Reducing Security Risks with Non-Cash Cannabis Transactions

Despite a predominately cashless society, the cannabis industry still primarily operates using cash transactions. This is due to cannabis’ status as a federally illegal narcotic and leads to banking challenges for cannabis businesses. Although most cannabis transactions are completed using cash, there are alternative methods for non-cash cannabis transactions that are increasing in availability and popularity.

Non-Cash Cannabis Transactions and Security

There are a number of reasons why cannabis businesses are beginning to prefer payment methods other than cash. Any business that frequently deals in cash must store this large amount of currency on-site before it can be deposited into a financial institution. This can expose businesses to increased risk of robberies, burglaries, and internal theft. By accepting non-cash cannabis transactions, cannabis businesses can reduce the amount of cash on-site and decrease the associated risks.

Additionally, accepting non-cash payments not only serves to reduce security risks, but can also increase efficiency. When large amounts of cash are stored on-site, managers must count and deposit cash funds from drop safes into the main cash storage safe more frequently than dispensaries that encourage non-cash cannabis transactions. This can be time-consuming and tedious, but also increases risk of theft or diversion. Cash is most vulnerable to theft when it is out of secure storage. When cash is repeatedly in the process of count and transfer into the main cash storage, there are more opportunities for a potential theft.

Secure Methods of Non-Cash Cannabis Transactions

Although the most popular forms of payment, credit and debit cards, are not typically accepted by cannabis businesses, there are currently several ways that cannabis businesses handle non-cash transactions. The most efficient and secure way in which companies can collect money from customers is by using a cashless ATM. A cashless ATM functions similarly to that of a normal ATM, but instead of dispensing cash, it transfers funds from the customer’s account to the cannabis business’ account electronically. In order to ensure that the cashless ATM is used as safely and securely as possible, the system should be integrated with the dispensary point-of-sale system and should be under video surveillance at all times.

Another alternative to cash payments are bank transfers. Bank transfers or Automated Clearing Houses (ACH) transfer money directly between bank accounts, eliminating any need for checks or cards. Using ACH is a safe and reliable way to accept payments. A possible drawback of using this method is that dispensaries need to use a third-party operator, such as Hypur Pay. Customers will need to register with the third-party operator as well as download an app in order to make a payment. This method is a safe, reliable alternative to a cashless ATM to reduce the security risks caused by handling large amounts of cash on-site.

Non-cash cannabis transactions are increasing in popularity because they are often more convenient for consumers. Cashless forms of payment such as credit or debit cards or electronic payments are the most common forms of payment at most retailers and many customers no longer carry cash on their person. A dispensary that does not accept non-cash cannabis transactions or does not have an ATM on-site may be less appealing to customers.

The Future of Non-Cash Cannabis Transactions

Despite the limitations of current non-cash cannabis transactions, there are clear benefits to offering cashless payments and this method of transaction will likely continue to grow in popularity. The emergence of COVID 19 has also served as a catalyst for companies to move away from cash transactions. Many cannabis businesses have recently begun to offer forms of non-cash cannabis transactions as a way to reduce contact between employees and customers.

Additionally, it is possible that legislation could open up more options for non-cash cannabis transactions in the future. The SAFE Banking Act, a bill that would prevent federal banking institutions from being punished for serving cannabis businesses, has been passed by the House, but awaits Senate ratification. Although slow, it seems the federal government is beginning to recognize the importance of allowing cannabis businesses federal banking services.

As legalization of cannabis spreads and legislation changes, it is likely that cashless payments will continue to increase in availability. Although limited and not perfect, there are options for cannabis companies that want to utilize non-cash transactions to appeal to customers and reduce security risks.

How Can Sapphire Risk Help?

Tony Gallo and the team of experts and consultants at Sapphire Risk Advisory Group have written hundreds of Security Plans which feature non-cash cannabis transaction security. Follow us on social media to stay up to date with more security best practices and cannabis industry updates!