Can You Use a Credit Card at a Dispensary?
Unpack the unique financial landscape of cannabis dispensaries and navigate approved payment methods for your purchase.
Navigating payment options at cannabis dispensaries can be confusing. While many states have legalized cannabis, the payment landscape remains complex. This complexity stems from the disconnect between state-level cannabis laws and federal prohibition. Understanding these considerations is essential for a smooth transaction.
Understanding Payment Challenges
Credit cards are generally not accepted at cannabis dispensaries due to the conflict between state and federal law. Cannabis remains a Schedule I controlled substance under federal law, specifically the Controlled Substances Act (CSA). This federal illegality creates challenges for financial institutions. Major credit card networks (Visa, Mastercard, American Express, Discover) operate under federal regulations and cannot process cannabis transactions.
Financial institutions face legal and regulatory risks by engaging with cannabis-related transactions. Federal anti-money laundering (AML) laws, such as 18 U.S.C. 1956, criminalize handling proceeds from unlawful activities, including marijuana sales that violate the CSA. Banks and credit card companies risk severe penalties, including fines and imprisonment, if found to be knowingly facilitating federally illegal activities. This exposure leads them to prohibit cannabis purchases on their networks to avoid regulatory scrutiny.
The Bank Secrecy Act (BSA) requires financial institutions to file suspicious activity reports (SARs) with FinCEN for transactions suspected to be from illegal activities. While FinCEN has issued guidance for banks serving cannabis businesses, financial institutions still face federal prosecution risks. This environment compels most traditional financial service providers to avoid direct involvement in cannabis transactions, leaving dispensaries with limited payment solutions.
Accepted Payment Methods
Given federal restrictions, cash remains the most universally accepted payment method at cannabis dispensaries. Many dispensaries operate as cash-based businesses due to limited access to traditional banking, creating security and logistical challenges. Handling large amounts of physical cash necessitates robust security measures, including secure storage and transport, to mitigate risks like theft.
Debit cards offer another common payment option, though processing often involves specific workarounds. Many dispensaries utilize “cashless ATM” or “point-of-banking” systems. A debit card transaction is processed as an ATM withdrawal, often rounded up to the nearest $5 or $10, with the customer receiving change in cash. While this allows debit card use, major card networks like Visa and Mastercard view these practices as potential violations of their rules.
Beyond cash and debit card workarounds, some dispensaries explore other digital payment solutions. Automated Clearing House (ACH) transfers, or pay-by-bank, facilitate direct bank-to-bank transfers, bypassing card networks. These methods often have lower transaction fees and offer increased security by moving funds directly between accounts. Some dispensaries also adopt mobile payment solutions, QR code payments, or cryptocurrency, though these are not universally available and have their own challenges.
Preparing for Your Purchase
To ensure a smooth experience, bring cash as your primary payment method. Due to the complexities of federal and state laws, cash remains the most reliable option across the industry. This approach helps avoid potential inconveniences or delays at the point of sale.
Before visiting a dispensary, call ahead to inquire about their accepted payment methods. Policies vary significantly and may change without notice. Confirming payment options, like debit cards or cashless ATM service, saves time and prevents issues.
Be aware of potential transaction fees associated with non-cash payment methods, particularly with cashless ATM services. These systems often charge a convenience fee, similar to an ATM withdrawal, typically $3 to $5 or more. If a cashless ATM system requires transactions to be rounded up, be prepared to receive change in cash. Having sufficient cash as a backup is prudent to cover your purchase and unexpected fees.