Cannabis Payments Guide 2025

On 16 May 2024, the Biden administration announced that they submitted a proposal to reclassify cannabis from Schedule I to Schedule III. This would be the most significant drug reform in over 50 years.

While the proposal doesn't legalize recreational marijuana outright, it would shift cannabis from Schedule I (which are drugs considered to have a high potential for abuse) down to Schedule III. This reclassification would put cannabis in the same category as anabolic steroids, ketamine, and testosterone.

More importantly, Schedule III drugs have a currently accepted medical use in treatment in the United States which would have several real-world consequences for cannabis businesses selling recreational cannabis, including:

• Access to Banking Services: Reclassification could potentially grant cannabis businesses easier access to traditional banking services.
• Marketing and Advertising: One of the biggest complaints from cannabis businesses is their inability to advertise their products. Reclassification would likely come with changes in labeling, packaging, advertising, and marketing regulations, including the legalization of targeted advertising campaigns.
• Integration into Wellness Culture: At the moment, the vast majority of states prohibit businesses from making any health-related claims. This could change and businesses would be able to position their products as part of a holistic approach to health and self-care, emphasizing the natural, plant-based origins of cannabis products.
• Regulatory Compliance: Cannabis businesses would need to navigate a new regulatory landscape, adjusting their operations to comply with the requirements of Schedule III substances.
• Legalization Efforts: While reclassification does not mean full legalization, it does mean cannabis becomes a product with nationally accepted medical uses. This could pave the way for future legalization efforts for recreational use.

For now, cannabis businesses will have to wait a while before the change takes effect. The next step is a 60-day public comment period that will allow stakeholders to express their views. After that, a lengthy formal rulemaking procedure will begin involving an administrative hearing and a decision from The Drug Enforcement Administration (DEA). Until then, cannabis remains a Schedule I controlled substance.

Cash has always been the most common form of payment in the cannabis industry. It is undoubtedly convenient in a lot of ways, offers quick turnaround time for customers, and is the most “fire and forget” option out there.

Yet, it’s not the ideal solution. Over 83% of Americans aged 30 to 50 use debit or credit cards for their daily transactions and don’t necessarily carry cash regularly. Cash limits your ability to upsell to customers and cart size is also limited by how much cash someone has in their pocket.

There are some serious issues with cash payments. For instance, keeping track of cash payments is neither easy nor always possible. And with regulations around cannabis payments becoming stricter, this is a major problem for cannabis dispensaries.

One way to get around this is to use a comprehensive POS system that makes life easier for your budtenders. For instance, Cova POS brings active cash management features that help with a variety of cash drawer functions including managing cash in-cash out, drawer audit, bank transfers, and more. These features also help reduce the cost of overhead expenses, inefficiencies, and errors that come with counting cash manually.

Another problem with cash payments is the lack of compliance oversight when it comes to tracking and tracing. And untraceable cash handling practices can lead to cannabis inventory issues as well. But these issues too can be overcome with the right POS system. For instance, Cova has cutting-edge security integrations that combine transaction data with security camera footage to have 360-degree visibility into cash payments.

But even with the best point-of-sale system possible, there is still one risk cannabis dispensaries face with cash payments – the risk of robberies and theft. In fact, we’re currently seeing an alarming trend of robbers specifically targeting cannabis dispensaries because of their large cash reserves.

Also Read: Cannabis Fraud 101: Tips to Safeguard your Dispensary & Prevent Thefts

Cannabis being currently classified as a controlled substance at the federal level has consequences for cannabis businesses all over the country. Arguably, the biggest challenge is the inability to use traditional payment networks like Visa and Mastercard to process payments.

Also Read: How to Choose the Best Cannabis Payment Solution in 2025 (FAQ)

Cash is indeed a popular choice but it’s not without issues (some of which are too big to ignore). Cova works with hundreds of cannabis dispensaries across North America and we’re seeing a clear trend – a growing number of cannabis businesses are making the switch to cashless payment methods, like:

ACH or Automated Clearing House is a form of transferring money directly between banks without the use of checks, wire transfers, or cards. ACH is arguably the most efficient, fastest, and reliable form of cashless payments available to cannabis retailers in 2025.

With ACH, businesses can instantly verify that a payment has come through and instantly see the difference reflected in their bank accounts.

It’s robust too. More than 33 billion payments were made using ACH in 2024 and billions more will be made in 2025. But even if you use a method as reliable as ACH, your Point of Sale system can still fail, causing downtime, compliance issues, and unhappy customers.

