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The 2023 Guide to Cannabis Payment Processing Solutions

Everything you need to know about payments for the cannabis industry.

Compliant, digital cannabis payments

Introduction to cannabis payment processing

The recent surge of states passing legislation for legalized cannabis in some form has been nothing short of revolutionary. Not since the end of alcohol prohibition in 1933 has a product been rapidly unleashed onto the licensed market with such high and widespread demand. With each passing year, cannabis legalization, normalization, and demand continue to grow.

While the industry looks optimistically towards the future, the current federal classification of cannabis brings substantial challenges.

One of the most common issues faced by rising cannabis businesses is the need for reliable, consistent, and fully compliant cannabis payment services.

If you currently own or operate a cannabis dispensary - whether recreational, medical, or both – you likely have questions about the current landscape of available cannabis payment options.

With the changing legal status of cannabis, and making sure transactions are as transparent as possible, it is important to have a trusted cannabis payments provider. While cash is commonly used to make cannabis payments, cashless payment options allow for bookkeeping and increased security.

In this guide, we'll walk you through  the cannabis payment solutions currently utilized in the industry and the risks and benefits around each option.

By the end of this guide, you'll understand more about cashless compliant payments and the benefits of having a reliable cannabis payment provider, like Aeropay, to start accepting digital cannabis payments.

What is the Risk of Cannabis Cash Payments?

Cannabis businesses are putting up with cash payments despite the risks.

Though cash payments are the most common way to transact in the retail cannabis space, it is not without its share of complications. Transacting predominantly in cash, especially when operating at a high-volume location, can create unforeseen additional costs associated with cash management.

Cash Risks

Tax collection fees

Cash theft

Increased time spent by employees counting cash

Armored vans used to make cash deposits

Security threats for employees in store and delivery

Transfer of illness

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Debit Cards - "Cashless ATMS" - or the "ATM Loophole"

What is really happening when a business allows you to make a cannabis related purchase with a debit card.

The cannabis industry newswire exploded at the end of 2021 when Visa issued a statement titled “Cashless ATM” and Misuse of ATM Transactions Prohibited. 

In this statement, Visa stated, “Cashless ATMs are primarily marketed to merchant types that are unable to obtain payment services — whether due to the Visa Rules, the fuels of other networks, or legal/regulatory concerns. Therefore, supporting this scheme affects the integrity of VisaNet and the Plus network, as well as the Visa payment system.” This statement indeed was a warning that cashless ATMS were on the verge of being shut down at the end of 2022.

Cannabis retailers nationwide have been rushing to find an alternative to cashless ATMs given the recent shut down at the end of 2022. Until December of 2022, you would have seen many dispensaries accept debit card payments where totals were rounded to a flat amount and cash was given back to the customer. This was called a cashless ATM and was shut down following VISA’s warning. It was a workaround method that was never compliant and evolved from traditional credit card companies not wanting to touch cannabis due to it being federally illegal.

Processing a transaction for cannabis with a pin debit card violates the payment cards network policies. Every merchant has a merchant ID number identifying the business with the payment processing systems, essentially telling the payment processor where to send money that has been transacted. Along with the merchant ID number, there is a Merchant Category Code which identifies what kind of business the merchant is conducting. 

Since cannabis is still federally illegal, there is no way to correctly identify the business that remains in accordance with payment processing processes. Hiding or masking the transfer of money can raise an alert for potential money laundering schemes, putting the merchant at risk.

How do Cashless ATMs work at dispensaries?

A customer requests $100 at a cashless ATM terminal. After providing necessary security info, i.e., Personal Identification Number (PIN), the terminal dispenses a receipt to the customer. The budtender deducts the purchase total, applicable tax, and cashless ATM fee and returns any remaining change to the customer, still requiring dispensaries to have cash on hand.

Cashless ATMs allow dispensaries to accept debit card payments indirectly. A dispensary customer uses the cashless ATM to withdraw cash from their bank account and purchase cannabis products at the point of sale without handling money for most or all of the transaction. On the consumer’s bank statement, rather than charges appearing as a payment made at a dispensary, the transaction appears as a cash withdrawal from an ATM.

Cashless ATMs permit the processing of cannabis payments with debit cards - which violates card network policy agreements.

Aeropay vs. Cashless ATM


Aeropay is transparent with regulators in each state it operates.

Accurate Payment Amounts

Customers pay exactly the right amount, no rounding to the nearest $5.

No Fees For Customers

Customers are never charged a fee.

Easily Void & Refund Transactions

You're in control with the ability to void and refund transactions before they have settled.

Seamless eCommerce & POS Integration

Best APIs and technology end points to allow for a seamless integration.

No Hardware Needed

Aeropay doesn't require any bulky or expensive hardware for customers to pay in your store.

Aeropay Landscape Logo

Cashless ATM

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How about allowing for crypto currency payments at a dispensary?

A fresh, but volatile and risky payment option.

Since Bitcoin was developed in 2009, it and other cryptocurrencies (altcoins) have become increasingly popular. The industry continues to be regulated as you can expect to be scrutinized if you were to accept any form of cryptocurrency payment method.

