What cannabis dispensaries should know about cash management

The cannabis industry is a fast-growing industry with huge market potential and social impact. Cannabis dispensaries and MSOs(multi-state operators) are vital components of the cannabis industry, as they are responsible for producing, processing, selling and distributing cannabis products. They offer a variety of choices and services to consumers, while also creating jobs and tax revenues for the communities. However, the cannabis industry also faces many challenges and opportunities, one of the most important ones being cash management. Because cannabis is still illegal at the federal level, most banks and financial institutions refuse to provide services to this industry, forcing cannabis dispensaries and MSOs to rely on cash to conduct transactions and operations. It is estimated that the legal cannabis sales in the US reached $22 billion in 2020, of which 70% were cash transactions. This means that this industry has to handle more than $15 billion in cash every year. Can you imagine how difficult and dangerous it is for cannabis dispensaries and MSOs to manage their cash? Some of the cash management problems that they face are:

• Legal compliance and reporting difficulties and burdens: The cannabis industry is subject to strict legal compliance and reporting requirements, which add difficulties and burdens to cash management. Cannabis dispensaries and MSOs have to comply with various state laws, federal laws, IRS rules, etc., as well as keep detailed records, audits, tracking, etc. These procedures often cause delays and administrative burdens, making the process of handling cash more challenging.
• Lack and limitation of financial services: Cannabis dispensaries and MSOs face a lack and limitation of financial services. They need a range of services, such as cash withdrawal, accounts receivable management, bill payment, electronic payment, real-time settlement, custody services and detailed reporting. But because cannabis is still illegal at the federal level, most banks refuse to provide services to this industry, for fear of violating money laundering laws. Solutions are available, but they require banks to invest in new operational and technological capabilities to serve the cannabis industry.
• Insufficiency and expensiveness of insurance: Cannabis dispensaries and MSOs face insufficiency and expensiveness of insurance. They need to consider various types of insurance, such as property, general liability, excess, product and completed operations liability, product recall expense, property in transit, and living plant coverage. But because cannabis is still illegal at the federal level, most insurance companies refuse to provide insurance to this industry, or charge high premiums. Using an insurance advisor with expertise and experience is very important.
• Inefficiency and error rate of cash counting and recording: Cannabis dispensaries and MSOs have to count and record a large amount of cash income and expenses every day. This process is time-consuming and tedious, and prone to human errors or omissions. It is estimated that the manual counting of cash has an error rate of up to 1.5%. This affects the accuracy and reliability of their financial data.
• Labor cost and resource waste of cash management: Cannabis dispensaries and MSOs have to spend a lot of manpower and time to manage cash. It is estimated that handling cash takes 15 minutes to an hour every day. This occupies the valuable time of their managers and staff, preventing them from focusing on providing quality services and products.
• Difficulty and risk of cash sorting: Cannabis dispensaries and MSOs have to manually sort different denominations and conditions of cash. This process is tedious and difficult, and prone to confusion or damage. It is estimated that the manual sorting of cash has an error rate of up to 2.5%. This affects their cash flow and quality.
• Inconvenience and cost of ATM depositing and withdrawing: Cannabis dispensaries and MSOs have to use ATMs to deposit or withdraw cash or pay bills. This process is inconvenient and expensive, and prone to malfunction or limit. It is estimated that using ATMs to deposit or withdraw cash or pay bills costs $3 to $5 in fees. This increases their operating costs and dissatisfaction.
• Time consumption and opacity of cash register reconciliation: Cannabis dispensaries and MSOs have to regularly reconcile the cash amount and transaction records in the cash register. This process is time-consuming and opaque, and prone to discrepancies or disputes. It is estimated that reconciling the cash register takes 10 to 15 minutes every day. This affects their cash control and tracking.
• Security and intelligence of safe: Cannabis dispensaries and MSOs have to use a safe to store excess cash. This process is insecure and unintelligent, and prone to forgetfulness or abuse. It is estimated that using a safe to store cash costs $50 to $100 in monthly rent. This increases their security risk and cost.
• Danger and expensiveness of cash transportation: Cannabis dispensaries and MSOs have to regularly transport cash to headquarters or banks for deposit or settlement. This process is dangerous and expensive, and prone to loss or robbery. Robbery can happen anywhere, including dispensaries, transport vehicles, suppliers, employees or owners’ residences, etc. To ensure security, they usually rent armored cars to transport cash, which costs $100 to $200 per trip. This affects their security and profitability.
• Visibility and controllability of cash inventory: Cannabis dispensaries and MSOs need to know the cash inventory situation of each location or all locations in real time. This process is invisible and uncontrollable, and prone to shortage or surplus. It is estimated that the cash inventory of each location or all locations averages $10,000 to $20,000. This affects their cash planning and optimization.
• Complexity and resource consumption of POS integration: Cannabis dispensaries and MSOs need to integrate their POS system with headquarters or banks for data analysis and decision making. This process is complex and resource-consuming, and prone to incompatibility or inconsistency. It is estimated that using a POS system costs $100 to $200 per month. This affects their data quality and efficiency.

