Pitfalls of accepting credit cards at your dispensary

Accepting Credit Cards for Cannabis Could Destroy Your Company

As states legalize medical and adult-use marijuana, dispensaries are popping up across the country. Entrepreneurs see the growth potential in the cannabis space but face serious issues when it comes time to find a payment processor for cannabis. There are plenty of shady payment schemes out there promising solutions, but using them could put your company at risk. Here’s why.

You Could Be Breaking the Law

The branded card networks do not permit cannabis transactions. This applies to both credit and debit networks. But this is not a law, so this isn’t where you’ll get in trouble running dispensaries that accept credit cards.

The legal issue is that in order to offer cannabis debit and credit card processing, some payment schemes use workarounds to try and fool the branded networks. Most often, this is done by lying about what kinds of transactions you’re doing. So instead of being transparent about your marijuana payment processing, these Merchant Service Providers (MSP) claim that you’re selling flowers or health-food products.

By lying about what items you’re selling, you are lying to a financial institution. That is a federal crime with fines up to $1,000,000 and up to thirty years in prison. As a result, using these sketchy payment solutions could put you in legal trouble, despite selling products that are legal in your state.

You Could Lose Your Merchant Account, Forever

Let’s imagine that you’ve signed up with a sketchy payment processor who promised you cannabis debit or credit card processing. You thought it was fine, but it wasn’t. Then, the branded card networks find out. Not only could they shut down your marijuana merchant account, but they could also add you to their blacklists.

The blacklists run by the branded card networks are called the Terminated Merchant File (TMF) or Member Alert to Control High-Risk (MATCH) databases. Banks and credit unions get access to these lists and use them to determine if someone should get a merchant or bank account. As a result, getting placed on one of these lists could make it harder for you to get a bank account in the future, even if marijuana is legalized at the federal level.

You Could Get Sued

There’s a lawsuit underway in California due to unfair competition. The lawsuit came about because there are dispensaries that take credit cards competing against compliant dispensaries that follow the rules and don’t accept debit or credit card payments for marijuana. The compliant company is now suing the service that was breaking the rules for unfair business practices. 

Even as we watch that lawsuit unfold, it’s clear that this is an area where we will see more litigation. Not only will this highlight that those companies were lying to financial institutions (the crime described above) but could also open them up for penalties and damages. 

Need a Legitimate Cannabis Merchant Account?

Your Money Could Be at Risk

To get around the rules, some of the payment schemes use offshore processing. This means that your money goes through other countries, like offshore islands or even Russia. That may sound fine at the moment, but when you need it for payroll or to enjoy your profits, you could be forced to pay high fees and deal with administrative nightmares. Some retailers in this situation have lost hundreds of thousands of dollars from this mistake, many of them never getting their money back.

Also, it’s important to note that if consumers realize that card transactions aren’t allowed, you could face significant chargebacks. Think of your most loyal customer, the one who has racked up thousands of dollars in purchases over the past few years. Now imagine that they read a viral article or blog post about how they can call their card issuer and claim that those purchases were fraudulent, asking for their money back. Could you absorb those kinds of losses?


There’s a Solution!

Now that you know the risks involved, let’s talk about a more compliant solution. You can get a legitimate cannabis merchant account, one that is transparent. Hypur can help you find your ideal bank or credit union partner, one that will give you cannabis merchant service using Electronic Funds Transfer (EFT) transfers.

Hypur can help you with your cannabis electronic payments. When you use Hypur for a cannabis merchant account, your customers still get all the ease and convenience of electronic payments. Plus, consumers tend to spend more when they use Hypur, typically 20% more, with an average ticket of over $90 because they can easily buy products with the money they have in their bank account.

Need Reliable Cannabis Payments?


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  4. […] you’re using cannabis credit card processing, you could be vulnerable to massive chargebacks. These could range from costly to ruinous. Hypur […]

  5. […] repercussions for this are pretty dire. In fact, accepting credit cards for cannabis could destroy your company. It can also hurt the cannabis industry in general, contributing to the payment […]

  6. […] many cannabis businesses are looking for cannabis credit card processing, the reality is that dispensaries that accept credit cards are setting themselves up for future […]

  7. […] Cannabis dispensaries that take credit cards are currently breaking the rules. That’s because the branded card networks have specifically excluded cannabis transactions on their rails. In fact, cannabis credit card processing could put your business in danger. […]

  8. […] This is one of the most sought-after forms of dispensary payment processing. Everyone wants to accept debit or credit card payments for cannabis. But the fact of the matter is that the branded card networks do not allow such transactions. Offering cannabis credit card processing in your business could put you and your business at risk, with the potential for fines up to $1,000,000 and 30 years in prison, not to mention the fact that these dispensary payment systems regularly go down. Read more about the perils of credit cards for cannabis here. […]

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