As a common workaround to federal banking regulations, known as cashless ATMs, stopped working at many retailers starting last week, cannabis dispensaries in several states are working to find ways to process transactions without cash. Cashless ATMs, also known as the “point of banking” system, would allow customers to use bank cards instead of cash at cannabis stores, allowing retailers and their patrons to transact marijuana purchases. gives you more flexibility when handling
But starting last week, some of the largest ATM transaction processors, including NCR Corp.’s Columbus Data Services, have stopped using cashless ATM transaction processor services, according to unnamed sources cited by Bloomberg. NCR declined to comment on the situation. according to reports.
“This is a pivotal point for cannabis banking,” Ryan Hamlin, CEO of payment technology provider Possabit Systems Corporation, told Bloomberg about the cashless ATM closure.
last year notice
Late last year, international payment processing giant Visa announced in a memo to retailers that it was “aware of POS devices marketed as ‘cashless ATMs’ being deployed at merchants.”
The system worked by rounding up purchases, often to multiples of $20, to make the transaction look like a cash payment. Instead, only the changes from the transaction are returned to the customer, and the pharmacy stores the rest to cover the payment for the purchase.
“A cashless ATM is a POS device powered by a payment application that mimics a standalone ATM, but does not make cash payments to cardholders,” the December 2021 memo continues. “Instead, the device is used for purchase transactions and is incorrectly coded as an ATM cash payment. The purchase amount is often rounded up to look like a cash payment.
In April, Bloomberg reported that it was able to process cashless ATM transactions because they were disguised by listing the addresses of nearby businesses, such as fast food restaurants, rather than the actual pharmacy address. The portion of cannabis sales processed through cashless ATM transactions represents 25% of the projected $25 billion in annual pharmacy sales.
“These sales could generate more than $500 million in fees to payment processors based on average purchases,” Bloomberg said.
Banking Laws Hinder Legal Cannabis Businesses
The popularity of cashless ATM transactions demonstrates the difficulty federal regulation poses to cannabis businesses, even when they operate legally under state law. Federal banking and money laundering laws impose restrictions on the banking industry, making it difficult for financial institutions to provide traditional services such as credit card processing, loans, deposit and payroll accounts. But cashless ATMs cannot pass federal regulations.
“The cashless ATM trend is hurting investors, pharmacies and consumers. Ultimately, it’s blatant money laundering,” said CannaTrac CEO Tom Gavin. high times“Instead of creating loopholes and using cashless ATMs, pharmacies should take advantage of other safe, legal and transparent solutions currently on the market. The right financial solution is FinCEN. You must be registered with and have a money transfer license or be a sponsor or bank agent with a money transfer license in that state.”
Posabit’s Hamlin said signs of cashless ATM closures began to appear in November and increased in the last week. He estimates that by the end of the weekend, only about 20% of the cannabis industry will still be able to use cashless ATM payments.
Cannabis dealers in Arizona, California and Massachusetts have reportedly been affected by the closure of cashless ATM transactions, with employees at these stores recommending cash purchases instead. I’m here. Curleaf Holdings, one of the US’s largest cannabis retailers, reported in April that about a third of its dispensing transactions were processed through cashless ATMs.
Peter Su, senior vice president of Green Check Verified, a consulting and software company specializing in cannabis and banking, said: .
Sahar Ayinehsazian, a partner at Vicente Sederberg LLP and co-chair of the law firm’s Banking and Financial Services Access Group, said the closure of cashless ATM systems would be an option for parliament to pass legislation to allow legal cannabis. I said it shows that there is a need. Businesses have access to banking services.
“This closure further underscores the continued need for banking and financial reforms for cannabis businesses and the passage of the SAFE Act,” Ayinehsazian wrote in the following email. high times“While there is no guarantee that this law will open up payment processing for cannabis businesses, the industry is confident that its passage will facilitate access to legal and legitimate cashless payment options for cannabis businesses. I am very optimistic.”