The purpose of this article is to explain the importance and benefits of cash management for cannabis dispensaries, as well as to provide some effective tips and recommendations on how to address the aforementioned cash management issues.

The Importance of Cash Management in Running a Cannabis Dispensary

Cash management is crucial for the operation of cannabis dispensaries and MSOs. Good cash management can not only reduce operational risks and costs, increase efficiency and security, but also enhance customer satisfaction and reputation. Here are some of the main benefits of cash management:

• Improve the accuracy and reliability of financial data: By using automated cash counting and recording systems, cannabis dispensaries and MSOs can eliminate human errors and omissions, and ensure that their financial data is consistent and accurate. This can help them avoid penalties, audits, disputes, and losses.
• Reduce labor costs and resource waste: By using automated cash management systems, cannabis dispensaries and MSOs can save a lot of manpower and time that would otherwise be spent on handling cash. This can free up their managers and staff to focus on providing quality services and products, and improve their productivity and profitability.
• Lower error rates and risks: By using automated cash sorting and depositing systems, cannabis dispensaries and MSOs can avoid confusion or damage of different denominations and conditions of cash, and ensure that their cash flow and quality are optimal. This can help them prevent theft, fraud, counterfeit, or misplacement of cash.
• Optimize cash planning and inventory: By using automated cash inventory and tracking systems, cannabis dispensaries and MSOs can have real-time visibility and control of their cash inventory situation at each location or all locations. This can help them plan and optimize their cash needs, avoid shortage or surplus, and maximize their cash utilization.
• Enhance compliance and reporting quality: By using automated cash compliance and reporting systems, cannabis dispensaries and MSOs can comply with various state laws, federal laws, IRS rules, etc., as well as keep detailed records, audits, tracking, etc. This can help them meet the legal requirements and standards of the cannabis industry, and improve their transparency and accountability.
• Improve customer experience and loyalty: By using automated cash payment and withdrawal systems, cannabis dispensaries and MSOs can offer convenience and cost-effectiveness to their customers, who can use ATMs or electronic payment methods to pay for their purchases or withdraw cash. This can help them increase customer satisfaction and loyalty, as well as attract new customers.

Solutions and Recommendations for Cash Management Challenges Faced by Cannabis Dispensaries and MSOs

How to overcome Legal Compliance and Reporting Challenges and Burdens For Cannabis Dispensaries:

• Use a professional cash management service provider: Cannabis dispensaries and MSOs can use a professional cash management service provider, such as CashTech, to help them deal with cash compliance and reporting issues. CashTech is a company that offers comprehensive cash management solutions for the cannabis industry, which can help cannabis dispensaries and MSOs comply with various legal requirements, as well as provide detailed records, audits, tracking and more. CashTech can also help cannabis dispensaries and MSOs connect with partner banks to facilitate deposits, settlements, reports and other operations. CashTech’s services can save time and money for cannabis dispensaries and MSOs, while improving their compliance and reporting quality.
• Use a smart cash management system: Cannabis dispensaries and MSOs can use a smart cash management system, such as CashComplete, to help them deal with cash compliance and reporting issues. CashComplete is a company that offers smart cash management systems for the cannabis industry, which can help cannabis dispensaries and MSOs automate counting, recording, sorting, storing, transporting and reporting cash. CashComplete’s systems can reduce human errors and risks, while increasing their efficiency and security.
• Use an experienced accountant or consultant: Cannabis dispensaries and MSOs can use an experienced accountant or consultant, such as GreenGrowth CPAs, to help them deal with cash compliance and reporting issues. GreenGrowth CPAs is a company that offers professional accounting and tax services for the cannabis industry, which can help cannabis dispensaries and MSOs handle various state laws, federal laws, IRS rules and more. GreenGrowth CPAs can also help cannabis dispensaries and MSOs conduct financial analysis and planning, as well as provide other related consulting services.

