Cannabis has quickly become the new #1 cash crop in America since being legal in Colorado and Washington. Legal states have seen billions of dollars raking in from cannabis sales. Everything from flowers, edibles, concentrates, tinctures, capsules, and other cannabis products are selling like hot cakes each month. These products are in high demand and the cash flow is coming in faster than ever.
Colorado, the state where recreational use was first made legal, has seen widespread benefits in the increasing cash flow. In an ironic twist, all of the finances from this so-called ‘drug’ is actually helping the state flourishing. The Centennial state utilized the finances to fix roads, upgrade their educational system, better education on legal cannabis use, and even day centers for the homeless. All of these public benefits Colorado is seeing are from selling pot.
Even with these amazing financial benefits, there is one MAJOR problem that still needs to be solved: banking. Since cannabis is still federally-illegal, many banks refuse to conduct business with cannabis companies because of federal regulations. These federal regulations have opted many dispensaries out of a safe financial system that would help business run smoothly. Instead, many businesses have been forced to operate strictly on cash alone (which is REALLY bad!).
These strict financial regulations pose major business problems for many companies. One of the main problems is financial security. Many businesses are operating on cash, meaning they have no financial services set up. Since the finances are tracked through dollar bills, employees must work to keep track thousands of dollars in their office. The only secure solution would be to have a huge safe in place to store all of the profits in. Dispensaries are one of many businesses that are in danger of being robbed if necessary procedures aren’t in place (if you think a medical dispensary won’t ever get robbed, you couldn’t be any more wrong!). No set financial services mean businesses have a HUGE risk of being robbed if their profits isn’t properly secured.
Onto a less serious issue, no set financial services mean there’s limited creativity with financial promotion. Promotion, one of the four P’s of the marketing mix (price, place, promotion, and product!), is a crucial tactic of lifting your business off of the ground. Your dispensary may be fully operating, but it’s nothing without many marketing promotion to raise awareness of your business. Most dispensaries provide an ATM so that customers will have the cash for the product they want. It seems to help, but doesn’t really solve the bigger problem of the financial operations.
What if someone really wants to use their debit/credit card instead? If someone wanted to write up a check, how would it be processed? Would gift cards ever become an option to use?
It may seem trivial, but it’s important for serving every type of customer that comes in. Gift cards are a great strategy for promoting the business. If a bank won’t work with a dispensary due to legality issues, then gift cards won’t be a payment option for people. Other than gift cards, customers could be turned off by the fact they won’t be able to write off a check or use a debit/credit card to pay for their order.
So those were some problems I found that need to be solved if we want to push the cannabis industry any further. A majority of dispensaries are operating on a cash-only basis, which means they are in danger of being robbed. Not only do they face the danger of being robbed, but they are limited in their marketing creativity. The cannabis industry has been gaining leverage since legalization has been making waves over the past few years, but there’s still work to be done to increase its full potential.
I believe it is important to solve these financial roadblocks before pushing further. Massachusetts will have legal dispensaries opening next July, so we must get the financial operations squared away. We have to be pushing forward, not backwards.
The cannabis industry is here to stay, federal regulations or not. Banking companies should work to solve the financial regulations that are hindering the businesses from growing further.