Except if you’re using Cova Pay. Just this last month, Cova achieved its seventh consecutive year of 100% uptime on 420, the busiest day in all of 2025. In other words, Cova maintained its record of processing hundreds of thousands of orders in a single day for the 7th year in a row!

Also Read: 420 Cannabis Retail Sales 2024 Infographic: How Much Dispensaries Made (And Lost)

Best of all, Cova comes with a fully integrated ACH solution that enables cannabis retailers to accept digital payments both in-store and on your cannabis eCommerce website. Cova Pay ACH doesn't require any terminals and facilitates payments through a text message. Out-of-the-box integration and support for ACH help retailers accept ACH payments without additional third-party solutions, long-winded setups, and one more vendor to worry about.

Cashless ATM is a payment method that uses a terminal connected to the ATM network, allowing customers to make payments directly from their bank accounts, eliminating the physical exchange of cash.

In addition to convenience and security, cashless ATM reduce transaction times and improve customer experience which very often leads to increased basket size and greater revenue.

There are some small trade-offs, though. Notably, cashless ATM transactions can only be processed in $5 increments (some vendors may let you round up to the nearest dollar) and customers may incur additional transaction fees.

since these systems operate on traditional payment networks, they face ongoing scrutiny due to federal cannabis regulations. This can result in unexpected service interruptions if processors are deemed non-compliant with network risk rules.

When evaluating payment solutions, cannabis retailers should always:

• Have a backup payment solution in place
• Ask processors about their contingency plans
• Verify the processor's track record and stability

At Cova, we carefully vet our payment partners and maintain relationships with multiple processors. This approach ensures that if one system experiences disruption, we can quickly transition our clients to alternative solutions, minimizing any impact on their business operations.

Also Read: Cannabis Payment Alternatives to Cashless ATMs for Dispensaries

PIN Debit (or direct debit, or simply debit cards) allows customers to make direct payments using their bank accounts, offering immediate transaction processing at the point of sale. While this payment method provides convenience for both customers and dispensaries, it's important to understand its operational landscape.

As of 2025, issuing banks are only required to ensure their debit cards work on a minimum of two debit rails not owned by Mastercard or Visa. This restriction results in only about 50% of PIN debit payments being successfully processed through these networks. That said, providers like Fiserv are now openly supporting cannabis debit payments on their rails.

Like other electronic payment solutions, PIN debit processors must maintain strict compliance with network rules. To ensure business continuity, cannabis retailers should implement multiple payment options as backup.

The answer depends on your business type. For THC dispensaries, credit card payments are not permitted. However, CBD-only stores can legally accept credit cards through integrated solutions like Vector Payment.

Credit cards are an attractive (and very convenient) option and cannabis consumers want credit card payments too., But while things may change in the future, as of early 2025, in the United States, accepting credit card payments comes with its risks.

For THC dispensaries, attempting to process credit card transactions puts you at risk of:

• Frozen bank accounts
• Held funds
• Potential loss of retail license

This is true even if recreational cannabis is legal in your state because the payment networks (like Visa, Mastercard, Discover, and American Express) all operate at the federal level. Unfortunately, cannabis sales are still illegal at the federal level.

This means that credit card companies consider them “prohibited” and refuse to work with cannabis businesses, as per federal law. Another downside of all payments in the cannabis industry classified as "prohibited" is that they attract higher transaction fees.

Fortunately, there are alternative digital payment solutions like Cova Pay that allow cannabis businesses to accept electronic payments without any “high-risk” fees or restrictions. Cova offers cashless payments through vetted payment partners, ensuring reliable, compliant transactions while providing redundant processing options to maintain business continuity.

Cryptocurrencies seem to operate “largely outside” traditional banking systems and regulations, which might make them attractive as a cannabis dispensary owner. However, accepting crypto payments comes with significant risks and challenges that outweigh potential benefits.

Though cryptocurrency payments are legal for cannabis transactions, their notorious price volatility makes them unreliable for daily business operations. While some payment solutions promise to simplify the process by managing wallets and converting crypto to cash deposits, these services typically rely on federally regulated sponsoring banks. This creates a critical vulnerability: if transactions violate bank risk policies, accounts can be frozen, and retailers may permanently lose access to their funds since there's no regulatory protection or recourse for recovery.

Cryptocurrencies have been historically volatile and while a new breed of cryptocurrencies is on the rise (called “stable coins”), that still does not address the other problem of cryptocurrencies – it can be a technical nightmare.

The practical implementation of cryptocurrency payments demands significant technical expertise, dedicated IT support, and substantial resource investment. These operational demands are particularly difficult to justify given that only a small percentage of consumers regularly use cryptocurrency for purchases.

