A Colorado company is aiming to make the process of purchasing cannabis feel just as natural as buying a steak dinner or drinks at a bar – by letting customers leave the wads of cash at home.
CanPay is billed as “the only legitimate and stable debit payment solution” for cannabis merchants and customers in legal markets.
It’s a relatively unheard-of concept in the industry. Despite the fact that cannabis is now recreationally legal in a total of eight states and medically legal in 29, it’s still considered illegal on the federal level. This means cannabis businesses have effectively been forced into a cash-only system, which, naturally, has led to a number of financial and safety concerns among merchants and customers.
And while the feds gave financial institutions the green light in 2014 to work with legal cannabis businesses so long as they followed a series of strict guidelines (as laid out in the Cole Memo and by the Department of the Treasury’s Financial Crimes Enforcement Network), the number of banks and credit/debit card companies willing to take up that offer has remained limited.
Enter CanPay, which partnered with a multi-state network of Cole Memo-compliant financial institutions banking the cannabis industry to create “the first debit payment solution for the cannabis industry.”
“We decided to effectively build our own payment processing platform that allowed consumers to pay retailers in as close to a VISA or Mastercard type program as we could possibly get without needing the involvement of one of the major card brands,” CanPay CEO Dustin Eide told Civilized.
To use CanPay, customers simply download the CanPay app to their smart-phone, create an account and, pending approval, link it to their existing checking account.
At participating CanPay retailers, customers can then log into their CanPay app at the time of purchase and scan a random token in the retailer’s point of sale device. Funds are then directly transferred from the customer’s checking account into the retailer’s compliant bank account.
“We’re the only solution we’re aware of that allows for the legitimacy that comes with doing business in your own [brand] name, while helping you de-cash,” said Eide, adding that “it’s better for everyone in the entire process if these transactions are electronic because it provides more transparency all the way around and generally it’s safer for the community to not have loads and loads of cash in circulation.”
Not to mention the inconvenience foisted upon customers within a cash-only business model, said Eide. Whether it means having to stop at an ATM (where transaction fees can climb up to $5) or having to make a purchase elsewhere to get cash-back before going to a dispensary, the options within this system make for a less-than-ideal customer service experience, said Eide.
“In a cash-only [system], customers essentially have to pre-plan what they’re going to purchase. That’s not the way they’re treated anywhere else,” said Eide.
“They go to a restaurant or a retail store and they’re able to pull out their card and make a payment without predetermining what they’re going to spend… CanPay normalizes the interaction between a consumer and a retail shop.”
Available in Colorado, Washington, Oregon
CanPay is currently available in 15 retail locations in Washington and Colorado, and just this week announced its availability in Oregon, as well. The company plans to expand to other newly legal states and partner with local financial institutions that establish compliance programs for cannabis clients.
“We anticipate rapid growth and as much as anything else, that’s going to track the rapid growth of the industry. We expect there will be more and more legalization that comes with time, and so there will be more and more markets able to participate in our service,” said Eide.
“The industry has been so used to a standard way of operating… and so we want people to know that they now have an alternative that’s built for this industry, that’s built on the backbone of compliant banking, and that’s going to be stable.”