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As Capitol Hill shops ready to mark 4/20, cannabis board says OK to use app and cashless payment options

High… above The Reef (Image: The Reef)

With concerns that cash transactions are making the industry a target for crime, more Capitol Hill pot retailers could add new purchasing options after state officials say they have clarified rules on payments.

Tuesday afternoon, Washington State Liquor and Cannabis Board said it has issued a rule clarifying that some cashless transactions are allowed — though “awareness of this rule has been slow to take hold.”

“Essentially, the rule allows retailers to engage in business with third-party vendors to allow for cashless transactions with customers,” Tuesday’s announcement reads. “Transactions may be conducted through an app on the customer’s phone.”

Around Capitol Hill, only the Uncle Ike’s stores currently accept non cash payment using debit cards.

“Options are limited while cannabis remains a Schedule 1 Controlled Substance and the federal government does not act to allow banking for cannabis transactions,” the board said.

But with increased concern about the armed robberies and clarification from the regulatory board, other Capitol Hill stores could follow suit.

One big drawback. High fees. The companies offering services in the space typically charge high fees meaning many customers will still choose to pay with cash.

“The state has not acknowledged the high fee issue yet,” a representative from a Seattle marijuana business tells CHS. “That’s likely a result of federal banking laws and the costs associated with circumventing them.”

Experimentation with payment options has been a risky proposition for Seattle’s marijuana retailers. In 2017, Ike’s briefly rolled out credit card payment options through a third party provider but shut the service down after a few months over concerns about federal legal issues.

The liquor board says the state’s Department of Financial institutions has posted a list of non-cash payment options including POSaBIT debit card processing, and CanPay “payment solutions for the state regulated cannabis industry and other emerging markets.”

The state says the list is not “exhaustive” and features financial institutions that “have provided information about the financial services they may be able to provide to the cannabis industry.”

Meanwhile, the Hill’s retailers are planning sales, promotions, and events as part of Wednesday’s annual 4/20 celebration of marijuana and pot culture. At The Reef on E Olive Way, the longtime CHS advertiser will again be doing its annual clean-up of neighboring Arcade Plaza along with DJ sets from Chong The Nomad and food trucks including the Central District’s WoodShop BBQ and Peruvian chow slinger Don Lucho’s.


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Phil Mocek
2 months ago

Message I sent to the state board of alcohol and cannabis trade this afternoon:

To whom it may concern:

I received an email message from you with subject “Updated Link: Joint LCB and DFI Message Regarding Cashless Retail Transactions.” In it, you seem to imply your belief that the best solution to cannabis retailers being robbed of their cash is for them and their customers to discontinue use of cash.

This is a terrible solution. Both retailers and their customers are engaging in federal civil disobedience. The retailers are, by necessity, making record of their bold and righteous disobedience. This is not the case for customers. Anything that requires customers of cannabis retailers to give up their anonymity while engaging in violation of federal rules, regulations, or law, is completely inappropriate.

Based on the news reports I have read about robberies of cannabis retailers, I think the best solutions to those retailers’ problems is likely a combination of 1) making more frequent cash drops (i.e., getting cash out of the store and into a bank more often than they currently do, so that they have less cash on hand at any given time), and 2) reducing reliance on the on-site use of poorly-manufactured automatic teller machines.

2 months ago
Reply to  Phil Mocek

3) Changing federal regulations to allow banks and money transfer licensees to engage in business with cannabis-focused companies if those companies are appropriately licensed by the State and local authorities to work in the local cannabis industry.

Phil Mocek
2 months ago
Reply to  DownWithIt

Use of cash is not the problem. Poor management of cash by retailers is the problem.

Instead of encouraging customers to make record of their violations of federal law by running all their federally-illegal-drug transactions through payment processors, WA LCB should tell retailers to get their cash off-site like every retail business did until charge card use became so common in recent years, and to stop renting cheaply-built cash dispenser machines.

2 months ago
Reply to  Phil Mocek

I would say the problem is actually people who steal, not the retailer who holds onto cash.

Phil Mocek
2 months ago
Reply to  MSE

Agreed. Theft is the problem. And typically, our reaction to potential theft is to secure our valuables (e.g., to put them in a sturdy safe, to store them off-site in a safe deposit box, to deposit them into a bank account), not to simply avoid use of things with value.

WA LCB, upon finding 1) that cannabis retailers regularly have large amounts of cash on hand and 2) that thieves, recognizing that juicy target, periodically try to steal the cash, do not seem to recommend moving that cash off-site more frequently, or to recommend using bank-grade ATMs in stores instead of the cheap-o kind you might find in a bar or gas station.

Instead,the LCB seem to have focused on arranging for customers to run their illegal-under-federal law transactions through Visa and/or Mastercard, creating a record of customer’s civil disobedience and paying a 3% protection fee to Visa and/or Mastercard.

Theft is the primary problem. Use of cash for retail transactions–exchanging money for goods–is not the secondary problem. Inadequate management of cash received from retail transactions is the secondary problem.

I’ve not worked retail since the 1990s, but I remember well my managers at the consumer electronics store where I worked, and before that, my managers at the restaurant where I worked, periodically taking a small, gray, zippered bag of cash to the bank, and keeping it in a big safe in the back office in between drops.