Moreover, the unregulated nature of cryptocurrencies means new restrictions can be implemented without notice, potentially leaving retailers without access to their funds and no government backing or FDIC insurance to protect their assets.

Put simply, banks operate under federal law, and currently, cannabis is illegal under federal law. This means banks are not allowed to facilitate the sale of cannabis, even if cannabis is legal in your state.

This has long been a major issue for cannabis businesses all over the country and to address it, SAFE Banking Act was first introduced in 2019. The bill, if passed, would allow state-legal cannabis businesses access to traditional financial services.

In the past five years, the SAFE Banking Act has been introduced in the Senate several times but has yet to be passed. However, over time it has laid the groundwork for financial institutions to work with legitimate cannabis businesses. The bill stipulates that a federal banking agency may not request or order a financial institution to terminate a customer account unless there is a valid reason for doing so, and that reason is not based solely on reputation risk. Valid reasons include threats to national security or involvement in terrorism financing.

There is no doubt that legal cannabis markets across the country will benefit from the SAFE Banking Act as it will create more control and balance in the industry needed to ensure safer access to cannabis. Even though cannabis digital payments come with their own set of risks, it's still easier than dealing with cash. You don’t have to worry about theft or make regular trips to banks to deposit cash.

The SAFE Banking Act is still some ways before it passes into law. That said, 24 US states have legalized recreational cannabis and the pressure is building on the Senate to make progress on the matter.

US states have made significant strides in clarifying the rules and regulations surrounding cannabis payment processing. The onus is now on cannabis businesses to ensure compliance and mitigate risks.

This starts with ensuring your inventory management and POS systems are fully integrated with your state’s seed-to-sale track and trace system. For instance, delaying, failing to send, or sending incomplete/incorrect compliance reports to your state’s regulatory body can result in financial penalties and in some cases, loss of licensure.

There are different steps cannabis businesses are encouraged to take to ensure compliance but perhaps the single most important thing is to use a secure payment solution with a vendor that specializes in cannabis transactions. Industry-specific vendors offer:

• a more complete feature set for compliance with cannabis regulations
• have a support ecosystem that better understands your needs
• built-in integrations with additional services crucial to running your dispensary smoothly

For instance, Cova's Cannabis Dispensary POS Software and inventory management system is built specifically for the marijuana retail industry. With lightning-fast transactions, 100% uptime, and a reliable offline mode, Cova is the best-reviewed and most recommended dispensary management software system.

Cova adheres to all reporting requirements, has automatic 2-way integration with Metrc, BioTrack, and other regulatory systems, and includes all the features needed to keep cannabis retailers compliant, including:

• ID scanner for age and card verification
• Integrated inventory and sales tracking and reporting
• Built-in product equivalency conversions and purchase limit enforcement.

The Cova Dispensary POS also synchronizes directly with Quickbooks® (or export into other file formats) and meets several industry compliance regulations including Type 1 HIPAA and SOC 2 Type II.

In addition to a comprehensive cannabis payment processing solution, cannabis dispensaries are also encouraged to:

• Implement Secure Payment Solutions: Use payment processors that specialize in cannabis transactions and are knowledgeable about the unique challenges and compliance requirements of the industry.
• Stay Updated on Regulations: Regularly review state and federal guidelines related to cannabis payment processing to ensure that your practices align with the latest legal requirements.
• Conduct Regular Audits: Periodically audit your payment processing systems and financial records to identify and address any potential compliance issues.
• Train Employees: Ensure that your staff is well-trained in the legalities and best practices of handling cannabis payments to prevent inadvertent violations.
• Maintain Transparent Records: Keep detailed and accurate records of all transactions to provide clear documentation in case of regulatory scrutiny.

By proactively addressing these areas, businesses minimize payment risks and ensure compliance with federal and state regulations.

Picking a cannabis payment processing solution is a major investment for any dispensary. There are several cannabis payment solutions available in the United States but not all are built to the same standard.

And it can be a time-consuming process to tell apart the superficial features from the features that have a real impact on your bottom line.

Also Read: 2024 Guide to Cannabis Tech Solutions for Dispensaries

To help you make that call with confidence, here is a list of the five most essential features that you should look for in your next cannabis payment solution:

Your cannabis payments software should be connected with your cannabis POS, eCommerce platform, inventory management, and other tools for a seamless experience, both for your employees and your customers.

A fully integrated system eliminates the need for manual reconciliation and data entry, streamlining the payment process to a few clicks. Cova Pay offers seamless integrations across Cova POS and partner solutions for a unified digital payment experience.

