US Dispensaries to Gain Banking Option With New CannaCard

As the federal back and forth around cannabis in the US continues, marijuana’s position as a Schedule I drug makes it near impossible for cannabis companies to access banking services.

This week, the SAFE Banking Act, which would allow federal financial institutions to service lawful cannabis companies, will be put to a vote in the US House of Representatives.

As it stands, the drug’s illegal federal status limits consumers to using cash at dispensaries, even in states where medical or recreational marijuana has been legalized.

One company’s cashless payment offering — self-described as the “Starbucks (NASDAQ:SBUX) app of the cannabis world” — hopes to be the solution to the cannabis cash crisis.

Illinois-based CannaTrac wants to use its CannaCard technology to make buying from dispensaries an easier and more transparent process. CannaTrac is also in the process of solidifying a public listing to be confirmed by the second or third quarter of 2020, according to a spokesperson for the company.

The Investing News Network (INN) spoke to CannaTrac CEO Thomas Gavin IV about the technology and the company’s plans to take it across the US and beyond.

“Many (dispensaries) are still dealing in cash, which costs them more in the long run (in) storage, taxes, everything — they’re paying a penalty for it all. We’re able to take that off the table,” Gavin told INN.

On the consumer side, CannaCard gives the option of paying with a physical card or an app, both of which are attached to a points-based rewards program. Funds can be uploaded via a checking account, debit card or with cash at one of the partnering dispensaries or retailer loading stations at a flat cost of US$0.95 per upload.

Like most credit cards, individuals need to be 18 or older to sign up, as the card can be used in other stores besides dispensaries.

Along with being able to bank aboveboard, retailers can also market themselves through the CannaCard app, Gavin said.

Earlier this month, the firm signed an agreement with Pacific Banking to provide retailers with the ability to apply for both the CannaCard platform and banking services from Pacific at the same time.

Currently, the card is only in use in Colorado at the CannaTrac store, but a national expansion is planned for October 1.

It’s not the only recent move from CannaTrac. In August, the company partnered with an unnamed CBD distribution source to create a payment solution using the CannaCard technology. Earlier this year, CannaTrac signed a contract with an undisclosed major retailer to use the payment platform in 18,000 retail locations across the US.

Gavin was unable to confirm which partners the company has signed as part of these deals, but said his firm plans on building a new rewards platform to be launched by the first quarter of 2020.

Other companies try to ease cannabis cash concerns

As a “universal payment solution,” Gavin said CannaCard is able to compete with other credit card options like the one recently launched by medical cannabis company Columbia Care (NEO:CCHW,OTCQX:COLXF), the Columbia National Credit program (CNC Card).

The New York-based multi-state operator touted itself as “the first and only cannabis company in the United States capable of directly accepting a credit card for cannabis purchases.”

The CNC Card started as a pilot program in the company’s home state in 2018.

In June, the company announced that customers in Delaware and Pennsylvania would gain access to the card, with Illinois and Arizona following close behind.

Columbia Care said it plans for national CNC Card coverage in its dispensaries by the end of this year and is also evaluating a broader market adoption.

Gavin said a critical point of CannaCard’s benefits is the rigorous vetting process it puts its clients through. In terms of security efforts, the company has partnered with risk management firm LexisNexis to get information on over 1,700 repositories.

“That’s part of the reason we always see a place for us in this industry. Even if it goes federally legal and … you’re able to use the federal rail openly, regulations are not going to go away,” said Gavin. “Regulatory processes, if anything, (are) going to be more scrutinized.”

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.