The Complete Guide to Cashless Payments for Cannabis Dispensaries

Treez Team
Two hands are shown surrounding a cannabis POS. One hand passes a debit or credit card to the sales associate budtender, to purchase cannabis products in a dispensary without using cash

The cannabis industry has always had a cash problem. 

Even though research highlights that more Americans are joining the cashless economy for the purchases they make in a week, cash is still king in the cannabis industry because of the illegality of credit cards. 

While normal retail tends to see 80% of cashless payments on purchases, cannabis retail sees merely 20%. This is because cannabis is federally regulated in a restricted category and banks have refused to take on the liability of facilitating finances in cannabis operations. 

This has resulted in increased risks for cannabis dispensaries as they scale their business to meet consumer demand. 

So is there a way out? 

The answer lies in cashless payments solutions that come with popular cannabis POS systems. 

In this guide, we’re going to walk you through what cashless payments mean in the cannabis industry, why it is important as the industry grows and how you encourage consumers to go cashless. 

What are cashless payments? 

Cashless payments refer to any type of transaction between a business and a consumer that is completed without the exchange of physical cash. The different types of cashless payment methods include using methods like credit and debit cards, digital wallets, bank transfers, buy now pay later, cryptocurrency and similar. 

As per research, the pandemic has accelerated the growth of cashless payments. The global cashless payment volumes are all set to increase by more than 80% from 2020 to 2025, and to almost triple by 2030. This is owing to the many benefits cashless payments come with, including convenience, speed of transactions and the ability to track the payments made. 

Cash vs contactless vs cashless payments for cannabis dispensaries 

Cash payments as the phrase itself states are transactions that are made with physical cash involved. In this case, a cannabis dispensary accepts the payment for an order in cash at the point of sale and has to record the sale on the POS, adding it to the cash drawer. It also typically includes manually verifying the amount received before recording the payment, exchange of exact change to settle remaining amounts and organize the cash based on currency and currency value. 

Contactless payments is a term that is used to categorize payment methods that don’t necessarily require a contact between the cannabis dispensary and the consumer. This usually includes payment methods like tap to buy or EMV chip cards that simply require a tap or a wave on the cannabis POS payment terminal.  

Now cashless payments refers to the transaction between a consumer and a cannabis dispensary, made using debit cards, QR payments, ACH payments, Apple Pay and similar methods. In this case, while there is a contact like inserting a card in the cannabis POS payment terminal,  the transaction is still contactless and no physical cash is involved. 

What are the types of cashless payments? 

A screenshot illustration of ACH payments, listing popular banks and a confirmation message for a cannabis order made at a dispensary through ACH payments

The cashless payments that cannabis dispensaries tend to see consumers use include the following: 

  • Debit card payments - One of the most common forms of cashless payments wherein the consumer can pay in person without cash using a magnetic strip or EMV chip card on a cannabis POS system, 
  • ACH payments - This transaction is made online by entering their account details for the transaction. In this case the payment is made by drawing the funds directly from someone’s bank account. The consumer can initiate these as a one-time payment to the cannabis dispensary or set up recurring payments if a subscription or membership is in place. 
  • Mobile payments and digital wallets - This type of cashless payment method allows consumers to pay using their smartphones via QR codes.
  • Buy Now, Pay Later (BNPL) - Another popular payment method for times when a consumer cannot make a direct transaction or does not have the funds to make a purchase at the cannabis dispensary. This allows them to pay for an order upfront, but pay to the bank for the amount at a later date. 
  • Cryptocurrency - While it’s not as widely used in cannabis dispensary transactions, this refers to using decentralized digital currency like Bitcoin and Ethereum to make payments. 

Why do you need cashless payments at cannabis dispensaries? 

As per our survey (and stated above), cash continues to be the most common payment method in the cannabis industry. While both dispensaries and consumers have become used to the status quo of transactions, here are the disadvantages of cash payments: 

