E-Commerce is Becoming a Viable Platform for Cannabis

Cannabis customers want e-commerce and delivery. But is selling cannabis through an online store finally here? Due to varying state by state legislation and the enduring federal illegality of cannabis commerce, legally selling marijuana online and shipping it to consumers was never before a possibility.

Consumer demands have shifted to online buying just as they have in other ecommerce categories. But, how would the online cannabis store collect payment? Seen as a liability, most major financial institutions still refuse to do business with cannabis companies, forcing operators to deal almost exclusively in cash.

Then COVID-19 happened. The pandemic and subsequent economic shutdowns saw cannabis operations classified as essential businesses. While this allowed cannabis businesses to remain open if specific public health measures were implemented and maintained, the ability to serve customers was drastically reduced, particularly for retail stores.

Selling Marijuana Online

Due to capacity limitations, social distancing requirements, and enhanced cleaning requirements dramatically impacted customer turnover, businesses needed to innovate to stay afloat. Cannabis businesses capitalized on any opportunity they could, including selling marijuana online, sort of.

Cannabis retailers began to offer online ordering and curbside pickup to stay open. In other places, online ordering and cannabis delivery options were made legal, even for recreational customers. But even in those cases, cannabis operators could not sell online and ship to a customer or accept credit card payments.

The Demand for Cashless Transactions

Today, most cannabis customers still make cash payments. There is a clear need for new solutions that allow cannabis companies to leverage an online cannabis market. With the increased use of technology in conducting cannabis business, cannabis companies (and consumers) are making louder demands for innovative, legal ways to accept payment for buying and selling marijuana online.

New Solutions

Innovative solutions to the e-commerce problem of processing online payments have been popping up in some areas, such as “safe checkout” mobile applications available in San Francisco, Los Angeles, and Washington. Fortunately, the development of viable cashless options like these are rapidly legitimizing the path to cannabis e-commerce.

How Does It Work?

Cashless payment applications function similarly to existing online banking institutions and prepaid debit accounts, such as PayPal or GreenDot. Customers download the application, set up an account, and transfer funds into the system directly from their bank accounts. Kindpay, another company offering cashless payment solutions to cannabis merchants in the form of the “DirectPay” service, has even discovered a way to accept major credit cards as part of their model. How exactly DirectPay circumvents federal restrictions and banking policy is complex, but Kindpay’s operational success and adoption by industry names such as Harborside has shown that legitimate cashless solutions for the cannabis e-commerce market are not only possible but increasingly viable.

The Future of Cannabis E-Commerce

The ultimate bottom line is that cannabis customers want online purchasing options, so industry leaders will continue finding new ways to meet their needs. The momentum of cannabis e-commerce seems clear and its ultimate viability on a national level appears inevitable.

Since major banking institutions will lobby for change on the federal level as the opportunity for profit becomes clearer, cashless payments for online cannabis purchases will become an industry norm. Until that time, cannabis businesses seeking to capitalize on e-commerce convenience have a little longer to wait.

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