Why cash is far from king in the cannabis industry


How often do you go to the ATM before visiting your favorite dispensary? You arrive at the car park with your wallet full of cash.

Everyone knows that people who go to a dispensary have money in their pockets, and suddenly the road to the front door seems long.

In Chicago alone, the FBI has reported more than 15,000 aggravated assaults so far this year. Once inside, you mentally calculate taxes, so you don’t spend more than you bring. Sound familiar?

Cash is not always king, despite industry struggles with banking.

Most would rather take their credit card at the point of purchase and finish it off – no extra stops, no worries about being assaulted on the way to the door, and less worrying about having exactly the right amount for a purchase.

And that’s just the part of the customer.

Tom Gavin, CEO of CannaTrac. Photos courtesy of CannaTrac.

For retailers, the struggle is more pronounced. Count every dollar you earn, find out what was bought with those dollars, and secure your cash in a vault or warehouse until tax time.

Renting an armored suburb to transport cash to an off-site location can cost between $ 20,000 and $ 30,000 a month. Did you know that there is a penalty to pay? taxes in cash? Sanctions vary by state, but add up quickly.

CEO of CannaTrac Tom Gavin hears about the struggles of retailers every day.

“At one point, that was a while ago, we were talking about an operation in California. Its costs for one year far exceeded $ 1 million in taxes, not the taxes they have to pay, but the penalties for paying in cash. ”

As long as cannabis is legal at the federal level, the challenges of working in cash will continue. There are some alternatives, however, for both retailers and customers.

Prepaid gift cards are an option to improve the security of retailers and customers. Customers charge the gift card and use this balance with any retailer that accepts the card. Reward programs offer customers bonus points for use in future purchases. It is a well-known and safer model than a lot of cash. “It creates a security feature for people waiting in line. It creates a security feature for people who leave, and it obviously creates a security feature for the dispensary itself,” Gavin said.

For retailers, prepaid gift cards and mobile apps like CannaCard (which are technically both) offer a much cheaper alternative to paper money.

“If you look at what retailer spending in cash, between transportation, storage, accounting, banking, all of that, is amazing. We have seen that between 18% and 30% of income goes to these expenses. Compare that to 2.4-5% and 50 cents per transaction, it’s a significant difference, “Gavin said.

Automating the payment process also gives retailers access to valuable data on their customers’ spending habits. What are they buying from other stores that they can’t afford?

How can I inform customers of sales or new products?

Depending on the status, CannaCard may answer these questions. Between security, comfort and data, the cash could be losing control of the keys to the kingdom. ⁇

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