What do Dispensaries Do With Cash Payments?

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Cash being hander over - What do Dispensaries Do With Cash Payments?

Did you know that dispensaries are not allowed to take payments made with debit or credit cards?

Even though many states are making medical and nonmedical marijuana legal, federally, it is still classified as an illegal substance. This classification is why credit card companies can’t process payments made at the dispensary.

That is not to say that some dispensaries have not found a way around this rule or that credit card companies are not reconsidering their stance on this issue.

However, just by law, credit card companies are not allowed to process federally illegal transactions due to credit card payments being federally insured.


Can Dispensaries use Banks?

The short answer is No. While much of the cannabis industry has been able to find some sort of banking, it doesn’t look how you might imagine.

Banks must adhere to federal law since the United States Supreme Court upheld federal authority to deem cannabis and all acts pertaining to cannabis a crime.

For banks to approve loans or even do something as simple as putting an employee’s paycheck in the bank, by federal law, is aiding and abetting the distribution of cannabis.

Leaving the dispensary owners to do an extensive amount of leg work in order to find a banking institution that will provide banking.


Where Do Dispensaries Keep Their Money?

Many dispensary owners feel forced into the cash market with little to no clear option on banking, causing them to take drastic measures like purchasing armored trucks and security guards to protect their cash.

Several cities have even seen an increase in gun sales and security glass due to the rise of robberies.


While the Financial Crimes Enforcement Network reports that in early 2021, 169 credit unions and 515 banks provided some kind of banking services to this high-risk industry, it’s still not always the ideal situation.

As of right now, there just aren’t many options outside of a secure off-site vault until adequate banking can be found.


Do Dispensaries Keep Track of How Much You Buy?

Many dispensaries do ask for some personal information, but here’s the good news, It’s mostly used for marketing purposes. Many states have laws in place that prohibit the collection and use of consumer information.

While the state government does use the Metrc (Marijuana Enforcement Tracking Reporting & Compliance) tracking system, the information recorded pertains to the time, place, and amount purchased. It does not include your personal information.


How Do Dispensaries Pay Their Employees?

With so many banking issues that face the cannabis industry paying employees can be challenging. If you’re lucky enough to work for a dispensary that has found a bank, then the payroll will work like any other company.

The only other two options for payroll payments are cash, which can be dangerous for many reasons, or hiring workers as contractors that receive 1099. Both ways have their own set of challenges for owners and employees alike.


How Do They Pay Taxes?

While it may seem that the federal government would be walking a fine line taxing an industry it deems illegal, they still require that these businesses pay taxes yearly. However, by filing a 280E, the illegal business tax code, dispensary owners can comply with federal tax laws.

Without a banking system in place, paying taxes can become stressful for business owners. Dispensaries owners in Salem, OR, pay their taxes in a bulletproof room where cash deposits are made in order to stay compliant.


Final Thoughts on What do Dispensaries Do With Cash Payments

While the cannabis industry is big business, it still faces a lot of challenges when it comes to how it handles money. As long as the federal government sees marijuana as an illegal substance, how to operate with little liability will always be a huge concern.

Maybe one day, our federal laws will catch up, but until then, large banking institutes and card processors will continue to wait on the sidelines. This is because they are unable to take on the risk that the cannabis industry poses to their own business.