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💳Cannabis Payments Quick Guide 2025
- Carpfish Creative
- Sep 8
- 8 min read
The cannabis payment processing landscape in 2025 remains complex, with businesses operating in a regulatory gray area between federal prohibition and state legalization. While traditional credit card processing is still unavailable for direct cannabis sales, specialized payment processors have emerged to serve this high-risk industry with solutions including PIN debit, ACH transfers, and cashless ATM systems.
Cannabis businesses typically face transaction fees ranging from 2.5% to 3.95%, significantly higher than traditional retail rates of 2.0-3.2%. Despite these challenges, the industry is expected to reach $45 billion in revenue in 2025, driving continued innovation in payment solutions.
Selection Recommendations
For New Cannabis Businesses
Best bets: Choose Cova Pay or Flowhub for full-service dispensary operations
What should I Budget? 3.5-4% of gross revenue for payment processing costs
Prioritize compliance over lowest fees to avoid regulatory issues. Regulatory/Insurance issues will cost much more than the small extra cost in your monthly operational budgets. We've seen it many times within the Cannabis industry and industry verticals outside of it.
Low-dose THC/CBD... Do not start with Square for CBD-only operations under 0.3% THC. North offers payments at 2.69% (no per-transaction fee) or lower. They approve with the merchants the business before you start taking payments, so any issues are minimal. When they arise, Carpfish advisors or our broker network fixes them quickly.
For Established Dispensaries
Evaluate current processor performance annually as part of your process.
Negotiate better rates based on transaction volume and processing history as a business progresses. Long-term payment contracts aren't usually your friends in cannabis, unlike other industries.
Consider integrated POS solutions for operational efficiency. How much time do you spend on uploading, double-entry, and lazy mistakes? Create a little chart and track it for a week, and most will be amazed. Process efficiency kills margins.
Diversify payment methods to r
For Established Dispensaries
Evaluate current processor performance annually as part of your process.
Negotiate better rates based on transaction volume and processing history as a business progresses. Long-term payment contracts aren't usually your friends in cannabis, unlike other industries.
Consider integrated POS solutions for operational efficiency. How much time do you spend on uploading, double-entry, and lazy mistakes? Create a little chart and track it for a week, and most will be amazed. Process efficiency kills margins.
Diversify payment methods to reduce customer friction and processing costs. What happens if your cannabis payments go down? Do you have a digital wallet service as a failsafe backup to continue business?
For Multi-Location Operations
Seek processors with multi-state experience
Implement centralized reporting and compliance monitoring
Negotiate enterprise-level pricing and support
Plan for varying state regulatory requirements
Cost Optimization Strategies
Businesses can reduce payment processing costs through several approaches:
Negotiation: Many processors offer negotiable rates, with some guaranteeing to meet or beat competitor pricing. Leaders Merchant Services, for example, offers rates starting at 0.15% + $0 with negotiable terms.
Volume Discounts: Higher transaction volumes often qualify for better rates, with some processors offering interchange-plus pricing for established businesses processing substantial annual revenue.
Surcharging: Retail dispensaries can pass processing fees directly to customers where legally permitted, helping minimize expenses.
Payment Method Mix: Prioritizing lower-cost options like ACH transfers over higher-fee debit transactions can reduce overall processing costs.
Fee Reduction Techniques
Negotiate Rates: Many processors offer negotiable pricing
Volume Discounts: Higher transaction volumes often qualify for better rates
Bundle Services: Combining POS and payment services can reduce costs
Surcharging: Pass processing fees to customers where legally permitted
Payment Method Mix: Prioritize lower-cost options like ACH transfers
Financial Planning
Monthly Processing Costs: Budget 3-4% of gross revenue for payment processing
Setup Costs: Factor in one-time implementation expenses
Compliance Costs: Include ongoing regulatory and reporting expenses
Reserve Requirements: Some processors require cash reserves for high-risk accounts
Base Selection Criteria for Cannabis Payment Processors
Essential Features
High Approval Rates: Look for processors with 90%+ approval rates
Cannabis Expertise: Industry-specific knowledge and compliance support
Multiple Payment Methods: PIN debit, ACH, and emerging technologies
Transparent Pricing: Clear fee structures without hidden costs
Compliance Support: Automated reporting and regulatory assistance
Red Flags to Avoid
Miscoded Merchant Accounts: Illegal and risky workarounds
Offshore Processing: Limited recourse and compliance issues
Hidden Fees: Processors not transparent about total costs
No Cannabis Experience: Lack of industry-specific expertise
Poor Customer Support: Critical for resolving urgent payment issues
Fee Structure Analysis
Cannabis payment processing fees are significantly elevated due to high-risk classification. High-risk businesses typically pay 0.5% to 1% higher than traditional retail rates, with cannabis processors charging between 3.49% to 3.95% per transaction plus $0.15-$0.25 transaction fees.
