How Cannabis Dispensaries Can Effectively Manage their Cash: Best Practices for Cash Management
The cannabis industry is rapidly growing, seeing more and more legal sales each year. In fact, legal cannabis sales are expected to reach $71 billion by 2030. With legalizations along the Northeast Coast piling up, the industry is growing faster than the surrounding legal and financial infrastructure.
For cannabis-related businesses (CRBs) cash still reigns supreme for cannabis sales. Because cannabis businesses are still predominantly cash-only, effective cash management is crucial for their success. Fortunately, today’s cash management technology can help ensure that your cannabis dispensary addresses both its security and compliance needs. In this post, we’ll explore how proper cash logistics can support your business’s ongoing success—and how Shields can support you as you develop and implement your own robust and efficient financial management strategies!
The Challenges of Cash Management in Cannabis Dispensaries
Since marijuana is still seen as a controlled substance at the federal level, cash is central to any cannabis operation. But, in addition to being one of the last cash holdouts in an increasingly cash-free world, the large amounts of cash can also provide added security issues for cannabis vendors. Let’s take a deeper look at the challenges dispensaries face in navigating and managing their cash volume.
Security Risks
With such high cash volumes and large stocks of valuable product, it’s no wonder dispensaries are a frequent target of theft. Recent local thefts in Philadelphia, New Jersey, and New York illustrate just how widespread the problem has become. In fact, according to the National Cannabis Industry Association, 90% of dispensaries experience some form of theft.
Increased surveillance and security can help reduce theft—but the best way to stop cash theft is to both secure cash quickly within your dispensary and manage the amount of cash available on site.
Compliance Requirements and Limited Banking Options
Not only are cannabis dispensaries bound by government regulations, which vary by state (more on this later), the banks that serve them are as well. Cannabis businesses may find it difficult to locate a nearby banking partner willing to accept their cash, creating additional barriers to managing and quickly securing it. And when financial institutions are willing to navigate special requirements to work with cannabis dispensaries, they have firm expectations on how dispensaries operate and manage their funds.
As the Pennsylvania Department of Banking Securities writes, “For well capitalized, well managed institutions…the act of providing banking services to marijuana-related businesses in full compliance with the guidance will not, in and of itself, prejudice an institution to adverse regulatory treatment from the Department of Banking and Securities…” Proper and professional cash management can be key to gaining approval from traditional banks.
Operational Inefficiencies
Manual cash handling processes can be time-consuming and result in additional time required for cash to be counted, sorted, and stored. The longer cash is not secured, the greater the risk of theft. Human error can also lead to losses, as well as incomplete or inaccurate records, which can create major compliance issues. Lastly, these issues also create increased vulnerabilities and opportunities for in-house theft.
How Federal and State Regulations for Cannabis Dispensaries in the Northeast Impact Financial Practices
As a current or future stakeholder in a cannabis business, you are likely very aware of the highly complex legal framework surrounding cannabis—with laws varying significantly between federal and state levels. But to better understand the implications for cannabis cash management, it’s important to first explore the basic laws surrounding cannabis banking and payment options.
Federal Regulation
In contrast to many state regulations, cannabis is classified as a Schedule I drug under the Controlled Substances Act (CSA). Because federal law prohibits marijuana growing, distribution, and possession, it creates logistical and legal obstacles for cannabis dispensaries, especially for banking. While states offer methods for circumventing federal law to allow for regulated banking partnerships (more on this below), federal law makes it impossible for major credit cards to be used at legal dispensaries.
State Regulations
Each state with legalized cannabis has its own set of rules and regulations which govern everything from security measures to packaging and labeling requirements, as well as banking. Compliance with these regulations is crucial for cannabis businesses to operate legally. Let’s explore a little bit about how banking and cash management are central to compliance.
Delaware: HB 355 was introduced this year to provide state-level legal protection for banks to reduce “fear of prosecution or penalties” and allow compliant marijuana businesses to use traditional banking methods, like checking accounts for depositing their cash and ACH services for paying employees. It’s important to note, beginning in 2025, new legislation will instate a 15% sales tax on all cannabis sales. For more information about Delaware Marijuana laws, visit DelawareStateCannabis.org’s Delaware Marijuana Laws 2024 page or Delaware’s Marijuana Commissioner’s website.
New Jersey: Last year, New Jersey enacted legislation providing state-level protections for banks and insurers that work with licensed marijuana businesses. The SAFE Banking Act is designed to safeguard financial institutions from penalties under federal law when servicing compliant cannabis entities that are legal under state law. For more information about New Jersey Marijuana laws, visit the NJ Cannabis Regulatory Commission’s website.
New York: The New York State Department of Financial Services (DFS) and Office of Cannabis Management (OCM) offer guidance for financial institutions and cannabis-related businesses on how to work together. As a memorandum from 2018 explains, the DFS will not impose regulatory action on any New York state-chartered bank or credit union that establishes a banking relationship with a medical marijuana-related business, provided the business complies with laws.
