Credit Cards Now Accepted at Massachusetts Cannabis Dispensary
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Credit Cards Now Accepted at Massachusetts Cannabis Dispensary

The Dreamer Cannabis retail facility in Southampton is using a third-party platform to allow customers to use credit for their purchases.

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March 8, 2022

An adult-use cannabis dispensary in Massachusetts is moving away from all-cash operations.

Dreamer Cannabis in Southampton, a town of about 6,000 on the north side of Springfield, began using a third-party platform that allows customers to buy state-legal cannabis products via credit cards, NBC-affiliate WWLP News reported.

The payment channel is a workaround of policies in place by most banks and major credit card agencies that ban transactions on cannabis, which remains federally illegal. Most state-legal cannabis dispensaries only accept cash or debit, the latter involving a point-of-sale (POS) transaction dubbed as a “cashless ATM.”

Cannabis retail operators are largely limited in payment options due to the lack of safe harbor for financial institutions servicing the industry.

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But the owners of Dreamer Cannabis are now catering to customers wanting to use credit cards.

“The consumer really doesn’t notice much difference,” co-owner Kevin Perrier told WWLP. “Instead of swiping the card at a terminal, we send them a text message on their phone. They enter their name and credit card information [and] hit pay. The process probably takes less than a minute.”

The third-party platform can be downloaded on phones, with customers signing into their accounts to make a transaction each time they visit the dispensary.

Dreamer Cannabis began using the platform a few weeks ago, according to WWLP.

The move by Dreamer Cannabis comes on the heels of Visa issuing a warning in December 2021 about cashless ATMs, where budtenders, for instance, can round a $55 order up to $60 on a debit card and give customers $5 back in cash.

“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs,” the Visa memo stated. “However, no cash disbursements are made to cardholders. Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement.”

Acquirers miscoding POS purchase transactions as ATM cash disbursements are in violation of ATM transaction requirements, Visa warned.

Visa also warned that acquirers are required to register all independent sales organizations or third-party services prior to the commencement of those contracted services on their behalf.

The scope for POS transactions come at a time when U.S. cannabis sales are projected to surpass $28 billion in 2022, and $46 billion in 2026, according to BDSA’s most recent five-year rolling market forecast.