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How the Cash Burden Weighs on Cannabis Businesses in an Economic Downturn

Cannabis
October 18, 2023
Rachel Ludwig

Relying exclusively on cash is a harsh reality for many U.S. cannabis businesses. Cash dependence comes with a long list of problems, but during our current period of economic uncertainty it’s especially risky for those in the cannabis industry. 

If you’re operating a cannabis business in the midst of this economic downturn, you may already be feeling the pressure of rising costs and increasing competition – this post explains why being cash-only makes things worse. 

High cash management costs

Handling cash can cost retailers between 4 and 15 percent according to research from IHL Group

Cannabis businesses must rely on employees to count cash, bundle it, drop it off at the bank, and then later reconcile it. That means the more cash (or better the business is doing), the higher operating costs become. 

Takeaway: The unnecessary costs associated with handling cash are an added strain on cannabis businesses already fighting against an economic downturn. 

Significant risk of theft

Any business that’s known to have a large amount of cash on hand is going to be a target for break-ins. Those in cannabis are no different. 

Just this March, vertically-integrated cannabis company Delta Boyz in California saw three separate attempted robberies. 

But these break-ins aren’t even the biggest threat to your cash on hand – according to MJBiz, it’s actually internal theft. They reported 90% of financial and product loss in the industry is due to employee theft.  

Takeaway: Cannabis businesses worried about the worsening economy must also worry about potentially drastic losses to their bottom line because of internal and external theft of cash. 

Impact on customer experience

For customer-facing cannabis businesses, like dispensaries, complete reliance on cash actually leaves money on the table. That’s because digital payments actually lead to:

  • • 25% higher customer spend 
  • • 30% increase in completed online orders
  • • 37% increase in online customers returning 

Companies looking to improve business during an economic downturn often move away from cash because of this. Switching to a cashless alternative like digital payments is one of the easiest ways to quickly drive revenue. 

Takeaway: If your dispensary is struggling, or you’re worried the economy is going to get worse, then adding digital payments will help you earn more and increase customer loyalty. 

Stop relying on cash

As you look for effective ways to minimize cash at your cannabis business, consider Aeropay digital payments

Aeropay offers secure and instant digital transactions for cannabis retailers and business to business payments – eliminating the need to keep hauling duffle bags of cash around. 

A digital payment is the instant transfer of currency from a customer to a business. A common method of digital payment is called ACH (automated clearing house), which involves sending funds directly from a customer bank to a business bank.

Schedule a 15 minute demo to see Aeropay’s full digital payments solution and put bank-to-bank transfers to work for your business.

Author

Rachel Ludwig

Marketing & PR Lead
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