How Cannabis technology companies help dispensaries find payment solutions when the Government will not
The United States is witnessing a boom in cannabis retail, which is expected to reach $31.8 billion in annual sales by the end of 2023. (Benzinga)
Fueling this growth are cannatech companies that innovate and lead technological advancements within a highly competitive and regulated industry. Cannatech companies like Treez facilitate in-store and e-commerce sales and offer dispensaries multiple digital cashless payment solutions, leading to increased sales and customer satisfaction.
Dispensaries Face Unique Challenges In Finding Banking And Payment Solutions
While state-level cannabis legalization is progressing, federal legalization and the Safe Banking Act remains stagnant in Congress. The uncertainty surrounding federal cannabis legalization has discouraged banks and virtually all credit card providers from doing business with cannabis companies leaving many to operate as cash-only businesses.
Despite the lack of decisive action by the government, cannatech companies have seemingly filled the void left by the absence of major financial institutions in the cannabis space. Fintech companies deliver multiple cannabis payment options to the market, yet many dispensaries are unaware of the growing number of these alternatives to cash transactions due to a lack of information, limitations of their own legacy systems, or their comfort with the status quo.
Cash Isn’t King: The Need For Cashless Payment Solutions
A cash-only business presents many challenges to a dispensary in terms of safety, efficiency, inability to offer customers multiple sales channels, and convenience.
Across the general retail industry, cash makes up less than 20% of sales payments. In comparison, cash makes up 80% of sales within cannabis dispensaries. The exorbitant amount of cash transactions has exposed dispensaries to robberies and made safety one of the biggest challenges to businesses. Safety concerns are escalating – in the state of Washington, according to The Center Square, there have been at least 100 armed robberies of dispensaries in 2022. According to Treez, by adding payment technologies to their businesses, dispensaries could reduce the amount of cash on-site by up to 30%, lowering the financial toll of theft and freeing up employee time for customer-facing activities.
Safer and more efficient transactions free up employee time to focus on customer-facing activities and improve the customer experience - often increasing long-term and overall sales. Flexible and adaptable payment solutions could be a key to moving the industry and individual companies forward. Whether it’s an in-store or online transaction, payment technologies help solve the problem of too much cash on hand while improving the customer experience.
Flexible And Adaptable Payment Solutions Key To Moving the Industry Forward?
In addition to safer and more efficient transactions, payment technologies also offer convenience and ease of use that can increase sales, in some cases doubling the average sales value. Cashless payments make it possible to offer online ordering to customers, which drives overall higher average order values.
Today, the three most common forms of cash alternative payment solutions include automated clearing house (ACH) direct deposits, pin/debit cards, and cashless ATM payments. Retail operators utilizing cashless ATM payments recently experienced outages due to the crackdown on the loophole that dispensaries use to process payments as ATM withdrawals by misidentifying purchases as coming from a nearby address. The crackdown shed light on the unsustainable practice leaving retailers to consider alternative options like those offered by TreezPay, the first fully-integrated cannabis payment processing solution to offer multiple cashless payment options. TreezPay delivers more than a 25 percent increase in monthly sales revenue for customers who implemented one of the cashless payment options. In 2022, as part of an effort to further provide payment solutions when the government won’t, Treez acquired Swifter, an ACH API payments platform tailored to meet the unique needs of the cannabis industry. Swifter by Treez enhances digital payment solutions by providing embedded partner-powered fintech services that lead to more transparency, stability and better processing rates.
The Power Of An Open API Network
With the rising popularity of cashless and contactless payment options, software companies are developing new technologies to keep dispensaries competitive in a landscape becoming more crowded as it inches slowly toward legalization. To manage the evolving payment technologies landscape and juggle regulatory compliance in each state market, dispensaries will look for a flexible platform that can easily integrate different traditional payment technologies, as well as emerging ones.
That’s why an open architecture like Treez’s API platform is reportedly so important. The API platform offers a broad suite of cannabis-focused solutions while also focusing on integrating with as many other innovative solutions such as cryptocurrency and Mobile QR. In this way, each dispensary has the freedom to shop around and build the software ecosystem that makes the most sense for its needs.
In the end, cannatech companies aren’t betting on legislation for the industry coming any time soon. As a result, Treez, and other technology companies, are proactive in delivering advanced cashless payment solutions that help dispensaries attract more customers, increase sales, provide better customer experiences and manage far less cash.