Why Are Dispensaries Cash-Only?

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Transaction happening at the counter - Why Are dispensaries Cash-Only?

Marijuana or cannabis dispensaries have recently been appearing everywhere, and you have probably seen them around your city. These dispensaries exist because federal law in the United States prohibits the sale of cannabis at pharmacies.

According to the state you live in, a dispensary may only offer medical marijuana, while another may offer both medical and recreational marijuana.

If you have been to a dispensary, you already know they are all cash-only. Find the answer to the question of why by reading on!


What Seems to Be the Issue?

The cannabis industry is a bit different from other industries, and many financial institutions refuse to accept money from dispensaries.

This makes it difficult for dispensaries to offer payment methods other than cash. Debit card and credit card transactions are all regulated federally as well, so dispensaries will only accept cash as a way to avoid conflict.

Although this may sound beneficial since these businesses won’t have to worry about credit card fees or the hassle of keeping track of multiple payment methods, there are other issues involved.

For example, being a cash-only business can make it difficult to keep track of payments when it comes to bookkeeping.


Is it Because of the Bank or the Government?

Well, the issue seems to be connected. Since the cannabis industry is a somewhat gray area in federal law, banks are hesitant to accept money from dispensaries.

Because banks are federally backed it can lead to them losing federal funding and in the worst-case scenario, prosecution for laundering drug money. There are also some states where the law clearly states that banks cannot accept money from cannabis dispensaries.

Because this industry is so high-risk, most banks will just choose to stay away from dispensaries, and this is why they are mainly cash-only enterprises.

Until there are clear changes in federal law to decriminalize all forms of cannabis, banks will avoid dealing with this industry.


Is There a Chance that it Will change?

Because most banks are federally backed and also federally funded, they will stay away from any industry that can clash with federal law. The only way this can change is if the federal law changes as well.

Once law changes are made to legalize all forms of cannabis, only then will bank start to accept payments from dispensaries.

Otherwise, it is truly a gray area, and selling cannabis may still be considered a crime, so banks accepting payments can end up in prosecution for criminal activities. If no legal changes are made, then dispensaries will remain cash-only for the time being.


Is it Cash Only in All the Shops in the US?

Although there are many dispensaries in the United States, and we can’t really have sure information on them, it is safe to say that most dispensaries will not accept credit card payments.

Even though state law may have legalized cannabis, on a federal level, distributing marijuana is still illegal.

In addition, because banks in America are federally insured, processing payments from dispensaries may be categorized as criminal activity, so banks will prohibit the use of credit or debit cards at dispensaries.

So, dispensaries will just have lots of cash on hand since they will only accept cash as a form of payment.


What are the Possible Solutions for this Problem?

As mentioned above, the only solution to this problem would be to change the law on a federal level. One of these solutions is the SAFE Banking Act.

This is legislation that proposes to ban federal regulators from taking criminal measures against institutions that provide legitimate cannabis industry businesses with banking services.

If this legislation is accepted, legitimate cannabis dispensaries that do everything by the book would be able to offer credit cards and debit cards as a method of payment, and banks would be able to process these payments without the worry of being prosecuted.


Final Thoughts on Why Are Dispensaries Cash-Only 

Until the federal laws on cannabis and cannabis distribution are changed for all states, dispensaries will remain cash-only.

Banks will refuse to process payments from these institutions since they are federally backed, and this activity could be categorized as criminal. Until then, if you are planning to go to a dispensary, make sure you have cash on hand!