Can you buy pot in Colorado with a credit card? It’s complicated
New laws set the table for modernization in marijuana, but experts say widespread change will likely rely on the feds.
Americans are accustomed to using a credit card when shopping, especially when making online purchases. That is, unless, they are buying weed.
Cannabis is among the country’s only industries that rely almost exclusively on cash transactions. Despite recent changes to Colorado laws that aim to modernize the customer experience, experts say it will take changes at the federal level before purchasing marijuana is as easy as checking out on Amazon.
In 2023, legislators passed a bill that made it legal for dispensaries to accept online payments for cannabis purchases. The bill, backed by Native Roots Cannabis Co., supersedes antiquated prohibitions and allows dispensaries to conduct business in a modern way, said Liz Zukowski the company’s director of public affairs.
Native Roots fought for legislation to allow people to pay for pot online. (Lewis Geyer, Longmont Times-Call)
“Online shopping and payments are ubiquitous across industries, so it seemed strange if not unfair that cannabis businesses couldn’t make the decision for themselves,” she said.
The bill passed with little opposition and the Marijuana Enforcement Division recently adopted rules to make it law. It’s still fresh, however, since the rules took effect in early January, and doesn’t yet appear to be in widespread use.
Online shopping is not entirely new to cannabis. Prior to this year, consumers were able to fill a digital basket on their favorite dispensary’s website, but they couldn’t check out in a traditional sense. Instead, buyers were required to pay onsite when they picked up their products in person.
And during the pandemic, when demand for online and contactless shopping skyrocketed, Gov. Jared Polis passed an emergency order that, among other things, enabled cannabis businesses to accept payment online for orders. Some businesses embraced the opportunity, which proved a successful test case for a move to digital payment processing, said Truman Bradley, executive director of the Marijuana Industry Group.
“There were no issues whatsoever for a year. There weren’t any issues with fraud, no instances of youth finding a loophole. It went pretty smoothly,” he said.
However, when the pandemic officially ended, so too did the emergency rules. In 2021, the cannabis industry tried to pass a bill codifying dispensaries’ ability to accept payment online and provide telemedicine, though it failed. Native Roots returned with a bill in 2023 that focused exclusively on payments.
Banking on change
So far, though dispensaries have been slow to adopt this new option because banking remains a contentious topic in cannabis, even a decade after legalization.
Banks and private companies like Visa and MasterCard are hesitant to work with dispensaries, manufacturers and cultivators because they don’t want to take on the risk of dealing with a substance that is still illegal on a federal level. Their reluctance makes it difficult for entrepreneurs in the space to access loans, lines of credit or traditional merchant processing.
According to policy expert Mason Tvert, the concern is that institutions would violate federal anti-money laundering laws by knowingly doing business with cannabis companies and be subject to civil or criminal liability, regulatory punishment and other consequences should regulators decide to crack down.
Federal legislators have considered offering special protections to financial institutions that work with marijuana businesses through the Secure and Fair Enforcement Regulation (SAFER) Banking Act, but so far have not reached consensus on the subject. The bill has died and been reintroduced multiple times in Congress, most recently in late 2023.
Uncertainty related to banking forces dispensaries to leverage third-party processors, rather than working directly with banks to process payments, said Peter Marcus, spokesperson for Terrapin Care Station, a dispensary with six Colorado locations.
“Terrapin is not currently accepting online payments for orders, but it is something we are very much actively pursuing,” Marcus said by email. “While the law in Colorado opens the door for credit/debit card payments, as well as methods such as Apple Pay and PayPal, it is still complicated to execute through third-party vendors.”
Interestingly, Native Roots also doesn’t offer the ability to pay online for pickup orders at any of its 21 stores even though it advocated to be able to do so, said Zukowski.
That’s not to say every weed purchase requires cash. Many dispensaries offer customers the ability to run a debit card through a device called a cashless ATM.
The small, handheld terminal circumvents the need for buyers to withdraw cash to hand the seller, but transactions are different from traditional debit purchases because they don’t charge the exact basket amount. A cashless ATM rounds up to the nearest five dollars and customers normally get some change back.
So far, federal lawmakers have been unsuccessful in passing legislation that would allow banks to work with the cannabis industry. This file photo shows U.S. Sen. Elizabeth Warren questioning a Wells Fargo executive on the topic in 2015. (Susan Walsh, Associated Press file)
Out for delivery
Colorado’s cannabis delivery companies have been working through the cash conundrum since hitting the streets in 2021. Collins Buckner, founder of Puff Pass Delivery, for one, never wanted delivery drivers carting large sums of money across the city.
“It’s just too dangerous,” he said.
Cashless ATMs won’t work for delivery either, he said, because they are a type of point-of-sale system that belongs to each respective dispensary. Because most dispensaries contract with an outside delivery company, the cashless ATM would need to be returned after every drop-off.
Instead, customers who order through Puff Pass Delivery use a service called Stronghold to make a bank transfer for the cost of their goods, similar to the experience of using Venmo. (Puff Pass Delivery currently works exclusively with Simply Pure Dispensary in Lower Highlands.) Buckner chose Stronghold because it leverages the same technology that Venmo does, called Plaid, to ensure individuals’ money and banking information is protected and secure.
While services like Stronghold, known as automated clearing houses, offer the convenience of online money transfers, few consumers are familiar with them and, thus, sometimes hesitant to use them. Buckner said 75% of people who abandon their carts using Puff Pass Delivery do so when prompted to pay.
“I would love if customers could just punch in their credit card number, that’s what they want to do. That would boost our business by three or four times,” he said.
Though the legislative approval of online payments isn’t a watershed moment for Colorado cannabis, Bradley sees it as an incremental step toward the industry in line with others. If the Drug Enforcement Administration reschedules marijuana, he expects more canna-businesses will get on board, though whether that inspires Visa, MasterCard and other payment processors to allow card transactions remains to be seen.
Ultimately, marijuana should be ready to meet the demands of a 21st-century society, he said.
“It’s one of many small steps towards normalcy and the further destigmatization of cannabis, as well as just making it a little bit easier for cannabis patients and consumers,” Bradley said.