Pennsylvania: As we mentioned earlier, as long as cannabis businesses are practicing state-required compliance, banks shouldn’t have any issues serving them. They advise several recommendations for financial institutions before they work with a CRB, such as conducting a thorough business risk assessment, and ensuring compliance capabilities. State requirements include proper security and control measures and employee training (a two-hour training course to demonstrate proficiency and knowledge of cannabis regulations, security protocols, and compliance requirements).
Compliance and Cash Management Go Hand-in-Hand
As you can see, compliance is key for a financially connected and successful cannabis business. Proper cash management practices can facilitate compliance and help your business establish itself as efficient and professional, in addition to lowering security risks.
Just as importantly, as cannabis businesses become more mainstream, they may soon be able to take advantage of business benefits including tax deductions. Proper financial management today means you are in a great position to adapt to these changes in the future.
Best Practices for Cannabis Cash Management
Cash management services and tools can make all the difference for businesses looking for secure, efficient, and compliant-friendly financial practices. Here are a few ways you can support your hemp industry business’s operations.
Implement Secure Cash Handling Procedures
Counting currency by hand is inefficient and insecure. Fortunately, there are professional Cash Management Services and products, including Teller Cash Recyclers (TCRs/Cash Recycling Machines) and Smart Safes that can facilitate cash counting and safe storage, and Cash in Transit (Armored Truck) services.
Cash recycling machines can quickly authenticate and secure incoming banknotes, reducing the need for manual cash counting by your staff. Similarly, Smart Safes can count and protect cash during transactions and prevent pry attacks with robust door designs and locking systems. You can even assign specific roles and permissions to employees to enhance security, reserving higher-security tasks for select staff members.
When you need your cash picked up and deposited, Cash in Transit Services provide secure scheduled pick-up and delivery of cash to the financial institution of your choice. When your cash is not in transit in an armored vehicle or in a Smart Safe, it is safe and sound in a Shields vault.
Invest in Advanced Security Systems
Regardless of how well you manage your cash, your store may be a target for theft simply because thieves see CRBs as easy sources for cash and high-value goods. Superior security systems can reduce the risk of criminal activity—and many states’ governing agencies require them. Key security measures include:
- Video Surveillance: Cameras with live monitoring and recording capabilities to cover all areas of the premises.
- Alarm Systems: Security systems with sensors for doors, windows, and motion.
- Access Control: Advanced locking systems like Verapass that limit and monitor employee access to sensitive areas using key cards, biometric readers, or PIN codes.
- Secure Storage: Safes, vaults, and ATM security gates for the most secure storage of cash and cannabis products.
- Inventory Tracking: Digital systems to maintain accurate records of inventory, which help prevent theft and ensure compliance with state regulations.
These systems not only can stop thieves, but can also act as a deterrent to criminals, further helping to mitigate risks.
Complete Regular Staff Training
Regular staff training is essential in the cannabis industry due to the extensive regulations governing CSB operations. Proper training in cash handling and regulatory compliance helps employees understand and follow state laws, reducing the risk of violations that could result in hefty fines or even business closure. Regular training sessions ensure that staff are up to date with the latest regulations, enhancing their ability to manage cash securely.
Additionally, having a compliance-centric focus for staff training can help you ensure that your business is always abreast of new rules and regulations, whether they are opening doors for additional opportunities, or making sure you are meeting new guidelines, from taxation rules to local ordinances.
Benefits of Partnering with Shields Business Solutions for Your Cash Management Needs
At Shields, we understand the role of cash in today’s transactions, as well as the specific risks that come with it. We’re proud to work with our region’s burgeoning cannabis industry, offering:
- Expertise in Cash Management: Over 40 years of experience in providing customized solutions, with over a 99% on-time delivery rate for cash-in-transit services.
- Comprehensive Services: From cash handling and security to ATM/ITM solutions, we’re the local experts who can meet all your cash management needs.
- Geographic Coverage: We are the premier ATM/ITM, TCR machine, cash management and service provider for the NJ/PA/DE/NY financial community.
- Customer-Centric Approach: We’ve worked hard to develop tailored solutions to meet the unique needs of cannabis dispensaries.
We stand strong with over 100 dedicated professionals across multiple locations, leading the charge in the ATM and Cash-In-Transit service industries.
Increase Security and Optimize Your Cannabis Cash Management with Shields
As a CRB, security and compliance are crucial to your business. At Shields, these same priorities are also our primary focus.
Whether you’re looking for Security Solutions, Smart Safes, or Cash Recyclers, we can help your business create a customized cash management system to meet your needs. Contact us to learn more, book a free security consultation, and explore our cash management and armored cash transport offerings today!