How to Address the Lack and Limitation of Financial Services for Cannabis Dispensaries:

• Using Compliant Banks or Credit Unions: Cannabis dispensaries and MSOs can use compliant banks or credit unions, such as Safe Harbor Services, to access financial services. Safe Harbor Services is a company that provides compliant banking services for the cannabis industry, and can assist dispensaries and MSOs with cash withdrawals, bill payments, electronic payments, real-time settlements, custody services, and detailed reporting. Safe Harbor Services follows strict compliance procedures and standards to ensure consistency with federal laws and regulatory agencies. Safe Harbor Services' services can provide convenience and security while reducing costs and risks.
• Using Professional Payment Platforms or Apps: Cannabis dispensaries and MSOs can use professional payment platforms or apps, such as Hypur, to access financial services. Hypur is a company that provides professional payment platforms for the cannabis industry, and can assist dispensaries and MSOs with electronic payments, real-time settlements, bill payments, accounts receivable management, and more. Hypur uses advanced technology and security measures to ensure the legality and traceability of transactions. Hypur's services can provide convenience and transparency while increasing revenue and customer loyalty.
• Using Innovative Financial Solutions or Partners: Cannabis dispensaries and MSOs can use innovative financial solutions or partners, such as Dama Financial, to access financial services. Dama Financial is a company that provides innovative financial solutions for the cannabis industry, and can assist dispensaries and MSOs with cash deposits, bill payments, electronic payments, real-time settlements, custody services, and detailed reporting. Dama Financial partners with multiple compliant banks and financial institutions to provide a diverse range of choices and services. Dama Financial's services can provide flexibility and reliability while optimizing cash flow and profitability.

How to Improve the Efficiency and Accuracy of Cash Counting and Recording for Cannabis Dispensaries and MSOs & How to Simplify and Secure the Cash Sorting Process for Cannabis Dispensaries and MSOs:

• Using Intelligent Cash Sorting and Storage Systems: Cannabis dispensaries and MSOs can use intelligent cash sorting and storage systems, such as CashComplete RCS-400, to improve the efficiency and accuracy of cash sorting and storage. CashComplete RCS-400 is a company that provides intelligent cash sorting and storage systems for the cannabis industry, which can automatically sort cash of different denominations and conditions, and store them in a secure safe. CashComplete RCS-400 can also track and report the cash inventory situation of each location or all locations in real-time. The system can optimize cash flow and quality for dispensaries and MSOs, while improving their security and controllability.
• Using Customized Two-Pocket Money Sorters: Cannabis dispensaries and MSOs can use customized two-pocket money sorters, such as Currency Discriminator Ribao BCS160, to improve the efficiency and accuracy of cash sorting. Ribao BCS160 is a company that provides customized two-pocket money sorters for the cannabis industry, which can set different denominations or conditions as rejection criteria based on the needs of dispensaries and MSOs, and automatically kick out bills that do not meet the criteria to another pocket. It can also detect counterfeit or damaged bills and separate them. Ribao BCS160 perfectly meets the personalized needs of dispensaries and MSOs while reducing the possibility of confusion or damage.

Maximizing Efficiency in Cash Management for Cannabis Dispensaries and MSOs:

• Automate Cash Management Processes: One solution to minimize labor costs and resource waste is to automate cash management processes. By using cash recyclers and other cash management technologies, dispensaries and MSOs can reduce the amount of time and manpower needed to manage cash. These automated solutions can count, sort, and secure cash, freeing up staff to focus on other tasks.
• Implement Cashless Payment Options: Another way to reduce the burden of cash management is to encourage customers to use cashless payment options. By accepting credit/debit cards and mobile payment systems, dispensaries and MSOs can minimize the need for cash handling altogether. This can save time and resources, allowing staff to provide quality services and products to customers.
• Outsource Cash Management: Cannabis dispensaries and MSOs can also consider outsourcing their cash management to third-party service providers. These companies specialize in cash management and can provide more efficient and secure solutions. By outsourcing cash management, dispensaries and MSOs can reduce the burden on their staff and minimize the risk of theft or fraud.
• Train Staff on Cash Management Best Practices: Finally, dispensaries and MSOs can maximize efficiency in cash management by training their staff on best practices. By providing regular training on cash handling procedures, staff can become more efficient and effective in their roles. This can help minimize errors and reduce the time and resources needed to manage cash.

How to Avoid the Inconvenience and Cost of ATM Depositing and Withdrawing for Cannabis Dispensaries and MSOs:

• Using Professional Payment Platforms or Apps: Cannabis dispensaries and MSOs can use professional payment platforms or apps, such as Hypur, to access financial services. Hypur is a company that provides professional payment platforms for the cannabis industry, and can assist dispensaries and MSOs with electronic payments, real-time settlements, bill payments, accounts receivable management, and more. Hypur uses advanced technology and security measures to ensure the legality and traceability of transactions. Hypur's services can provide convenience and transparency while increasing revenue and customer loyalty.
• Use an experienced accountant or consultant: Cannabis dispensaries and MSOs can use an experienced accountant or consultant, such as GreenGrowth CPAs, to help them deal with cash compliance and reporting issues. GreenGrowth CPAs is a company that offers professional accounting and tax services for the cannabis industry, which can help cannabis dispensaries and MSOs handle various state laws, federal laws, IRS rules and more. GreenGrowth CPAs can also help cannabis dispensaries and MSOs conduct financial analysis and planning, as well as provide other related consulting services.

