Easy to Implement Tips to Set Up a Cashless ATM for Your Cannabis Business

In the growing cannabis market, cash is key.

Like it or not, federal laws push many marijuana-related businesses into mainly cash transactions. But dealing with cash can bring about its own problems. Businesses find cash hard to track, requiring greater internal controls to ensure safety and accuracy. Add in the fact that an all-cash business is considered “high risk” by the IRS and therefore subject to extra scrutiny and audits, and its a lot to deal with.

And now, with COVID-19 pandemic concerns, there’s a public health aspect too: both businesses and customers want touchless payment options.

Enter cashless ATMs.

But What is a Cashless ATM for Legal Cannabis Businesses, and How Does It Work?

Cashless ATMs—also called Point of Banking systems—enable customers to purchase medical marijuana at dispensaries using a debit card. Credit cards aren’t supported.

  • The cashless ATM user-interface is familiar. Customers swipe their debit card and enter their PIN.
  • Instead of cash, the system produces a voucher for the approved transaction amount in increments of $5 or $10, plus a convenience fee. The voucher—which must be used at the establishment—proves that the cash was debited from the customer’s bank account and earmarked for the merchant.
  • Funds are paid into the merchant’s bank account and are displayed as cash withdrawals on the customer’s account statement.

For example, if a dispensary purchase totaled $77, the customer’s debit card would be charged $80, with the customer receiving $3 in change.

This system, while not as ideal as accepting credit cards, is far better than customers having to pay cash, according to an article on MoCannTrade.org, the Missouri Medical Cannabis Trade Association.

Less Risk, Larger Transactions

Running an all-cash business is now a public health danger due to COVID-19, but it still remains a security and internal control risk as well for businesses that must face the added concerns that accompany keeping large amounts of cash on hand.

According to Brian Bauer of Abaca, a financial services company, reducing the number of cash transactions in cannabis businesses is safer and more profitable.

“Offering cashless ATM boosts average transaction sizes by 25% among our cannabis business customers.”

Brian Bauer of Albaca, a financial services company for the cannabis industry

How to Work with Your Bank

Since financial institutions are subject to the federal Bank Secrecy Act and various other anti-money laundering requirements, the use of cashless ATMs can provide some unique challenges.

As a cannabis business, be aware that your bank will need to work with you and your vendors to ensure that it is adhering to any requirements. According to Jim Regna, CEO and founder of Triad Bank, it’s important to have open communication between your dispensary, your bank and your cashless ATM vendor.

Your bank will need to understand and vet the cashless ATM provider’s services and technology. Some cashless solutions have run into problems in other states and have been forced to shut down, primarily because they run afoul of the terms of service for Visa, MasterCard, and other credit card processors.

“It is important for a dispensary to partner with a vendor offering a solution that does not touch the card processors’ systems.”

Jim Regna, CEO and Founder of Triad Bank, headquartered in St. Louis, and MoCannTrade board member

According to Regna, before doing business, your bank will likely perform a due diligence review of the cashless ATM provider. Marijuana dispensaries should be prepared to help facilitate the bank’s review.

Going forward, the bank will need to do ongoing customer due diligence checks. It will monitor transactions for suspicious activity, just as it would for cash transactions.

Cashless ATM Costs

Depending on the payment processing provider, merchants pay a monthly fee plus a “per swipe” fee, a percentage of the transaction amount plus the “per swipe” fee, or a combination of all three.


Cannabis businesses utilizing cashless ATMs will need to provide accurate records of transactions to their banking partners and be able to reconcile cashless ATM transactions with seed-to-sale records.

Cash Back Limitations for Cashless ATMs

To avoid potential money laundering issues, the marijuana-related business and its bank should agree on a cash back limitation when sales are made using the cashless ATM solution.

According to Regna of Triad Bank, the cash back limitation should be large enough to allow marijuana dispensary customers to receive change in cash for their purchase, but not large enough to encourage significant cash back transactions like customers may be used to when using a debit card in a traditional retail setting.

Limiting the amount of cash back will make recordkeeping practices much easier for both marijuana dispensaries and their banks.

As my team at Smith Patrick CPAs helps cannabis businesses with their accounting and finance needs, we recommend that you develop a plan for how to handle cash and ensure appropriate records are being kept for tax and audit purposes.

Cash transactions are a part of the marijuana industry, but it’s helpful to know there’s other ways to accept customer purchases. Cashless ATMs can provide cannabis businesses and customers with a safe, compliant alternative to cash.

To successfully implement cashless ATMs, cannabis businesses must establish, implement and review compliance measures.

More Information

Our team at Smith Patrick CPAs will continue to share best practices for cannabis businesses and keep you informed. For help with your marijuana business strategy or tax needs, reach out to us at 314-961-1600 or schedule directly here to discuss your situation.

David Smith helps businesses and individuals develop smart business practices for tax and accounting advantages as the president of Smith Patrick CPAs. He is involved in the Missouri cannabis industry through MoCannTrade and other organizations, helping cannabis operators with their tax and accounting needs. Reach him at 314-961-1600 or schedule directly here.

About Smith Patrick CPA

Smith Patrick CPA is a St. Louis-based, family-owned CPA firm dedicated to providing personal guidance on taxes, investment advising and financial services to small businesses and financially active individuals. For over 30 years, our firm has focused on providing excellent service to businesses, non-profits, individuals and government agencies in St. Louis and the surrounding areas. Investment Advisory Services are offered through Wealth Management, LLC, a Registered Investment Advisor.