top of page
  • Alex

Merchant Processing for Cannabis Dispensaries

Updated: Dec 5, 2022

Empirical Solutions is a legitimate merchant account firm, so with our program, you will be on the same page with non-cannabis businesses in your area. We provide merchant processing for dispensaries and other TGK licensees, adding to its extensive financial services focused on the cannabis industry.

With our mutual card payment solution, cannabis bans from banks and credit card networks no longer affect your business. Forget workaround solutions like cashless ATMs, digital wallets, and unclear company names on invoices - our commerce solution is transparent, fully compliant, and sustainable.

Wherever your company operates in the supply chain of THC factories, our solution is always with you. Any legal entity with legal authority in the country can use our solution to process the personal data of the seller. It includes medical and adult clinics, processors, groomers, rescuers, and shippers.

Adding proper merchant processing to your payment options is a big step up from standard cashless ATMs. Gone are rounded sales, customer charges, and disguised DBA addresses. This system allows you to make sales at the exact price without fear of your cashless ATM being pulled out from under you at any time.

What are the problems with the cannabis business and credit card processing?

Cannabis with more than 0.3% THC remains illegal at the federal level. However, federal officials generally argue that state-compliant cannabis businesses can operate without risk of disruption. Moreover, to the surprise of many cannabis industry professionals whom financial institutions have denied essential banking services, banks have established rules for banking cannabis businesses. This process emphasizes anti-money laundering monitoring and reporting.

MasterCard and Visa have clarified that they will not support federally illegal cannabis transactions. Despite access to banking services, legal cannabis businesses cannot secure merchant accounts to process debit and credit card transactions. Only federal legalization can change this policy.

Unlike the CBD sector, which we will discuss in more detail later in this article, cannabis credit card processing and other merchant processing services are not only restricted – they are prohibited. It's a constant headache for cannabis businesses whose customers want to pay by credit or debit card and don't understand why their money isn't accepted in those forms.

As a result, cannabis entrepreneurs use a variety of tactics to offer their customers card-based transactions, from the clever to the downright dodgy. Some were unsuccessful, while others served as a temporary solution.

Lies About Operations

A common approach for many cannabis businesses is to come up with an obscure company name to hide that their operations are in any way related to cannabis. Of course, eventually, their bank finds them out, and their accounts are usually closed.

This approach is unreliable because there is a possibility that entrepreneurs who are caught lying to banks and their card networks may end up on a blacklist, known as the Terminated Merchant File (TMF). Any person added to this list is banned from accessing card services for five years. The stakes are high, and the payoff is low; This is not a recommended route for obtaining cannabis credit card processing services, no matter how enticing and straightforward it may seem.


For those who don't want to lie to the bank outright (as they should), there is another standard solution: a cashless ATM. Cashless ATMs look like ATM transactions to the bank, but they function like debit card transactions in the clinic. In this system, customers pay a transaction fee and "draw" an even number of invoices to cover their purchase. The cashier then gives them cash.

For example, if a customer wants to purchase an item worth $73, they give the cashier their debit card, and the cashier charges $80 plus a transaction fee. The cashier then provides the customer with a $7 cash change at the time of purchase.

However, this practice is also unacceptable because it relies on fraud to hide cannabis transactions that depend on card networks. And credit card networks usually realize that an ATM is being used without cash and turn it off.

If caught and shut down, dispensaries and other cannabis businesses may simply find another service and do the same. However, repeated incidents can eventually lead to lawsuits for unfair trading practices or fraud claims. Although these results are not expected, they have risks.

Electronic Checks and ACH Transfers

The only other functional solution for cannabis businesses is electronic checks or ACH transfers, which are usually done through a smartphone app that the customer downloads and deposits. Like a mobile wallet, the app pulls money from the customer's bank account, which can be used to pay for cannabis transactions. It is the most compliant and secure way to conduct cashless cannabis transactions.

Unfortunately, this method has an acceptance problem. Few customers want to download an app they don't know, let alone provide sensitive banking information to connect their checking account to it. This approach requires significant trust and effort to create an account, encouraging many customers to use ATMs and collect cash before going to the store.

There are several things cannabis growers can do to encourage customers to download and use a mobile wallet, including offering discounts or bonus money to get started. Unfortunately, these promotions can impact a business's bottom line, presenting another obstacle to mainstream adoption.

Is processing CBD sellers dangerous?

The vendor processing situation is slightly different regarding CBD because processing is available. Merchant processing will allow CBD businesses to process debit and credit card transactions for the first time after card networks have been locked out for years.

US Bank's trading arm, Elavon, has begun processing transactions on behalf of CBD merchants, which CBD businesses have received well. At the time, CBD was still considered a Schedule I substance under the Controlled Substances Act (CSA). Unfortunately, compliance turned out to be a problematic moving target to hit.

It was a brutal blow to the CBD industry but by no means an unfamiliar experience. It means the industry will be back to square one in processing card transactions, albeit with positive developments. At least hemp and hemp-derived products were decriminalized in December 2018 with the signing of the 2018 Farm Bill, which designated cannabis with less than 0.3% THC as federally legal cannabis.

However, the lack of trade processing services for CBD businesses remains a thorn in the side of many entrepreneurs. These minimal e-commerce opportunities leave hundreds of small businesses at a standstill regarding how and when they can accept customer credit card payments.

What will it take to open cannabis credit card processing services for the industry?

As we saw in the CBD, the only thing that has begun to open trade processing services is a federal schedule cut. Card chains are not expected to lift the wholesale ban on cannabis transactions until the federal government moves cannabis out of the CSA. Currently, cannabis businesses do not have access to merchant accounts, and CBD businesses must make additional efforts to find a reliable trading partner for processing.

If you're having trouble finding merchant or banking services for your cannabis business, we can help. Our extensive network of cannabis-friendly banking partners includes some of the industry's most experienced experts. Not only can we help you secure the banking services you need today, but we can also help you succeed tomorrow. Contact us today or apply for merchant processing to learn more about our solution and cannabis banking in general.

Empirical Solutions Trade Processing Program

Our trade processing has no early termination, application, or annual fees. It is non-binding equipment fees or trading account numbers after adopting the applicable federal regulations. All major billing networks support and support our merchant payment processing program. Full disclosure of bank and processor details is an advantage of our solution and forms the basis of a profitable processing solution for merchants we are happy to introduce.

Your cashless, transparent, and legal cannabis payment solution is just around the corner - it's here. Empirical Solutions is a legitimate merchant account, so with our technology, you can be on the same page with non-cannabis businesses in your state. For more information on how it works and to apply for an account, visit the merchant data processing page on our website or contact our representative by phone or email.

Banking has been a weak point for the legal cannabis industry for most of its existence. Even where legal, Banks are often hesitant to get involved in the cannabis business. This also applies to cannabis credit card processing: The card chain's ban on cannabis transactions blocked the state's legal THC licensees from merchant processing services, preventing them from processing debit and credit card transactions.

Even CBD, repealed under Farm Bill 2018, struggles to provide trade processing services. Despite the legal status of CBD, it can also be difficult for CBD businesses to secure merchant accounts. There may be few suppliers willing to work with CBD businesses.

Why has it been so difficult for merchant processors to secure the cannabis business? Where are we today? Most importantly, how long will it take for the cannabis industry to get access to this necessary banking service?

17 views0 comments


bottom of page