Cannabis Banking Startups Want to Make It Easy to Buy Weed
Walking into the Planet 13 Entertainment Complex—the world’s largest cannabis dispensary—in Las Vegas, Nevada, is a luxury experience. Seventy-four registers line up as personal shoppers accompany customers, explaining the different types of premium cannabis in glass cases. Customers can also catch a glimpse of robots making infused HaHa gummies and fizzy beverages. It feels seamless, and for many, like going to an Apple store. That is, until checkout time.
Cash is king by default. You won’t be able to Apple Pay your way out. Among the 19 states (and the District of Columbia) that have legalized recreational cannabis usage—37 states for medical marijuana usage—none of the operating dispensaries will take credit cards as a payment option. The dominance of cash has made dispensaries prime targets for theft. Last year, the Los Angeles Police Department reported a twofold increase in burglaries, stickups, and armed assaults at legal cannabis dispensaries. Operating a legal dispensary also means highly punitive taxes because owners cannot seek typical standard business deductions.
Classified as a Schedule I drug “with no currently accepted medical use and a high potential for abuse,” marijuana is part of a cohort that includes heroin, LSD, and ecstasy. Despite the debates over its (and the others’) medical usage, cannabis is still, at the federal level, illegal to buy, sell, and possess. Major credit card processors like Visa and Mastercard will not authorize any credit purchases for cannabis products in the United States. To get around those challenges, about half of existing dispensaries use “cashless ATMs,” a method that miscodes a purchase at a point of sale (POS) as an ATM withdrawal. It is an option that Visa has notably frowned upon.
