those recommending the app to their customers. They still accept cash payments – and even have an ATM on-site – but they are pushing the app as an alternative.

The app is from a company known as Hypur. Company officials have somehow managed to convince a number of banks to participate. Through the app, a patient can directly transfer funds from his or her bank account to the dispensary’s account with no ATM or user fees assessed.


Though not perfect, the app eliminates the need for patients to carry cash. It allows a dispensary to accept electronic payments without having to accept credit or debit cards. As an added bonus, the app allows for curbside service. Patients can order their products online – after registering, of course – then pick up the order at curbside when it’s ready.


  • A Temporary Solution


There is talk of Washington changing federal law to accommodate state medical marijuana statutes. If they do, the app-based solution to the cash problem will be but a temporary one. Does that mean it would go away? Probably not. The app still offers a level of convenience that customers would not likely give up after getting used to it.

In the meantime, cannabis dispensaries have a big cash problem they are having to constantly work around. Business must be good because dispensary owners are willing to do whatever it takes to operate.

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