As more and more states start to loosen their cannabis laws, many marijuana dispensaries are finding themselves facing a unique set of challenges. One of the biggest issues they’re encountering is the inability to acquire a credit accepting merchant account.
This is due in part to the unwillingness of the banks and credit card companies to process marijuana transactions due to the legal grey area that it resides in under Federal law. This has forced many dispensaries to run a cash-only business, which comes with a set of inherent risks for both the shop and the customer.
We’ve come up with five cash safety tips that marijuana dispensaries should take into consideration when creating a risk mitigation plan.
Bank or Credit Union?
Many banks are unwilling to accept cash deposits from legal marijuana sales as they feel there is too much legal risk under the current Federal law. This has led smaller banks, such as credit unions, to jump at the opportunity to work with cannabis retailers.
The U.S. Treasury Department put out a report on March 2018, that stated there were over 411 banks in the U.S. who were willing to work with marijuana dispensaries. As the months go by, that number is growing. This means that no matter what state you’re in, there’s a good chance you’ll be able to find a credit union willing to accept your cannabis cash.
Credit Card Processing Risks
In March 2019, the H.R.1595 – SAFE Banking Act of 2019 was introduced to Congress. It’s intended to provide legal protection to banks and credit card companies who work with marijuana dispensaries. As of this blog post, it’s currently being debated in the House.
As this bill makes its way through Congress and up to the President for a signature, the only other alternative for marijuana retailers is to work with high-risk credit card processing specialists. The problem with this is that they sometimes will use “creative” ways of disguising the transactions.
For example, they might use a different merchant category code, creating a shell company, or outright mislabeling a transaction as “auto repair.” Anyone of these methods resides in a legal grey area and comes with a considerable amount of risk for the merchant and their bank account.
Major cash transport companies are often unwilling to work with dispensaries. This has led to a flood of new cash transportation companies that have sprung up to address this problem. These businesses are bonded, highly trained, and well-financed, and specifically service the cannabis industry.
They will arrive at your shop in undisclosed cars and at random times during the week. This randomness helps add an additional layer of security that the bigger armored car companies don’t offer—even if they wanted to.
High-Quality Video and Security Systems
The biggest threat to cannabis companies lies not from outside theft, but internal shrinkage. This is why many dispensaries invest in state-of-the-art 4k high-definition cameras that can help keep shrinkage levels to a minimum.
Live video monitoring by a reputable security company helps ensure that a pair of eyeballs are watching each and every transaction during the business day. This can discourage employees from pocketing products or giving friends an unauthorized discount.
Employers should also invest in training so that their budtenders know the risks that an all-cash business faces, how to detect these threats, and what to do if a situation should arise.
Use a Smart Safe
Smart safes, such as the CashWizard from AMSEC, help save both time and money. Using state-of-the-art technology, a smart safe can help streamline the heavy cash management processes and adds an additional layer of security.
CashWizard helps reduce the time it takes to perform daily counts while incorporating powerful cloud-based technology that provides secure connectivity and access to data that can help dispensary owners make more intelligent business decisions.
Smart Safes by AMSEC
Cash will still be the preferred form of currency for marijuana dispensaries for the foreseeable future. A smart safe can help your cash-based business save time, money, as well as provide peace of mind that your hard-earned income is safely stored in a highly secured safe. If you’d like to learn more about AMSEC smart safes, contact us via our website.