In the early days of the cannabis industry, media outlets covered the bags of money that became synonymous with the industry. Even as legalization spread and medical or adult-use marijuana has become more common, cannabis banking remained tricky and many dispensaries still have bags of money. But this could be costing your business even more than you realize.
Cash-related Workforce Expenses
The cost of handling cash in the average retail business is 4% to over 15%. Due to the cash-intensive nature of cannabis, cash handling costs are typically at the high end of the range. It’s intriguing to drill down into exactly where those hidden costs come from, though, as a large part of it is from labor requirements you might not even be considering.
Every time an employee opens or closes a drawer, time is needed for counting and settling amounts, plus a manager will need to be involved in this sensitive business routine. No matter how fast and streamlined this process might be, it is an activity that’s repeated multiple times per day, every single business day.
For a simple example, let’s imagine that it takes your employee and manager five minutes at the start of a shift and ten minutes at the end of a shift to open and close out a drawer. Even if you only have two registers open at a time and two shifts running at any given time, that’s an hour of employee and management labor that is spent on cash every single day. If your business is open seven days a week, that’s almost an entire day of work that’s lost to cash drawer opening and closing.
With more shifts, more open registers, and longer drawer opening or closing times, your business is probably facing an even higher cost of cash!
Handling cash is also slower for transactions. Customers take time to count out their cash, which is then checked by your employees. Your staff then needs to count out change, which is usually confirmed by the customer as well. Even if this process runs smoothly, it can lead to longer waits at dispensaries due to slow line speed.
In turn, you may be hiring additional staff and opening more drawers, compounding your cost of cash.
Need to Reduce Your Cost of Cash?
Additional Fees for Cannabis Cash
If the average, non-cannabis business has a cost of cash between 4-15%, with an average of 9.1%, what is the cost of cash for cannabis businesses?
If you have bags of money, you will need to pay someone to transport it for you, plus you will probably face deposit costs. This means paying for a cash in transit service, typically getting charged for the number of pickups and deliveries each month. You will also need to pay to deposit those large sums of money into your bank account.
Bags of money can also lead to the question of where do dispensaries keep their money. You will need a larger safe than might be required at similarly sized retail establishments in other industries. You’ll also need more security to keep your money and employees safe – the large scale of cannabis money has turned many dispensaries into targets for criminals.
Even when your cannabis cash makes it to the bank, you could face higher fees for your bank accounts than what other industries face. This is for a range of reasons. Banks have a higher burden of compliance in the cannabis industry, regardless of the cash-intensive nature of the business, which means that they are spending more time doing admin on your account. This goes up the more cash you’re using, with the bank required to file a Currency Transaction Report (CTR) for any cash deposit or withdrawal over $10,000.
The Solution to Your Marijuana Money Problems
The best way to reduce your cost of cash is simply to reduce the amount of cash in your business, promoting cashless solutions. This is tricky in the cannabis industry as the branded card networks do not allow debit or credit card payments for cannabis. But Hypur takes compliance seriously and has a transparent solution, offering cashless payments for cannabis. This includes getting a legitimate merchant account, letting you accept electronic payments for cannabis.
Customers who use Hypur pay directly from their bank accounts with an Electronic Funds Transfer (EFT). This cashless option reduces the high volumes of cannabis cash in your business, plus it’s fast and convenient to use. This means that your line speeds improve, and your employees and managers don’t spend as much time opening or closing drawers. As a result, your staff and management can spend more time on key parts of their jobs, making better use of your workforce.
Additionally, customers paying electronically spend on average 20% more, boosting average transactions over $90. So not only could you reduce your cost of cash when you go cashless with Hypur Pay or debit card processing, but you could also increase your sales and profits.