  1. Inaccuracies in account tracking 
    As a retailer collects cash and records the payment, they’re required to verify the amount handed to them. But having to manually enter the amount into the cannabis POS or accounting software, can be prone to errors. And the slightest of errors in reporting the transactions to authorities, can get a dispensary shut down. 
  2. Security risks for retailers 
    With an increased amount of cash in the dispensary, cannabis retailers experienced increased risk of theft, violence and loot. Irrespective of the dispensary location, there are thousands of articles reporting theft of different degrees. 
  3. Increase customer wait times 
    Cash payments require customers to stand in waiting lines at the point of sale. For a dispensary with heavy foot traffic, this can lead to customers feeling disgruntled by the amount of time it takes for them to complete the purchase. 
  4. Inability to meet transaction amounts 
    Meeting the exact amount the purchase is totalling to, can be a hassle for both the dispensary retailer and the consumer. Imagine having to tend exact cash to complete the transaction - dropping the change is no-go for most as one party then takes the loss. This has also led to relying on ATMs at the premise where consumers have to often pay a fee to pull out cash to pay the exact amount. 
  5. Multiple trips to the bank 
    Cannabis dispensaries cannot keep all cash at the retail location. This hence requires them to make multiple trips to the bank to submit the cash into their account. Having to do so further increases the workload on the business and makes them prone to risk during the movement of cash. 
    Due to the above reasons, Forbes has found and quoted that there has been a steady rise in cashless payments across all industries. The article also states that there have been new entries in the cashless payment providers to meet the changing consumer demands and preferences. 

What are the benefits of cashless payments? 

While there are several benefits of cashless payments, here are some that are crucial to cannabis dispensaries: 

A graphic depicts the improvement to a cannabis dispensary's business after implementing Treez POS, including high ticket volume per day, sales volume per month, Average Order Value, and faster customer transaction times

Increased revenue 

Studies have found that while consumers are still drawing cash for making purchases, the amounts are often limited to their current needs. But when you offer cashless payments, the consumer can then increase their basket size, adding more items to their order based on the promotions you’re running at the dispensary. Retailers using Treez have experienced 28% higher average order values by going cashless. 

  1. Decreased customer waiting time 
    We have found that cannabis retailers and dispensaries using Treez for cashless payments are able to process 17% more transactions per hour. This automatically also means reduced customer waiting time at the point of sale, enabling them to complete the purchase faster - this is especially crucial when a purchase is being made for medical purposes. 
  2. Precise transactions 
    Penny transactions can often be difficult to manage for both the dispensary and the consumer. With solutions like debit and ACH payments, consumers and dispensaries can transact with ease without having to manage change, leading to better reporting and a much better customer experience. 
  3. Reduced risk of theft
    With low to no cash being available at the cannabis retail location, there are lesser reason for theft and break-ins. On surveying our customers, we have found that going cashless has helped them make their dispensary more secure. 
  4. Meet compliance regulations
    The cannabis industry is evolving at a rapid pace and requires dispensaries to meet the compliance regulations set by the state authorities to continue selling. Using a cannabis POS to enable cashless payments helps them meet these regulations automatically due to their affiliation. 

How to get consumers to adopt cashless payments at dispensaries? 

Our surveys have found that cannabis dispensaries often struggle to get consumers to use cashless payments for orders. Here are some ways you can change their preferences: 

  1. Promote discounts and benefits on cashless payments 
    Be it on your website or at your retail location, offer and promote the added benefits on cashless payments. This can be something as simple as taking 5% off the purchase total or offering a discount on the next purchase the consumer makes. 
  2. Make it simpler to go cashless 
    Ensure you cover all the cashless payment methods to make it simpler for consumers to choose the same. A good cannabis POS will cover all popular methods including debit, ACH payments, digital wallets, mobile payments, etc. 
  3. Offer rewards 
    Instead of discounts and benefits, you can also choose to offer rewards to customers who choose cashless payments for orders. This can include store credits and loyalty points that they can collect towards a future purchase. 
  4. Train your employees 
    Budtenders tend to have the maximum face-time with consumers at the dispensaries. Ensure that you educate them about the benefits of cashless payments for the dispensary and how they should be proactively promoting the same to customers. Train them about why, when and how they should encourage a customer to choose cashless - for example, when the basket size meets a specific total. We will cover this aspect more in detail in our next set of blogs; remember to subscribe for updates! 

Getting started with cashless payments at cannabis dispensaries  

Going cashless at a dispensary may seem all too overwhelming as compared to simply collecting cash payments for orders. 

Imagine having to integrate with multiple payment wallets and banks just to receive payments and then record them in your system. 

But cannabis POS and cashless payment solutions like Treez are making it much simpler with the help of best-in-class integrated payment gateways. From PIN Debit to Automated Clearing House (ACH), and other payment methods, Treez is helping cannabis dispensaries upgrade to secure and seamless payments! 

Book a demo today to know more

Frequently asked questions about cannabis dispensary cashless payments

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