While cryptocurrencies do have benefits, they are far from ideal for businesses operating in the cannabis industry. Only a handful of your potential customer base owns any crypto and it can be difficult to help your customers set up their crypto accounts.

At the same time, crypto can be extremely volatile. Bitcoin lost approximately 85% of its value within a month in 2017 and 70% so far since 2021 highs. Volatile price fluctuations can become a risk and difficult to manage if you're always converting between currencies.

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Is it legal to process credit cards at a cannabis dispensary?

No. While companies still knock on the doors of dispensaries, offering credit card processing solutions is not worth the risk. Major credit card providers do not allow cannabis transactions on the card rails.

Credit Card Risk

Americans are familiar with making everyday purchases with their credit cards.  Often, it catches the casual cannabis consumer by surprise to learn that dispensaries do not accept credit cards as a payment method. 

As cannabis remains federally illegal and classified as a Schedule 1 controlled substance, major credit card companies, i.e., VISA, MasterCard, and American Express, currently prohibit credit card cannabis payments.

With the cannabis industry's focus on providing sophisticated and tech-savvy consumer buying experiences, cash-only requirements can be off-putting to the customer. Many Americans use credit cards programmed in their mobile phone wallets and prefer cards to cash for convenience and loyalty points.

Though accepting credit cards may sound tempting, cannabis businesses should avoid it until federal legislation provides clarity and card networks begin transparently endorsing the use of their networks in cannabis.

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Is it legal to accept ACH & Bank Transfers at a dispensary?

Yes. Digital cannabis payments enable consumers to pay from their bank account directly to the dispensary using their mobile phone.

Using ACH and digital payment platforms, cannabis owners can leverage financial technology (FinTech) to help protect themselves from legal challenges, minimize costs, and increase operating efficiency. These payment options offer various unique features, such as full integration, prepay, pre-authorization, and easy voiding/refunding. Both consumers and retailers prefer digital cannabis payment options, leading to increased market share for these payment platforms within the industry.

Undoubtedly, digital payments and cannabis continue to go hand in hand. As time goes on and the industry continues to grow, the use of digital payments will become even more widespread.

But why have digital payment solutions, like Aeropay, become so popular?

  • Guaranteed Payments
  • Streamlined Operations
  • Better Customer Experience
  • Same Day or Next Day Deposit
  • Delight Your Customers Throughout Their Journey

How do dispensaries address problems with cash payments?

Cash payments can be problematic for cannabis companies. Cash shortages, processing costs, and security issues are just a few of the common issues that cash can create. It is also impossible to accept cash for online orders or for customers to prepay with cash when they place an order for pickup. Digital payment solutions help businesses avoid these common issues, operate more efficiently, and keep better track of payments.

The cannabis industry has a lot to consider, and businesses are becoming savvier regarding their entire cannabis technology ecosystem, including payments.

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ROI of Cashless Cannabis Payments

How to Determine the Best Solution for Your Business

When deciding which cannabis payment option makes the most sense for your business, be sure to keep the following variables in mind:

  • Margin
  • Revenue
  • Current Retail Operations
  • BOPIS, Curbside, & Delivery
  • Integration
  • Optionality for Customers
  • Customer Experience

Clearly, there is a lot to consider when choosing which cannabis payment process is ideal for your dispensary. When considering all variables above, it’s evident digital payment providers, like Aeropay, are the preferred payment solution in the cannabis space.

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The Future Legal Aspects of Cannabis Payments

What to Expect for Legal Aspects of Marijuana Payment Solutions

Over the past decade, the cannabis industry has witnessed incredible changes. But these changes are only the beginning. Over the next few years, there will likely be several more remarkable changes that alter the legal status of cannabis and corresponding marijuana payment solutions.

  • Secure and Fair Enforcement (SAFE) Banking Act
  • Removal of Cannabis as a Schedule 1 Drug
  • Section 28(e)
Legal future of cannabis payments

With each passing year, the legalization of both recreational and medicinal cannabis is becoming more accepted across American society. With greater acceptance, creating cannabis payment systems and their supporting infrastructure has become increasingly more possible. A Pew Research Center Poll from April 2021 revealed that 91% of Americans now support the federal legalization of cannabis—an all-time high.

As more states allow some form of legal and licensed cannabis, payment processing options will continue to expand. Within the next ten years, most states with a licensed cannabis market will incorporate payment processing infrastructure. A challenge for cannabis suppliers will be finding ways to minimize fees and ensure payments are consistently processed with little chargeback.

While traditional banking services and credit card payments may become available for cannabis-related businesses at some point in the future, cannabis transactions will likely be considered high risk for quite some time. High risk regarding credit card payments will lead to significantly higher processing fees than seen with ACH payments.

As a result, bank transfers will continue to remain a popular payment option throughout the cannabis industry as consumers enjoy the smooth user experience each time they return.

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How to Get Started with Aeropay

Signing up for Aeropay is easy. Simply complete a compliance form and a training overview (total time required is less than 2 hours). At that point, your business will be ready to accept payments.

Digital payment options, without a doubt, represent the future of the cannabis industry.


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We’d love to show you how we put bank-to-bank transfers to work for your business.

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