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firms. "We're a technology solution that supports cannabis Cash-flush dispensaries are crime magnets
businesses and cannabis-friendly financial institutions,"
said Mike Kennedy, the firm's co-founder and chief Legal sales of cannabis products in the United States to-
strategy officer. taled $10.8 billion in 2021 and are expected to post a com-
pound annual growth rate of 14.9 percent between now
GCV now counts over 100 banks and credit unions as and 2030, according to Grand View Research. That reflects
customers and has more than 2,000 cannabis and related only the public face of cannabis: retail pot shops, which
businesses using its platform. have become magnets for crime.
"We can automate all the back-office functions," Kennedy
noted. Exact numbers are hard to come by, but in Washington
state alone, at least 50 armed robberies took place at
In September 2022, GCV acquired PayQwick, a compre- dispensaries during the first two months of 2022—
hensive treasury management and financial services plat- more than in all of 2020 or 2021. In March, three people,
form that includes lending and payment processing. The including one suspected armed robber, were killed during
company holds money transmitter licenses in a dozen dispensary holdups in the state.
states and has applications pending for licenses in three
additional states, including New York, the latest state to Even if the SAFE Banking Act were passed into law, most
legalize sales of cannabis for adult recreational uses. experts believe it would do little to drive cash out of the
business. "We've been told by the card brands that they
PayQwick developed a "closed loop" settlement network won't change their position until cannabis is federally
for business-to-business payments, Kennedy stated, add- legal," said Dustin Eide, CEO at CanPay, a Colorado firm
ing that the business-to-consumer side "is a wide-open that has built a mobile payment app consumers can use to
market, but we don't play in it." pay for dispensary purchases.
Making cannabis banking safe CanPay is part of an emerging category of financial
technology firms that target cannabis businesses and
For cannabis businesses that manage to secure banking cannabis-friendly FIs. It created a closed-loop payment
relationships, it's often not cheap. FIs have been known to system, although Eide said he prefers to think of it as "a
assess monthly account maintenance fees of $500, or more, payment network built on the ACH."
plus 10 percent processing fees on cash deposits. "I'd rather
keep it in a safe," Metzler griped. Consumers link their checking accounts to a mobile app,
which can be used at more than 800 dispensaries in 31
And because credit and debit cards are issued by regu- states. The app generates a single-use payment code that
lated FIs, the card brands have closed off their networks to authorizes the merchant to collect payment through the
these transactions as well. CanPay network.

Legislation approved by the U.S. House of Representatives When the card brands do finally approve cannabis-related
in July would create a safe harbor for FIs to work with can- transactions in the United States, consumers will also
nabis businesses. The SAFE Banking Act, as the legislation have the option of linking credit and debit cards to the
is called, wouldn't eliminate the regulatory requirements app. Eide said.
around banking these businesses, and there doesn't seem CanPay charges dispensaries a transaction fee of less than
to be much momentum in the Senate for passage, despite 2 percent; there are no merchant set-up fees, annual fees
broad bipartisan support. or long-term contracts, he noted, adding that no fees are
assessed consumers.
Forty-two members of the Senate, including nine Repub-
licans, signed on as co-sponsors of the SAFE Banking Act, More than 100,000 consumers have signed up to use
which also has the support of major financial services CanPay. Earlier this year the company surpassed $500
trade groups and the American Bar Association. A recent million in dispensary transactions. "That may not seem
poll by Morning Consult found 65 percent of registered like a lot in the Visa and Mastercard worlds, but it's a big
voters support allowing cannabis businesses in states deal for transparent cannabis sales," Eide said.
where it's legal to have access to banking services.
Visa red flags workaround
"We have a critical window of opportunity between now
and the end of the year to enact common sense cannabis One dispensary workaround that has received significant
reforms starting with access to the banking system," said attention is cashless ATMs, or point of banking devices.
Rep. Ed Perlmutter, D-Calif., who authored the House The devices look more like POS terminals than ATMs and
version of the bill. "Continued inaction on this issue is are driven by applications that mimic standalone ATMs.
dangerous and neglectful, and continues to put communi- They accept debit cards, or like ATMs, can be used to ac-
ties, businesses, employees and patients at risk across this cess the cash advance function on a credit card.
country."

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