Cannabis Credit Card Processing Program Highlight

Welcome back my friends! Last article I mentioned we had some exciting news coming in the cannabis payment processing space. So let’s get to it!

Many cannabis operators don’t realize that you can, in fact, accept credit cards at your dispensary. Other dispensary owners may have heard about it but are rightly skeptical. 

Having been in the business for almost a decade we are going to cut through the noise and review why and how you can accept credit cards and highlight a cannabis credit card processing program currently available to those who qualify.

First, let’s talk about the most common objection we receive when advising a cannabis dispensary owner that they can accept credit cards.

Objection: You can’t accept credit cards for cannabis purchases because it’s illegal.

Truth: ALL of the current methods of processing cannabis transactions are technically illegal due to Federal law.

For example cashless ATM, the most common method used to process cannabis transactions, disguises point-of-sale (POS) cannabis transactions as ATM cash withdrawals, which misrepresents the nature of the transaction to banks and card networks like Visa and Mastercard.

These networks explicitly prohibit cannabis-related payments due to marijuana’s federal illegality under the Controlled Substances Act, even in states where it’s legal. 

By coding the transactions this way, dispensaries effectively deceive financial institutions into processing funds they would otherwise reject, violating terms of service and potentially triggering federal laws against bank fraud (18 U.S.C. § 1344) and money laundering.

This is illegal and is considered bank fraud by financial regulators, payment networks, legal experts and industry compliance firms. 

We will also remind you that no payment system has been completely foolproof or safe from law enforcement intervention. 

Past law enforcement initiatives have come after Pin Debit and Cashless ATM systems over the last five years. Reference Trulieve Cannabis Corp. vs. Switch Commerce for an example from just this year.

How Does Cannabis Credit Card Processing Work?

When it comes to credit card processing for cannabis purchases, the same rules apply, UNLESS there is a workaround to be sure the card isn’t technically being used to purchase cannabis and running over the credit card payment networks.

Solutions have varied greatly over the years, however, they seem to have consolidated around a similar process in recent history. 

Essentially it works like this…

• The customer swipes their credit card at a POS terminal
• The transaction is processed as a purchase of a digital gift card or voucher (a federally legal item)
• The system immediately redeems the gift card value for the cannabis purchase, keeping the cannabis leg off the credit card rails (Visa, Mastercard, etc.)

This process allows the card to be used the proper way to purchase something legal in a transaction (a gift card) that can run over the credit card ‘rails’. 

The gift card is then instantly redeemed for the cannabis purchase removing the need for the transaction to run over the credit card ‘rails’ so you don’t run afoul of payment network terms. 

Qualifications & Highlights

Cannabis credit card processing programs tend to be slightly higher cost but that is often outweighed by the 25% to 35% larger average order sizes seen with credit card purchases versus debit card purchases. Now let’s get to the details.

Minimum Qualifications

• Minimum $50K per month in processing volume. (Common threshold for high-risk processors to offset compliance costs; smaller volumes often get deprioritized due to regulatory scrutiny.)
• 40% of your processing will still need to be done using a debit solution (also offered via Pin Debit and Cashless ATM)

Highlights

• Mastercard, Visa, Discovery and AMEX processed on a credit card device
• US Based bank with bank oversight
• Acquiring banks are actively engaged in the solution
• Funds are paid out in 3 days and is direct deposited
• Integrates with Dutchie and other systems (Can repurpose some terminals like Dejavoo, QD2 and QD4)
• Card present transaction qualifies correctly
• Entire onboarding process takes about one week

Cost Structure

• Full credit card processing 5.5% plus $1.50 per transaction 
• $100K plus per month in processing may qualify for $4.95% plus $1.50 per transaction
• Tips are customizable by dollar or percentage amounts
• Merchants may add a percentage or flat fee to reduce cost
• If all electronic payments go through the system the terminals are free. The Dejavoo terminals come preprogrammed and ready to go. This includes in-store and off-premise terminals

Want to see if you qualify? Contact us for a free consultation today.

That’s it for now. Visit back for cannabis financing and cannabis merchant processing updates.

About the Author: Daryl Eames is the founder of Loanviser and the NH Cannabis Association. He has advocated for cannabis legalization in the state of New Hampshire and has deep experience in cannabis financing and cannabis merchant processing, servicing the cannabis industry since 2019.