Cashless Payment For The Cannabis Industry
Cashless Payment For The Cannabis Industry with Chris Rentner, Spence Labs, co-founder, and CEO. Our next guest operates an innovative financial technology startup developing cashless payment and customer relationship platforms for the cannabis industry. The innovative platform lets dispensary customers pay for cannabis purchases with their mobile phones, eliminating the need to carry cash or visit an ATM inside the dispensary. Spence is a turn-key national system for both dispensaries and technology companies in the cannabis industry, offering two solutions: First, mobile payments for retail customers and cannabis delivery; and second, a simple API allows dispensaries or cannabis tech companies to quickly embed digital payments in their own platforms. Working with Chicago-based Burling Bank, who will manage payment clearances from buyer to seller. Rather than rely on credit card rails or an ATM system, Spence utilizes Automated Clearing House (ACH) payments, the system typically used for transfers between banking institutions for automated bill pay and payroll direct deposit.
Payments are a constantly vexing problem for American dispensaries since the federal government still classifies cannabis sales as illegal, Visa, Mastercard, and federally-chartered banks don’t want to risk getting shut down by investigators from the Department of Justice. Burling Bank is state-chartered in Illinois. For dispensaries able to convince a large number of customers to use Spence – PharmaCann’s North Aurora Verilife store is currently testing the app – the app offers a number of boons over ATM payments or even credit cards if they were legal for cannabis. Rentner says dispensary customers pay no fees, and Spence’s fees will be cheaper than credit cards, which often run 5 to 8% for CBD stores. Payment transfers are executed in 4 to 18 hours, where credit cards often take three to five days. Fees to sellers are based on processing volume and other services purchased from Spence, which also operates loyalty and discount programs through the app.