More cash, more headaches for marijuana retailers after Mastercard ban

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Image of a cannabis transaction made with a credit/debit card

A customer uses a Visa card to make a marijuana purchase at The Goods in Somerville, Massachusetts. (Photo by Mike Spencer Photography)

Marijuana retailers across the United States are adjusting to handling and securing more cash in-store after Mastercard’s abrupt decision last month to halt millions of dollars in cannabis purchases involving its popular debit card.

Operators are also bracing for the possibility that global financial giant Visa will follow suit while facing growing threats their increasingly cash-heavy operations will become even more attractive to criminals.

Some marijuana retailers are zeroing in on improving in-store communication with customers and the overall shopping experience in the wake of Mastercard’s exodus.

Other retailers told MJBizDaily they are reassessing internal processes, including researching payment-processing vendors to potentially expanding card-purchasing options.

The debit-card ban also will likely push more business to the underground market, sources told MJBizDaily, perhaps generating even more competition from the illicit market.

The U.S. Cannabis Council told Green Market Report that “hundreds” of legal marijuana businesses  – particularly retailers – were affected by Mastercard’s decision.

One store operator, meanwhile, said Mastercard purchases accounted for almost 20% of in-store transactions.

It all adds up to more headaches and woes for retailers and consumers, according to Andrew DeAngelo, a Northern California-based marijuana consultant.

“The end result of this obviously is a lot more ATM machines, a lot more people using cash and a lot more exposure to violent crime,” he said.

“More transactions are going to move to the underground market, where you don’t have this cumbersome problem with payments.”

In a bit of irony, it’s no secret that peer-to-peer cash payment apps such as Venmo – which are regulated at the federal and state levels – play a key role in underground commerce.

One step forward, two steps back

In suburban Boston, The Goods – a retailer that opened last November – is reassessing its point-of-sale software and payment-processing services after the Mastercard ban.

The Goods was in the process of lining up a new payment-processing vendor to add PIN debit – cards that look like credit cards but operate like electronic checks – as a transaction option for customers.

But that decision is now on hold.

“At the moment, we paused those conversations regarding the payment process,” owner Chris Vining said. “We want to make sure that we’re doing the right thing.”

In San Diego County, shoppers at Jaxx Cannabis have largely conducted transactions in a cashless environment – a trend that gathered steam among many retailers because of the coronavirus pandemic.

After the Mastercard ban, however, workers are directing more customers to the store’s existing ATMs to withdraw cash.

Quick checkouts are less common these days.

“It’s just the customer’s experience being affected,” said Johann Balbuena, chief marketing officer at Prime Harvest, Jaxx’s parent company, which also has cannabis delivery and manufacturing operations in the San Diego market.

“Now we’re just reverting back to what it used to be,” she added, referring to the recent increase in cash-based purchases.

The company’s delivery business, which accepts only online payments, hasn’t been affected yet.

However, a three-month internal analysis of in-store transaction receipts revealed nearly 20% of Jaxx customers used Mastercard for purchases. Only 1% used Discover.

“Just looking at those numbers,” Balbuena said, “hopefully Visa doesn’t decide to take the same measure.”

Visa dominates debit-card purchasing volume in the U.S. with a 72% market share, Yahoo News reported, citing Nelson Report findings.

At GreenPharms’ Arizona locations in Flagstaff and Mesa, about 40% of clients use debit cards.

“It’s hard to say how many MasterCard-only cardholders will be lost. But at GreenPharms, even one person turned away is one too many,” owner Arvin Saloum told MJBizDaily.

“Any dispensaries currently accepting debit cards are reeling from the adverse effects of Mastercard’s decision.”

The GreenPharms stores have ATM machines, and customers are encouraged to bring cash.

Crime concerns intensify

Handling more cash at retail and distribution outlets could jeopardize workplace safety and increase the potential for theft or burglary, industry insiders told MJBizDaily.

Across California, burglaries continue to plague licensed cannabis businesses with near impunity – sometimes with deadly results.

In 2022, licensed marijuana businesses in California reported 329 break-ins or burglaries with losses, according to Department of Cannabis Control figures provided to MJBizDaily.

That’s more than double the 147 burglaries reported in 2021.

Most of these types of crimes are unsolved, and, in many cases, the police are slow to respond or fail to follow up, industry operators have told MJBizDaily.

“When the police don’t respond and nobody gets charged and nobody gets caught, it emboldens these folks,” said DeAngelo, who co-founded the pioneering Harborside cannabis chain in the San Francisco Bay Area.

In March 2021, Caitlin Orman – then a shift supervisor – was attacked by an armed robber who used an employee badge to enter a Green Thumb Industries-owned Rise dispensary in Joppatowne, Maryland, as she counted money alone after close.

The assailant shoved her in the bathroom, threw her head against a wall and hit her with a metal garbage can lid.

Orman fought back, and the robber ran out of the store with an undisclosed sum of money from the vault.

“In a busy shop, we definitely had well over $100,000 there most weeks,” Orman said.

“A lot of people don’t realize how much cash is kept on hand.”

The incident and aftermath forced her to leave the industry, though she plans to return.

She’s still dealing with trauma and anxiety.

More than two years later, the crime remains unsolved.

Orman is encouraging cannabis employees to stay vigilant and mindful on the job.

“Our training had prepared me for a federal raid, but not for someone coming in to rob us,” said Orman, who recently became a ganjalier, the industry’s version of a wine sommelier at hospitality venues.

“It’s important to be prepared and have an emergency plan.”

In Northern California, one local retailer, which was recently robbed overnight by a crew carrying assault rifles,  is installing fog machines as a hopeful deterrent to mobilized crime rings.

The machines emit blinding bursts of fog immediately after an alarm is triggered, essentially clouding the room.

The system costs thousands of dollars and cuts into business margins, according to DeAngelo.

“That puts a lot of pressure on prices on the final product because someone has to pay for all this stuff,” he said.

“It ends up being the consumer, or it ends up being investors.”

Several operators told MJBizDaily they are monitoring in-store cash-handling as well as reviewing cash-courier services and security procedures.

Numerous cannabis retailers, including several multistate operators that run dozens of stores across the country, declined to speak with MJBizDaily given the sensitive nature of this topic.

Differing perspectives

In cannabis, exceptions are often the rule, particularly considering the local nature of supply chains and commerce.

Some brands, such as Kush Queen in Anaheim, California, continue to hum along, largely unaffected by the Mastercard development.

“The whole thing feels like a red herring or something, because I haven’t heard of someone I actually know who was hit by it,” founder Olivia Alexander told MJBizDaily via email.

Chris Casacchia can be reached at