Experts warn cannabis retailers about the looming extinction of cashless ATMs

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

The future may not have room for cashless ATMs in cannabis stores. Based on a warning from credit card giant Visa, cashless ATM machines have been adopted in a careless way by cannabis retail dispensary owners. 

What would this mean for cannabis industry retailers across the U.S.? Well, the executives are considering the prospect of criminal charges being imposed on the individuals and/or organizations that helped to install such systems inside licensed cannabis stores.

According to president and CEO of Colorado-based Safe Harbor Financial, Sundie Seefried, many retailers are preparing ahead of potentially losing access to cashless ATMs. In fact, he foresees cashless-ATM closures no later than February.

“What we’re doing is sending a mailing to all our cannabis clients saying, ‘Here’s the notice, you need a backup plan, you need to consult with legal and figure this out, and we have to figure this out because they’re telling us to,’” explained Seefried.

Cashless ATM scheme in the cannabis industry is adopted by half of U.S. stores

On December 2, a letter was written by Visa and sent to banks outlining its knowledge of a “scheme” whereby cashless ATM miscoding had been taking place to protect the genuine reason behind the transactions.

“They are referred to as ‘cashless’ because the cardholder receives product instead of cash,” reads a statement from Denver-headquartered cannabis technology company Akerna.

“Compliance enforcement” and “penalties” would befall anyone caught breaching the terms, according to Visa. However, officials working at the firm did not specify exactly how violators would penalize the lawbreakers.

Cashless ATM scheme in the cannabis industry affects 50 percent of U.S. dispensaries

Although Visa’s letter didn’t name drop cannabis as the industry under speculation, many business owners considered it a warning. Currently, based on estimates from Akerna, half of all the nation’s cannabis stores serve customers with cashless ATMs.

Initially, Visa will probably track down banks that have been handling cannabis-related transactions. As a result of this, operators would have no choice but to turn in a new direction; e.g. integrating a different type of card payment technology or introducing a “cash-only” policy for customers.

“Big institutions don’t act that fast, but when they put out a notice like (Visa’s), they’re serious,” said Seefried, who doesn’t anticipate criminal charges. “I think this was Visa putting everybody on a courtesy notice.” 

Moving forwards, industry experts advise cannabis retailers who use cashless ATM machines to seek out alternative payment options or request a cash-only service.