A Complete Guide to Cannabis Dispensary Payments

Introduction to Cannabis Payment Processing

If you are a dispensary owner or employed at one, you may have questions about the current state of cannabis payment processing solutions. Since cannabis is still illegal federally in the US, dispensaries must navigate strict regulations and operate mostly as cash-only businesses. But that is changing fast, as cannabis technology providers are coming up with innovative electronic payment solutions for dispensaries that allow people to pay with debit cards.

Due to the constantly changing legal status of cannabis, it is crucial to partner with an advanced cannabis dispensary payments provider that helps you make your dispensary transactions as transparent as possible and always stay compliant with regulations. Cashless dispensary digital payments will enable better bookkeeping and accounts management and save you a lot of time.

This guide covers the different cannabis payment options available for dispensaries, what you must look for in a dispensary payment processing solution, how you can transition to cashless cannabis payments, and the benefits of using a trusted dispensary payments processing solution like Cova Pay for collecting quick and easy digital payments.

Current Cannabis Payments Landscape

Dispensaries have relatively few options for processing cannabis payments, and cash is still the most common form of payment across the United States. On the contrary, in Canada, people can use either their debit or credit cards at all cannabis retail stores.


Cash is the most common and direct payment method, and possibly the only solution in regions where banks don’t want anything to do with cannabis businesses. But cash only limits your ability to resell to customers, and cart size is also limited by how much cash someone has in their pocket. Moreover, there are a lot of risks associated with being just a cash-only dispensary, including robberies, internal thefts, and the opportunity cost of overhead expenses, inefficiencies, and errors that come with counting cash manually. 

ACH Electronic Transfer

Dispensaries can accept electronic money transfers from bank accounts. ACH (Automated Clearing House) refers to the process of transferring money between banks without the use of checks, wire transfers, or cards. With such electronic transfers, businesses can instantly confirm that the money is there and that the money is going directly from the customer's account to their bank account. But the challenge of accepting ACH payments from customers is the need for third-party solutions. Your cannabis POS must be integrated with the ACH payment solution for a seamless customer experience. A fully-integrated ACH solution like Cova Pay allows you to accept digital payments both in-store and on your cannabis eCommerce website. In fact, Cova Pay ACH doesn't require any terminals and facilitates payments through a text message or QR code with the exact total amount. 

Credit Cards

Cannabis consumers want credit card payments, as they commonly use this payment method for purchasing everything else as well. However, the federal illegality of cannabis prevents Visa, Mastercard, and AMEX from knowingly engaging with the cannabis industry. This simply means that dispensaries cannot accept credit cards. If someone proposes a solution, you must decline as it may put your cannabis business at legal risk.

Debit Cards

Direct debit allows customers to pay with the money in their accounts. It's instant charging. Many people think debit cards are a legitimate payment method for cannabis products, but there are risks involved, especially since banks have to conform to federal laws. But these risks can be mitigated by using a compliant dispensary payments solution like Cova Pay. Dispensaries can process debit card payments via either cashless ATMs or PIN Debit solutions. However, a PIN Debit solution is a more convenient and compliant cannabis payment solution than cashless ATMs and is the preferred digital payment processing method for Cova Pay as well. 

Note: With the recent crackdowns on cashless ATMs or “point of banking” systems by card payment processing companies, cannabis dispensaries can process card payments only via a compliant PIN Debit payment solution. Read here about compliant cashless ATM alternatives to dispensary payments

Why do Dispensaries Need Digital Payments Solution?

Cashless transactions are an integral part of any retail sector and facilitate consumer shopping. Cannabis eCommerce and cashless electronic sales continue to revolutionize the way consumers shop, and that’s true for the cannabis industry as well. However, because of the unique situation of our industry, regulated at the state level but illegal federally in the United States, accepting card payments has been almost impossible for cannabis retailers.

But that will inevitably change as compliant and trusted payment processing solutions like Cova Pay will not only help dispensaries avoid the risks of managing a cash-based business but also curate a better customer experience for their clients. An advanced cannabis cashless payments solution will help in normalizing the cannabis retail experience. Cova Pay reduces reliance on cash by allowing dispensaries to accept debit card payments from customers in a secure way via PIN Debit, making it convenient for consumers to buy their favorite cannabis products.

How do Cannabis Dispensary Electronic Payments Work?

Cannabis digital payment processing solutions use electronic processors to receive and distribute payments from customers’ banks. Such solutions allow cannabis dispensaries to sidestep all of the difficulties associated with running an all-cash business. Cannabis payment processing allows retailers to automate transaction reporting in a way that is impossible when dealing with cash.

Electronic bank-to-bank payment systems connect a shopper’s bank account digitally in seconds and transfer money instantly to your account. Digital payments integrated with all the other solutions in your dispensary’s tech stack facilitate dispensary operations. With instant payment reporting, you can enjoy an in-depth view of the state of your dispensary business at any time, and improve your cash flow cycle. Cova Pay is the best digital payments solution for dispensaries and integrates seamlessly with Cova POS and Cova eCommerce.

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Let us dive into the following chapters for an in-depth understanding of cannabis cashless payments for dispensaries and how to choose the best solution.

Banking Laws and Risks of Digital Payments
The SAFE Banking Act has been introduced in the senate multiple times but is yet to be passed. Even though cannabis digital payments come with their own set of risks, it's still easier than dealing with cash. 
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Benefits of Digital Cashless Payments
Cashless or electronic dispensary transactions offer a significant advantage of business transparency over cash-based payment systems. Also, providing customers with a modern and convenient shopping experience is a key competitive advantage in the cannabis industry.
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How to Choose Dispensary Payment Solution
There’s a plethora of cannabis payment solutions out there, but not all can provide you with the enhanced level of safety, security, and compliance needed for the cannabis retail industry. Look for these essential features before choosing a dispensary payment solution.
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