Real World Benefit: Improved Customer Experience

Going cashless reduces customer wait times and enhances the shopping experience, increasing transaction rates by over 20% per hour and allowing customers to spend more without cash limitations. Also, most people don’t carry cash nowadays.

Don’t leave any of your customers without an option. Offer multiple payment options to increase sales and streamline collections. Ensure your payment provider supports transactions from deliveries to curbside pickup and integrates additional payment methods like gift cards. For instance, Cova’s mobile tablet POS is flexible enough to integrate additional cannabis payment methods like gift cards in the future and supports the default payment methods.

Real World Benefit: Increase in Sales and Revenue

Cashless payments can increase average basket size by up to 25%. When customers are not limited by the amount of cash they carry, they tend to buy more. Upselling techniques are also easier to implement in a cashless dispensary environment.

Choose a payment partner with clear pricing and quick deposit timelines. Your dispensary may be charged extra fees by some payment processors, such as monthly subscription costs, annual compliance fees, refuse fees, support fees, termination fees, consumer convenience fees, etc.

Transparency in processing fees also helps you set accurate product prices and forecast profits.

Real World Benefit: Easy Banking and Account Tracking

Cashless payments reduce trips to the bank and simplify tracking. Automated transaction reporting also helps save time on cash handling and counting, making accounting, error reporting, and compliance much simpler.

Integrated payment data analytics provide crucial insights into your dispensary’s performance and customer preferences. Gain crucial insights into the success of your dispensary and the opinions of your customers by utilizing integrated dispensary data analytics to derive valuable insights from your payments.

Visualize data points with clear, real-time graphs and charts to make better business decisions and evaluate the success of offers like rewards or gift card programs. Additionally, these insights enable you to assess the success of offers, such as your rewards or gift card programs. For instance, with Cova Pay, customers tend to spend an average of 25% more as compared to cash purchases.

Real World Benefit: Data Collection and Analytics

Every digital payment transaction provides individualized customer data, offering valuable market research. Payment data analytics help evaluate sales performance and the success of special offers.

The right payment processor will ensure you can protect your clients by adhering to all regulations. This compliance guarantees that your payments are processed over unique, secure routes, ensuring the ongoing security of your client's financial information.

Real World Benefit: Increased Safety and Less Overhead

A cannabis payments solution with error-reporting features improves cash management and reduces administrative overhead and employee time spent on counting cash manually and reconciling errors, which can be invested elsewhere to streamline dispensary operations.

In addition to these essential features, cannabis dispensaries should look for automated features in dispensary payment processing software such as:

• accepting and managing tips
• support for cannabis delivery services
• offline functionality
• cannabis inventory management
• integration for loyalty programs and clienteling
• seamless syncing with your accounting software

These features and integrations can pay for themselves, many times over.

With most of us focused completely on the SAFE Banking Act, it’s easy to forget about all of the other developments happening in the cannabis industry. And with cashless solutions becoming increasingly necessary, it’s even more important for dispensary owners to stay informed about the latest trends and developments in cannabis payments.

Also Read: Top 2024 Cannabis Payment Trends Dispensary Owners Must Know

Here is a sneak peek at some of the biggest cannabis payment trends for 2025:

• The cannabis market is projected to continue its rapid growth, with 18 additional states expected to legalize cannabis.
• The shift to cashless payments is driving dispensaries to adopt ACH transfers, digital wallets, and other electronic payment methods.
• With the rise in cannabis business thefts, the industry is prioritizing secure cannabis payment solutions to mitigate risks and enhance safety for both businesses and customers.
• An increasing number of states are providing tax relief by decoupling section 280E from their state tax codes. This would allow cannabis businesses to claim business expenses and reduce their taxable income. New York and Illinois are some of the most recent states to make this change.
• The lack of traditional banking support is forcing some dispensary owners to try cryptocurrencies like PotCoin as a secondary payment method. However, volatility still remains a concern for everyday transactions.

Choosing safe and convenient cannabis payment methods in 2025 requires a thorough understanding of the evolving landscape. While cash payments are still very common, switching to cashless methods such as ACH transfers can significantly improve operational efficiency and customer experience.

With over two decades of experience working with countless cannabis dispensary owners across North America, Cova dispensary POS systems offer secure and compliant payment processing options that mitigate the risks associated with cash-based transactions.

Stay ahead of the competition by choosing the best cannabis payment solution for your dispensary. Schedule your COVA Software Dispensary POS Demo. Our team of experts will help you understand the capabilities of our award-winning POS system and how it can meet (and exceed) your business’s unique needs.