This year, you can expect shifts and new trends in the cannabis industry that will contribute to growth while furthering the development of transparency, compliance, and financial responsibility.
Emerging markets in states like New Jersey and New York are being closely watched and are setting the precedent for legal cannabis markets on the east coast. In Q3 alone, New Jersey saw over $100 million in recreational cannabis sales. Experts believe adult-use cannabis legalization in New Jersey has pressured neighboring states to do the same. At the end of 2022, New York became the next to follow suit. Recreational cannabis sales also kicked-off in Connecticut last week, and state regulators reported more than $250,000 in sales generated on the first day of business.
Consumers across all retail sectors, including cannabis, are abandoning the use of cash altogether. According to Pewter Research and CNBC, only 41% of Americans use cash in an average week. Cashless payments will continue to increase in popularity during 2023, allowing customers to pay with mobile devices at dispensaries and other cannabis businesses via contactless and digital payments. Expect to see bank-to-bank transfers via ACH overtake alternative payment methods and “workarounds” such as Cashless ATMs. Expect to see differentiators for contactless payments go beyond transaction fees with a focus on speed and settlement times, risk and fraud protection measures and supporting marketing programs. Secure and safe transactions will be key as risky cash transactions continue to dwindle.
As adult-use legalization reaches New York and the rest of the east coast, we will likely see more mainstream ancillary businesses from other industries move into the cannabis realm, including large-scale corporate finance, banking, accounting, and other crucial services. This transition into cannabis will provide the industry with much-needed support and enterprise-level solutions, especially when considering the current status of the SAFE Banking Act.
Partnerships with large-scale tech companies and other big players will lead the way by offering integrated solutions for cannabis businesses with much more flexibility, choice, and scalability. More companies will rely on the ability to choose their tech stack rather than the convenience of a one-stop shop. Digital payment providers like Aeropay, for example, have already partnered with some of the top technology companies, including Jane, Akerna, Flowhub, Dispense and Mosaic, among many others, to offer all-in-one payment and business management opportunities.
These robust integration solutions will allow business owners to integrate all aspects of their dispensary, including e-Commerce or cannabis delivery, for seamless digital transactions and store management. For developers and business owners, companies like Aeropay will continue to offer the latest easy-to-implement SDK, a more extensive library for complete customization, and access to more advanced out-of-the-box integrations with numerous point-of-sale and cannabis eCommerce platforms.
It's no surprise that experts are forecasting big moves on the tech side of the cannabis industry in 2023. With a growing customer base and new technology, the industry will continue to experience growth in the next few years. The number of legal cannabis consumers is expected to reach close to 71 million by 2030. Keep an eye out for new products and services that could help propel the sector even further, especially concerning payments for cannabis dispensaries.
Anyone familiar with the burgeoning industry is aware of the challenges cannabis businesses face when it comes to payments. In the last year, there were several hurdles as well as positive accomplishments that will help determine the path ahead as far as payments for cannabis dispensaries go.
Here's a recap of what happened in 2022 and what to expect for the future of cannabis payment processing.
For the third time, the SAFE Banking Act did not make it past senate approval. First introduced in 2017, the SAFE (Secure and Fair Enforcement) Banking Act would give cannabis entrepreneurs access to banking services that are currently unavailable due to the federal laws surrounding cannabis legalization. After being approved in the House of Representatives several times, the long-anticipated bill failed to pass the Senate in its current iteration.
One of the most significant events last year was President Biden's passing of the Medical Marijuana and Cannabidiol Research Expansion Act. It's widely known that scientific research on cannabis, CBD, and hemp is minimal due to marijuana's classification as a schedule 1 drug. Due to this lack of research, there's little policymakers have to go on to prove that cannabis contains many medicinal benefits and a low potential for consumption abuse.
This year’s increase in digital cannabis payment processors for dispensaries will primarily be due to the recent crackdown on using cashless ATMs. Cannabis retailers have been using cashless ATMs, or "point of banking" systems, as a workaround to allow customers to use their bank cards at checkout. Business owners can "mask" payments to hide transaction details like the name of their business and the products sold.
As the industry continues to evolve, staying current on the latest payment solutions is crucial in staying competitive, compliant, and transparent. Because cannabis is still federally illegal, accepting payments like this is technically unlawful. Credit card companies like Visa have warned the industry against cannabis payments that run on the card rails.
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