When pot patient Karen Seeb Goldstein shops for cannabis, she uses CanPay, an app that offers a workaround for marijuana buyers who’d prefer not to pay cash for their weed.
“I love it,” said Goldstein, who lives in Fort Lauderdale and is vice chairwoman the pro-cannabis group Regulate Florida. “I sometimes buy more than I plan to buy, and I don’t like to carry tons of cash.”
Amid a nationwide wave of marijuana legalization, banking barriers remain a challenge for the budding industry. Federal prohibition means banks and credit card processors are reluctant to process payments for pot.
CanPay is a Seattle-based company that has created a workaround. Marijuana buyers give their bank account number and routing number to the company. CanPay then allows them to make payments as ACH transactions.
CanPay must be killing it in Colorado or California or one of the nation’s other freewheeling marijuana markets, right? Not exactly, Chief Executive Dustin Eide says. In one of the many surprises thrown off by a cannabis legalization, CanPay has achieved its highest market penetration in staid Florida — home of perhaps the most corporate cannabis industry in the nation.
“Florida is definitely our strongest market,” Eide said during an interview in June.
Eide credits the concentration created by Florida’s regulatory scheme. In Colorado and California, most marijuana dispensaries are mom-and-pop operators, so negotiating with retailers to use CanPay is a process of knocking on one door at a time.
But in Florida’s vertically integrated market, just nine companies — including Trulieve, Knox Medical and Curaleaf — can sell pot to the public. And with patients like Goldstein sold on CanPay, cannabis companies have a competitive reason to use the app.
Eide calls it a “snowball effect.”
While some marijuana dispensaries have tried debit-card versions of pot payments, Eide says they don’t always feel aboveboard. For instance, the merchant name on the bank statement might be confusing. In CanPay’s case, the name appears on the customer’s statement.
“There’s no hiding what the transaction is,” Eide said.
CanPay charges marijuana dispensaries a 2 percent fee. Credit card companies, by contrast would charge 3 percent to 4 percent — if they would even process pot purchases.
“There wouldn’t be a need for CanPay if Visa and MasterCard were openly serving the industry,” Eide said.
CanPay imposes a daily limit of $500. And buyer beware: It is possible to overdraw a checking account with CanPay, which would lead to a cascade of fees from the bank and CanPay.
Goldstein, for her part, said CanPay lets her make impulse buys of items she spots while she’s in a dispensary. That’s something she couldn’t do if she had just enough cash to make a planned purchase.
“It’s like when you go into Publix for one thing and you see three other things you want,” Goldstein said.
While marijuana industry analysts expect Florida’s marijuana sales to top $1 billion a year in the near future, payment challenges could hamper the sector’s growth.
In Florida’s fast-growing cannabis market, there were 129,929 registered patients as of June 29, according to the Florida Department of Health’s Office of Medical Marijuana Use.
Eide declined to say how many of them use CanPay, and he was cagey about other financial information.
He did say that CanPay customers spend an average of $120 per transaction nationally.
Meanwhile, Eide said pot prohibition still looms over his business. For example, the Apple store refuses to carry the CanPay app, so customers put the app on their phones through a website operated by CanPay.