The complete fee structure includes:
Transaction Fees: 2.5% - 3.95% (vs. 2.0-3.2% for traditional retail)
Monthly Fees: $0 - $50 (often bundled with POS systems)
Setup Fees: $0 - $500 (frequently waived for established businesses)
Chargeback Fees: $15 - $25 per incident (critical due to higher dispute rates)
Regulatory Compliance Requirements
Federal Compliance
Cannabis businesses must navigate complex federal requirements despite state legalization. FinCEN Guidance (FIN-2014-G001) requires financial institutions to file Suspicious Activity Reports (SARs) and conduct enhanced due diligence when serving cannabis businesses.
Under Section 280E of the tax code, cannabis dispensaries can pay 60% to 80% of their profits in federal taxes due to prohibited business deductions. Only Cost of Goods Sold (COGS) can be deducted, severely limiting tax benefits available to other industries.
Form 8300 must be filed within 15 days for any cash transactions over $10,000, while quarterly estimated tax payments remain mandatory despite banking challenges
FinCEN Guidance (FIN-2014-G001): Financial institutions must file Suspicious Activity Reports (SARs) and conduct enhanced due diligence
Bank Secrecy Act (BSA): Requires anti-money laundering compliance
Section 280E: Cannabis businesses cannot deduct normal business expenses for federal tax purposes
Form 8300: Required for cash transactions over $10,000
Major credit card networks, including Visa, Mastercard, and American Express, which previously prohibited cannabis transactions, forcing businesses to rely on alternative payment methods (All major card networks approved cannabis SIC codes in January 2025, to start exploring
PIN Debit: Allowed through specialized networks with proper compliance
ACH Transfers: Permitted with enhanced due diligence and monitoring
Cashless ATM: Popular but facing increased regulatory scrutiny
Cryptocurrency: Emerging option with Bitcoin acceptance by some processors
A recent federal court ruling confirmed that payment processing contracts with cannabis merchants do not violate the Controlled Substances Act and are therefore enforceable, providing additional legal clarity for the industry.
State-Level Requirements & Compliance
Cannabis payment processors must verify state cannabis licenses and maintain ongoing monitoring for compliance violations in all cases. Each state has different requirements for medical versus recreational cannabis, creating additional complexity for multi-state operations. It's highly recommended to work with an experienced high-risk network.
License Verification: Payment processors must verify state cannabis licenses
Transaction Monitoring: Ongoing monitoring for compliance violations
Reporting Requirements: Regular reporting to state regulatory bodies
Product Restrictions: Different rules for medical vs. recreational cannabis
Market Trends & Innovations Happening
Technology Innovations
The industry is experiencing rapid technological advancement with AI-driven fraud prevention, blockchain solutions for transparency, and enhanced mobile payment integration. These innovations aim to reduce transaction risks while improving customer experience.
Legislative Developments
The SAFE Banking Act remains the most anticipated development, potentially allowing traditional financial institutions to serve cannabis businesses without federal penalties. Cannabis rescheduling from Schedule I could also dramatically change the payment landscape.
Federal legalization could enable credit card processing within months of passage, similar to the Canadian market experience. This would significantly reduce processing costs and increase payment options for cannabis businesses. Big changes are expected from Washington on this topic, digital banking, and others in early 2026, per industry expert insiders.
Technology Developments
AI-Driven Fraud Prevention: Enhanced security protocols, reducing transaction risks
Blockchain Solutions: Emerging transparency and compliance tools
Mobile Payment Integration: Growing compatibility with digital wallets
Integrated POS Systems: Seamless online and in-store processing
Legislative Outlook
SAFE Banking Act: Potential federal legislation to allow traditional banking
Cannabis Rescheduling: Possible federal reclassification from Schedule I
State Expansion: Continued legalization across additional states
International Markets: Learning from the Canadian legalization experience
Futures Outlook
Short-Term Expectations (2025-2026)
Continued growth in cashless payment adoption
Increased competition among payment processors
Enhanced mobile and digital wallet integration
Stricter compliance requirements and monitoring with Federal rescheduling expected in early 2026.
Long-Term Projections (2026-2030)
Potential federal cannabis legalization enabling credit card processing or more competition in the market, to decrease overall fees.
Traditional banks are entering the cannabis payment space, offering white label payment options.
Reduced processing fees due to increased competition
Advanced blockchain and cryptocurrency integration to greatly reduce the overall cost of taking cannabis
Top Cannabis Payment Processing Companies (Market Sample)
Cova Pay serves as the best overall solution for brick-and-mortar dispensaries, offering an integrated retail ecosystem with PIN debit, ACH, and gift card processing. The platform supports over 2,000 dispensaries across North America and has won awards for excellence and innovation.