How to Save Time and Increase Transparency of Cash Register Reconciliation for Cannabis Dispensaries and MSOs:

• Implement Point of Sale (POS) Systems: One solution to minimize time consumption and increase transparency in cash register reconciliation is to implement POS systems. These systems can automate cash register reconciliation by automatically tracking and reconciling transaction records with cash amounts. This can significantly reduce the time and effort required for manual reconciliation, freeing up staff to focus on other tasks.
• Use Cash Management Software: Another solution to streamline cash register reconciliation is to use cash management software. These programs can automate cash handling processes, track cash transactions, and reconcile cash amounts with transaction records. This can help minimize errors and discrepancies, and increase transparency in the cash management process.
• Conduct Regular Audits: Cannabis dispensaries and MSOs can also conduct regular audits of their cash register and transaction records to ensure accuracy and transparency. These audits can help identify discrepancies or disputes, and allow dispensary owners to take corrective action as needed.
• Train Staff on Cash Register Reconciliation: Finally, dispensaries and MSOs can maximize efficiency in cash register reconciliation by training their staff on best practices. By providing regular training on cash handling procedures and reconciliation processes, staff can become more efficient and effective in their roles. This can help minimize errors and reduce the time and resources needed for cash register reconciliation.

How to Enhance the Security and Intelligence of Safe for Cannabis Dispensaries and MSOs:

• Enhance Employee Security Awareness: One solution to improve cash security is to enhance employee awareness. Dispensaries and MSOs can provide security training to their staff to ensure they understand the importance of cash storage and the relevant protocols for storing and handling cash. Monitoring employee access to the safe can also help prevent unauthorized entry and reduce the risk of theft or abuse.
• Upgrade to Smart Safes: Smart safes are another solution to improve cash security and intelligence for cannabis dispensaries and MSOs. These safes use biometric identification, such as fingerprint scanning, to authenticate authorized personnel, increasing the safety of accessing the safe. Smart safes can also monitor cash levels in real-time and issue alerts when the cash limit is reached, helping prevent internal fraud or theft. Upgrading to smart safes can be a cost-effective solution in the long run, and reduce the risk of theft or abuse.

How to Avoid Cash Transportation Risk and Cost for Cannabis Dispensaries:

• Selecting Legitimate and Professional Transport Service Providers, such as Armored Vehicles or Qualified Logistics Companies. These companies specialize in transporting cash and other valuables and provide secure and safe transportation. Using these services can significantly reduce the risk of theft or loss, and minimize the cost of cash transportation.
• Implement Cashless Payment Options: Another solution to avoid cash transportation risks and costs is to implement cashless payment options. By accepting credit/debit cards and mobile payment systems, dispensaries can minimize the need for cash handling altogether. This can reduce the amount of cash that needs to be transported, and minimize the risk and cost associated with cash transportation.

More Tips for Effective Cash Management for Cannabis Dispensaries and MSOs

In addition to the basic rules, cannabis dispensaries can further improve their cash management practices by considering the following tips:

• Maintain a cash reserve: Establish an emergency cash reserve to cover unexpected expenses, such as equipment repairs or legal fees, and to ensure smooth daily operations.
• Implement cash forecasting: Use cash forecasting tools to predict future cash needs based on historical data and current trends. This will help dispensaries plan for potential cash shortages or surpluses and make informed financial decisions.
• Leverage banking relationships: Establish strong relationships with banks or credit unions that are willing to work with the cannabis industry. These financial institutions can provide valuable services, such as cash depositing, armored car transportation, and access to working capital loans.
• Optimize cash flow: Monitor cash flow closely and identify areas where improvements can be made, such as reducing expenses, increasing revenues, or negotiating better payment terms with suppliers.
• Consider alternative payment methods: Explore alternative payment options, such as digital wallets, cryptocurrency, or mobile payment apps, to reduce reliance on cash and provide more convenient payment options for customers.

In conclusion, cash management is a critical issue that cannabis dispensaries and MSOs need to address in order to operate efficiently, securely, and in compliance with legal requirements. The challenges and opportunities presented by cash management are significant, and require innovative solutions and effective strategies. Companies like Ribao Technology provide cash handling equipment that can help cannabis dispensaries and MSOs automate and optimize their cash management processes.

Ribao Technology is a leading supplier of cash handling equipment, with over 20 years of experience in the industry. They offer a wide range of products, including currency counters, coin counters, coin sorters, money detectors, and more. Ribao Technology's solutions can help cannabis dispensaries and MSOs reduce labor costs, improve accuracy and reliability, lower error rates and risks, optimize cash planning and inventory, enhance compliance and reporting quality, and improve customer experience and loyalty. With the right cash management strategies and tools, cannabis dispensaries and MSOs can overcome the challenges and seize the opportunities of the fast-growing cannabis industry.