The Problem
The cannabis industry's dependence on cash transactions arises from its uncertain legal status, notably in the United States. This cash-centric approach brings various operational, security, and financial challenges unique to the sector. Here, we examine the key challenges faced by cannabis businesses operating within a cash-based system.
Security Risks
High volumes of cash on premises increase the risk of theft, burglary, and robbery both for the businesses and their employees. This necessitates additional security measures, which can be costly.
Financial Management and Banking Issues
Due to the federal legal status of cannabis, many banks and financial institutions are hesitant to provide services to cannabis-related businesses. This makes it difficult for these businesses to open accounts, deposit their earnings, or access credit and other financial services, leading to challenges in managing finances, paying bills, or issuing payroll efficiently.
Cash Handling Errors
Manual transactions increase the risk of human error in counting and managing cash, potentially leading to discrepancies in financial records and loss of revenue.
Consumer Inconvenience
Customers may find cash-only transactions to be less convenient and may prefer the option to use credit/debit cards or digital payments. This limitation can affect sales and customer satisfaction.
Speed of Transaction
Cash transactions tend to be slower to process, resulting in longer lines and wait times, which can negatively impact the customer experience and satisfaction levels.