The cannabis industry has come pretty far from the days of universal prohibition, but the industry still faces a couple of major setbacks. Chief among them is a lack of access to banking and cashless payment services. Although numerous states have legalized either medical or recreational cannabis, it still remains illegal at the federal level and banking institutions avoid working with cannabis businesses in fear of retaliation from the federal government.
The coronavirus pandemic hasn’t made it easier; with the government advocating for cashless payments to reduce the spread of the virus, it has become clear just how much the industry needs access to cashless payment systems. Most other businesses have switched over to contactless transactions to keep both consumers and staff safe, but cannabis dispensaries have had to continue with cash payments. To make matters worse, cashless payments coupled with economic decline have led to a massive coin shortage.
This has affected establishments like convenience stores, laundromats, supermarket chains, and arcades that usually rely on the flow of paper currency and need to make change. But while these businesses can easily switch to alternative payment options that don’t require physical currency, cannabis businesses don’t have that luxury. “We still can’t operate like other businesses, unfortunately,” says Jerry Millen, owner of the Greenhouse of Walled Lake, a fully licensed medical and recreational cannabis dispensary in Michigan.
“First we ran out of pennies. We didn’t want to gouge the patient or the customer, so we rounded (transactions) down, which didn’t cost us a whole lot. But then we started running out of quarters, and suddenly, we started to feel an impact,” he says. But the cannabis industry is known for its innovation and creativity, and Millen found a way to save his bottom line. In late July, he launched a promotion called “Coins for Cannabis” which gifted customers who redeemed $100 or more in rolled pennies, nickels, dimes, and quarters in exchange for cash with a free premade joint.
The ploy paid off and as of late August, the Greenhouse of Walled Lake had collected almost $15,000 in coins, more than enough to sustain it for the rest of the year. Coins for Cannabis also created brand awareness and stimulated new business for the dispensary, Millen says, with recreational marijuana sales increasing “four, five-fold during the pandemic.”
Although there are plenty of up and coming wallet apps, many dispensaries would rather keep their operations cash only, at least for the moment. “It really comes down to being tired of being in the ‘beta phase’ of every startup with a hot idea,” says Aaron Varney, director at Dockside Cannabis in Seattle. “The learning curve comes at our expense,” he added.
It remains to be seen how other players in the cannabis space, such as Pure Extract Technologies Inc. will respond to the evolving challenges posed by the pandemic.
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