Flowhub provides comprehensive POS and payment integration for dispensaries, featuring cannabis-specific compliance tools, loyalty programs, and next-day funding. The platform supports over 1,000 dispensaries with seamless point-of-banking and ACH solutions.
Both can be obtained, usually with discounting or a proper rollout setup through our Creative Network. Have needs, lets talk!
Tier 1: The Market Leaders
Cova Pay
Best For: Brick-and-mortar dispensaries with integrated POS needs
Transaction Fees: Not disclosed publicly
Monthly Fee: Included in POS fee
Payment Methods: PIN debit, ACH, gift cards
Funding Speed: 1-3 business days
Key Advantages: Integrated retail ecosystem, award-winning platform
Coverage: Serves 2,000+ dispensaries across North America
Flowhub
Best For: Dispensaries seeking integrated POS and payment solutions
Transaction Fees: Not disclosed
Monthly Fee: N/A
Payment Methods: PIN debit, ACH, point of banking
Funding Speed: Next business day
Key Advantages: Cannabis-specific compliance tools, loyalty programs
Coverage: Over 1,000 dispensaries supported
Tier 2: Specialized Providers
Paybotic
Best For: Large cannabis businesses requiring rapid approval
Transaction Fees: Custom pricing
Monthly Fee: Varies (retainer model available)
Payment Methods: ACH, eCheck, PIN debit
Funding Speed: Varies
Key Advantages: 48-hour approval process, established since 2014
Specialization: Medical and recreational dispensaries, e-commerce
PaymentCloud
Best For: Hard-to-approve cannabis merchants
Transaction Fees: 3.95% + 15¢
Monthly Fee: $14.00
Payment Methods: Wide range, including cryptocurrency
Funding Speed: Next business day
Key Advantages: 98% approval rate, high-risk specialist
Notable Features: Free PCI compliance assistance, hardware options
North Payments (formerly NA Bancorp)
Best For: Online CBD and hemp businesses, select Cannabis
Transaction Fees: 2.69% and up.
Monthly Fee: $0 to $39.9,5, depending on volume.
Payment Methods: Credit/debit cards for selected cannabis, CBD/Hemp
Funding Speed: Same-day payouts, next day
Key Advantage: Online portal for invoices, remote payments, etc.
Built-in compliance: Customized e-commerce plans, no setup fees
Square and other similar formats
Best For: CBD businesses under 0.3% THC only
Transaction Fees: 2.5% + 10¢ low end.
Monthly Fee: $0 or higher, depending on volume.
Payment Methods: PIN debit, ACH, and limited credit card acceptance for CBD
Funding Speed: 1-2 business days
Key Advantages: Transparent pricing, established brand, quick setup
Limitations: Does not accept high-THC cannabis products. Many times, clients' websites or payment systems will be flagged, and it can take up to 30 business days to clear these issues.
Tier 3: Niche Solutions for Cannabis & THC/CBD
Bankcard International Group (BIG)
Best For: Multiple payment method requirements
Transaction Fees: Not disclosed
Monthly Fee: Not disclosed
Payment Methods: PIN debit, ACH, eCheck, Bitcoin
Funding Speed: Next business day
Key Advantages: BBB accredited, comprehensive educational resources
Notable Features: Tokenization and encryption of data
Green Check Direct
Best For: Comprehensive cannabis banking solutions
Transaction Fees: Not disclosed
Monthly Fee: N/A
Payment Methods: ACH, PIN debit, wire transfers
Services: Payment processing, banking, business loans, HR solutions
Coverage: Full fintech ecosystem for cannabis businesses
North Payments (formerly NA Bancorp) *Carpfish Preferred Provider
Best For: Online CBD and hemp businesses, select Cannabis
Transaction Fees: 2.69% and up.
Monthly Fee: $0 to $39.9,5, depending on volume.
Payment Methods: Credit/debit cards for selected cannabis, CBD/Hemp
Funding Speed: Same-day payouts, next day
Key Advantage: Online portal for invoices, remote payments, etc.
Built-in compliance: Customized e-commerce plans, no setup fees
Square and other similar formats
Best For: CBD businesses under 0.3% THC only
Transaction Fees: 2.5% + 10¢ low end.
Monthly Fee: $0 or higher, depending on volume.
Payment Methods: PIN debit, ACH, and limited credit card acceptance for CBD
Funding Speed: 1-2 business days
Key Advantages: Transparent pricing, established brand, quick setup
Limitations: Does not accept high-THC cannabis products. Many times clients' websites or payment systems will be flagged, and it can take up to 30 business days to clear these issues.
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The cannabis payment processing landscape in 2025 offers more viable options than ever before, though challenges persist due to federal prohibition. Success requires partnering with experienced, compliant processors who understand the unique needs of the cannabis industry while maintaining focus on regulatory compliance and operational efficiency.
To learn more, visit High-Risk Merchant Accounts Simplified
or reach out to us at info@carpfishcreative.com
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