How the Cannabis Industry is Pushing the Boundaries of Digital Payments

digital payments for weed

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 financial 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 offer service for products like marijuana. This is majorly because of compliance and payment issues that plague the cannabis industry. This is why financial institutions such as banks are not giving the same services they offer to other businesses to cannabis firms. Another issue affecting the financial 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 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 firms with an issue of processing payment and managing cash flows. This has given rise to immature financial 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 financial structures in the cannabis industry is the fragmentation of the market. The cannabis industry lacks a central e-commerce manufacturer to unite the different 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. Different growers, manufacturers, and dispensaries are working through different 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 financial 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, different 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 effectiveness in correcting some of the compliance issues facing the market.

Alt 36 is another notable payment innovation that is correcting the issues of digital payment in the cannabis market structure. It is the first 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 financial structure of cannabis markets. Clearing these obstacles will make the financial 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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