Business
Days of ‘Cashless ATMs’ in Marijuana Stores Are Coming to an End
Last week, the credit card giant Visa issued a warning about the misuse of cashless ATMs. What does this mean for the cannabis industry?
Pot shops may be compelled to revert back to exclusive cash payments which creates a logistical and security headache. Additionally, marijuana stores that have been involved in offering cashless payment options may face criminal charges.
On December 2nd, 2021, VISA issued a warning letter to its financial partners indicating that it was aware of the cashless payment scheme that was going on. Cashless ATMs were being used to disguise illegal transactions by wrongfully coding the true nature of the transaction. For example, marijuana purchases could be wrongfully coded as cash withdrawals. Even though VISA did not directly mention cannabis businesses, it is speculated that VISA was referring to the industry, as well as others.
Will Marijuana Stores Get Penalized for Using Cashless ATMs?
According to MJBiz data, there are about 11,000 cannabis stores; stand-alone and those run by vertically integrated cannabis businesses. At least one-half of these stores use cashless ATMs as a payment option to reduce the cash volumes that they have to handle each day.
It is highly unlikely that VISA will target cannabis stores offering cashless ATM services. They are likely to go after retail banks that have been processing the transactions. Eventually, the repercussions may reach marijuana stores. Earlier this year, two company executives from EAZE, a weed Delivery Company, got penalized for scheming to have banks process marijuana credit card payments. The VISA warning appears to have a familiar ring to it.
What Next?
Marijuana stores may need to pivot and rethink their payment strategy. They may need to revert back to accepting cash payments exclusively from their customers. This is going to be an inconvenience for both canna-businesses and their customers. In addition, it is a security risk. In the meantime, industry stakeholders predict that this move by VISA will cost them billions in terms of revenue.
