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How the Cannabis Industry is Pushing the Limits of Digital Payments
1. 1/14/2021 How the Cannabis Industry is Pushing the Boundaries of Digital Payments
https://cannabis.net/blog/opinion/how-the-cannabis-industry-is-pushing-the-boundaries-of-digital-payments 2/11
DIGITAL PAYMENTS FOR MARIJUANA
How the Cannabis Industry is
Pushing the Boundaries of Digital
Payments
The marijuana industry is pushing the limits of digital payment systems for the
better!
Posted by:
Joseph Billions , today at 12:00am
2. 1/14/2021 How the Cannabis Industry is Pushing the Boundaries of Digital Payments
https://cannabis.net/blog/opinion/how-the-cannabis-industry-is-pushing-the-boundaries-of-digital-payments 3/11
How The Cannabis Industry Is Pushing The
Limits Of Digital Payments
The cannabis industry is a growing market and as a growing market, it is stretching its wings to
bigger horizons needed for a functioning market structure. One of those horizons is in the place of
nancial structures. It is not just enough for the product to be in demand by consumers there are
necessary structures and strategies that must be put in place to ensure the forward movement of
the market. This, however, is a special problem faced by the cannabis industry because it lacks
major players like Amazon that can boost delivery and payment structures.
Amazon, like many other big e-commerce structures do not o er service for products like
marijuana. This is majorly because of compliance and payment issues that plague the cannabis
industry. This is why nancial institutions such as banks are not giving the same services they o er
to other businesses to cannabis rms. Another issue a ecting the nancial structure of the
cannabis market is the fragmentation of the market. With diverse markets structure not properly
synced in harmony, the cannabis market structure is there for the taking but no one seems to be
maximizing the opportunity.
With the absence of a large-scale central disperser of products like Amazon, small startups, and
cannabis dispensaries have been doing the little they can do to remedy the situation. App
developers and dispensaries are working up small payment processors to help deal with payment
and compliance issues. Other small companies are also working up ways to tackle these issues
with the aim of improving the market structure. To fully understand how cannabis companies are
remedying this issue, we will need to look into how cannabis companies are tackling these issues
and moving forward.
Regulatory compliance issues
Due to the scheduling of cannabis, procurement of such products through digital interfaces poses
a bit of a problem with regulator compliance measures. The products are either THC-infused or
CBD-infused which means that state and local laws need to be considered. Also, structures have to
3. 1/14/2021 How the Cannabis Industry is Pushing the Boundaries of Digital Payments
https://cannabis.net/blog/opinion/how-the-cannabis-industry-is-pushing-the-boundaries-of-digital-payments 4/11
be put in place to ensure products are sold to the right age group to limit risks. Such a legal
framework and compliance risks are the reasons why banks are hesitant to deal with many
cannabis companies.
This reality has provided cannabis rms with an issue of processing payment and managing cash
ows. This has given rise to immature nancial structures within the industry which is the least of
what should be attained in a burgeoning industry like cannabis. These obvious regulatory
compliance obstacles are also the major factor limiting some investors and entrepreneurs from
changing the market scope of the industry for the better.
Fragmentation of the market
A by-product of the immature nancial structures in the cannabis industry is the fragmentation of
the market. The cannabis industry lacks a central e-commerce manufacturer to unite the di erent
players within the market of the industry. This has made the industry divided into small working
fragments and has hindered the full development of the industry. Di erent growers,
manufacturers, and dispensaries are working through di erent networks thereby elongating
availability and delivery.
Cannabis businesses due to the fragmentation of their networks have had to pay higher expenses
for common marginal business expenses. Expenses such as data sharing, marketing, and route
optimization for delivery are higher for cannabis companies to procure. Other established markets
due to a well-oiled market system have had to pay less while enjoying the full dividends. This is
why payment issues remain a big problem for many cannabis companies seeking to digitally
optimize the market.
Delivery issues
Delivery management is one of the issues limiting the nancial capacity of the cannabis industry.
Few cannabis companies have systems that will enable customers to demand products digitally
and receive the products at a scheduled time. Common hindrances blocking delivery services in
cannabis are the proper tools to foster delivery tracking and input adequate marketing tools for
retailers. The absence of e-commerce solutions also makes delivery a worrisome issue hindering
the development of the cannabis market.
What is the cannabis market doing to remedy these issues?
Despite the obvious limitations, di erent stakeholders in the cannabis industry are making giant
strides to remedy these issues by pushing the limits of digital payment. Drop Delivery is an
example of an order-ahead cannabis mobile app. The app has in-built loyalty for cannabis
dispensaries which allows users to demand products and schedule pick up. This dynamic
innovation a few months after it came to the limelight under Vanessa Gabriel was purchased by a
public traded cannabis company. Its e ectiveness in correcting some of the compliance issues
facing the market.
4. 1/14/2021 How the Cannabis Industry is Pushing the Boundaries of Digital Payments
https://cannabis.net/blog/opinion/how-the-cannabis-industry-is-pushing-the-boundaries-of-digital-payments 5/11
Alt 36 is another notable payment innovation that is correcting the issues of digital payment in the
cannabis market structure. It is the rst compliant digital payment platform in the cannabis
industry. The combination of the structures of Alt 36 and Drop Delivery help to correct some of the
payment and compliance issues in the market. Drop Delivery deals with the technicalities of
delivering and marketing that apply to cannabis retailers. Alt 36 meanwhile covers the processing
of payments passing through the system. This digital platform removes compliance issues and
settles the problems brought about by the fragmentation of the markets.
Another positive move to improve digital payment in the cannabis industry is towards
cryptocurrency. Strike is a project that relies on the Bitcoin network to get rid of complicated
expenses issues. Jack Mallers the founder of the parent company of Strike has been using the app
for his parent’s dispensary in Colorado. This creative move is a step in the right direction to further
maximize the digital payment framework of the cannabis industry.
Bottom line
There is a need for much work to be done to rid the obstacles blocking the nancial structure of
cannabis markets. Clearing these obstacles will make the nancial footings in the industry more
robust. It will also create a pathway for more digital payment platforms to be introduced into the
industry.
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5. 1/14/2021 How the Cannabis Industry is Pushing the Boundaries of Digital Payments
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