Got a smartphone and a checking account? One of the of-age adults living in one of the eight states (plus D.C.) with legal recreational cannabis? Then leave your Benjamins at home, because you don’t need them anymore. Think of CanPay as the “green” version of companies like PayPal and Venmo.
It might be easy to think of the idea as just another weed-legal version of a business that already exists. But CanPay is going to transform the way we pay for cannabis, and here’s why.
No Longer A “Cash Only” Business
CanPay has actually overcome a major obstacle that still stands in the way of making cannabis a full-fledged industry. And that obstacle is the federal government. Many people celebrated the major nationwide victories for marijuana legalization this month, but growing, possessing, and consuming it remains illegal as the law of the land. Therefore banks, which are usually federally insured, would find themselves in violation of the law for doing any cannabis-related business.
Cash was the one exception. And that has meant that for the most part, and especially for consumers and retailers, cannabis has been a cash-only business. Obviously, that creates a whole set of problems. Consumers aren’t happy about having to carry a bunch of cash around, and retail shops have to invest in some serious security to protect the mounds of money they’re getting. This makes it inconvenient for everyone involved.
Sure, there have been some attempts to loosen these restrictions, but banks have been slow to take the risk. In 2014, the US Department of the Treasury spelled out some rather strict rules to try to let banks have some limited transactions with legal cannabis businesses. It’s called the Cole Memo, and so far extremely few credit card companies have taken up the offer.
Enter: CanPay. Ultimately, CanPay created a multi-state network connecting the limited Cole-compliant companies in Oregon, Washington, and Colorado together. The result? The company calls it “the first debit payment solution for the cannabis industry.”
How Does CanPay Work?
If you have Venmo or PayPal, you pretty much already know how CanPay works. You download the app on your smartphone, get yourself approved, and link your profile to one of your bank or debit accounts. After that, it’s as simple as logging into CanPay app and scanning randomly generated “tokens” at participating sale-points. So that’s one limitation of CanPay for now. Your app only works at retail locations that are also following the rules of the Cole Memo. If you shop at one of those locations, funds transfer directly from your debit account to the retailer’s bank account.
Thus, one advantage of the CanPay network is that you don’t have to involve one of the major card brands like Visa or MasterCard, even though the purchasing experience is very similar. And at the same time, you get to “de-cash” your cannabis shopping experience. “In a cash-only system, customers essentially have to pre-plan what they’re going to purchase. That’s not the way they’re treated anywhere else,” said the CEO of CanPay, Dustin Eide.