I will admit I was clueless about the all-cash business of cannabis stores. The two that have been approved by Community Board 1 — for 16 Murray and 35 Wall streets — both will have armed guards. (Can you imagine that at Chambers Street Wines?) And the Ukrainian art gallery/cannabis store wannabe on Reade has already been burglarized.

And now I get it! So for those of you catching up like me, I reached out for an explanation from the New York State Office of Cannabis Management. They told me to read this story from the Staten Island Advance, which had an interview with John Kagia, the OCM’s director of policy and which has covered the cannabis issue very closely.

Since cannabis is still illegal at the federal level, most banks in the country “simply won’t service cannabis companies.” The SI Advance quotes the American Bankers Association as saying “the possession, distribution or sale of marijuana remains illegal under federal law, which means any contact with money that can be traced back to state marijuana operations could be considered money laundering and expose a bank to significant legal, operational and regulatory risk.”

Kagia told the Advance that “Visa and MasterCard have been unequivocal since the advent of this market that they were not comfortable with providing credit card payments for cannabis,” he said, noting in the first six months of 2023, New York had $33 million worth of legal weed sales. “The new development here was MasterCard and Visa coming out and saying that they also did not want their debit cards being used to issue payments,”

There are a couple options other than cash:

• Regional Banks: Kagia said regional banks are not as exposed to the same kind of federal regulatory infrastructure and some of them will allow customers to use debit cards from those institutions.
• ACH Payments: Some licensees allow customers to set up an Automated Clearing House account with a weed shop to pay for purchases.

There is a Safe Banking Act that was introduced last May among Senate Democrats that would allow small and minority-owned businesses to access the capital they need to start and maintain successful cannabis-related businesses. I’ve sent a note to Congressman Dan Goldman’s office to see if he has engaged on that.

Kagia tells the Advance that this issue is just growing pains in a young industry. But I think that is almost a silly understatement given there are now armed guards at neighborhood stores. (The OCM’s press office told me it’s not their issue: “These are all based on federal regulations, not state stuff, so if you’re asking about changes to payment options moving forward you might be better suited reaching out to federal representatives than us.”)

Someone who has visited cannabis stores in other states can tell me how it works there. Maybe it’s just New York City that has the crime issues…

“We recognize that these issues can occasionally make purchasing cannabis legally a less elegant consumer experience than it might be for the rest of the economy,” Kagia said. “These are just some of the growing pains that occur in a young, fast evolving market. Even as we go through this evolutionary process I would still encourage consumers to purchase from the legal market where they can get quality, safe tested product.”