CanPay's approved provider status means patients can use a debit card to purchase medical cannabis. 

• Courtesy photo
• THC patients can skip ATM fees with CanPay.

In most states, buying medical or recreational cannabis means paying with cash. Many banking institutions won't work with cannabis businesses, as they operate in a gray area—legal at the state level but still in conflict with federal law, as cannabis remains a Schedule I drug.

That situation won't change completely until cannabis is descheduled at the federal level. But as local cannabis industries gain public support in many states, legal workarounds are taking shape.

Last October, CanPay was named by Utah's Division of Finance as an approved payment provider for medical cannabis pharmacies statewide. This approval means many patients can swipe a debit card inside of a medical cannabis pharmacy to pay for their medicine, potentially saving a stop at the ATM.

But how is it possible, given the limited relationship between banks and cannabis businesses? "The State of Utah has a unique approval program for payment providers that was created to enhance transparency for the state's medical cannabis program," CanPay CEO Dustin Eide told City Weekly. "The application process is outlined in the related statute, and includes the submission of CanPay documentation around compliance, transparency with its banking partners, and consumer and merchant security."

The company also launched an app that allows patients to pay medical cannabis pharmacies in Utah with a debit from their checking account using the Automated Clearing House (ACH) network.

"CanPay operates its pay-by-bank platform exclusively on the Automated Clearing House Network, which is the only network available for legitimate and transparent at-the-counter cannabis purchases," Eide explained. "Through a quick and simple account creation process, the customer can link their CanPay account to their bank account and immediately begin making fee-free payments at any participating dispensary."

At many medical cannabis pharmacies in Utah, patients have been able to pay with a card after their bill is rounded up to the nearest $5 and with ATM fees applied. This also means patients receive a small amount of cash back, which is helpful if the patient chooses to tip the pharmacy associate (or budtender).

This same system is now being applied in other states to allow medical cannabis patients to use payment cards. Beyond Utah, CanPay serves over 1,000 dispensaries in other states.

"This includes multiple locations across Utah, for delivery payments, and at over 1,100 dispensaries across the country," Eide said. "CanPay is glad to be in partnership with the State of Utah."

The CanPay platform enables payments from over 14,000 financial institutions spanning across other industries.

CanPay was founded in 2016, and is one the largest multi-retail and ecommerce pay-by-bank payment networks. Its services are geared for emerging markets and businesses in highly regulated industries like cannabis.

Credit card companies in general haven't warmed up to cannabis businesses, and many banks still do not allow full services. While MasterCard and Visa routinely enforce a ban on providing banking services to businesses that touch cannabis, the tides are turning.

A record number of banking institutions report that they're catering to state-legal cannabis businesses. This takes place amid increased pressure on Congress to enact broader protections for financial institutions that work with cannabis businesses.

A long-term solution has been in the works for years at the federal level. The Secure and Fair Enforcement Regulation (SAFER) Banking Act aims to provide state-legal cannabis businesses access to traditional financial services.

It would do so by providing federal protection for financial institutions that offer services to cannabis-related businesses operating legally.

The U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on February 5 on debanking practices by regulators and banks. While the initial point of the hearing was cryptocurrency, senators from both sides of the aisle called attention to cannabis banking.

At the meeting, Sen. Elizabeth Warren (D-MA) highlighted the inability of the cannabis industry to use traditional banking services. Warren explained that the vast majority of over 10,000 complaints the Consumer Financial Protection Bureau received were about cannabis companies. Sen. Thom Tillis (R-NC) also called for reexamining federal laws to give cannabis businesses some clarity.

Similar actions are taking place in the House. At a hearing before the House Financial Services Committee on Feb. 6, Rep. Warren Davidson (R-OH) called for a cannabis banking bill to finally finish the crossing line. Several attempts have been launched before, such as the Secure and Fair Enforcement (SAFE) Banking Act.

At the local Utah level, a $3 per-transaction fee that goes to the state will be halved to $1.50 under SB8, which recently passed. For now, using a debit card is an option at medical cannabis pharmacies, but it will take time until all credit card companies and banking institutions fully come aboard.