Legal Cannabis Retail Innovates Its Way Around Payments Knot

marijuana dispensary sign

Legal marijuana may have a massive payments problem, but that’s not stopping retail innovation in perhaps the newest area of legitimate commerce in the U.S. and Canada.

No one would ever mistake a marijuana dispensary for a food truck, but that is what one shop in Reno, Nevada calls itself when charging customers’ credit cards.

Credit card statements will show that a purchase was made at the “Midgrun Eats LLC food truck, not at the Blüm Marijuana Dispensary,” the Reno Gazette-Journal reports.

Experts on dispensaries say such labeling is the only way to get around federal banking regulations. No matter what state laws may say about marijuana, federal law still considers the drug illegal, and that means financial institutions and payment services providers are reluctant to take part in the industry.

Back Door

“It’s not even a back door, it’s more like an upper window,” Jeremy Skaff of Colorado-based Journey Business Solutions told the newspaper. Skaff is a marijuana business financial advisor.

The label allows Blüm to take credit cards in an industry that is typically cash-only. “The more options that you give people to pay, the more business you’re going to get. No one carries cash anymore,” Skaff told the news outlet. No other dispensaries in Nevada’s Washoe County take credit cards except the six Blüm shops.

Trends in legal cannabis retail are just now emerging, and fresh numbers from Colorado are providing insight into how the industry is evolving.

According to a report from CNBC, Colorado, the first state to make recreational pot legal, has hit a milestone: It has “surpassed $1 billion in total cannabis-related revenue, the first state in the country to hit that milestone. Companies also have made more than $6.5 billion in sales over the last five years, with April and May of this year the highest-grossing months since legalization.”

Other figures also point to how much consumers are spending on legal retail pot. According to the report, “per-person sales are also highest in Colorado, with people buying, on average, $280 worth of cannabis per year compared to $220 and $130 for Washington and Oregon, respectively, the second and third states to legalize weed, according to Scott Willis, head of research at Grizzle, a New York-based investment research company.”

The report said Colorado “had 2,917 licensed marijuana businesses and 41,076 individuals licensed to work in the industry as of June.”

The industry is seeking to essentially rebrand itself into something clean, safe and even suburban — no more sketchy dealers, no more fear those the police sirens might start screeching as one buys this particular product.

Evidence of that comes not only from ongoing attempts to bring a luxury retail feel to the cannabis market, but the strong role of women entrepreneurs in helping to drive the early growth of this new segment of retail. Women have become involved in all facets of the legal cannabis operations across the United States and Canada.

Big Retail

Size also matters in this young industry. According to one recent report, a 13,000-square-foot legal retail dispensary in that city includes a “pizzeria and coffee house to attract customers who don’t partake in the now-legal herb.” Not only that, but “it offers an Apple Store-like atmosphere, with sleek modern decor, digital projections and motion-sensor displays, and friendly associates toting iPads.”

In fact, the report continued, “foot traffic has averaged 2,465 people per day since the beginning of 2019, but nearly a third of visitors don’t avail themselves of the bud, vape and edibles on sale.” The owners designed the store not so much as a destination for cannabis consumers but a general tourist destination — a model that could be imitated in other tourist hotspots as more states legalize marijuana for recreational use.

It's something to watch a young industry develop — look for more retail innovation even as the payments part of the equation continues to be a challenge.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.