Member Exclusive, Payments

The $61 billion cannabis industry is getting its first dedicated digital payments platform

  • Valley Bank unveiled plans for Valley Pay at Money 20/20 earlier this month, with aspirations to migrate cannabis business’ cash usage to a secure, web application.
  • The platform operates as a digital wallet, seeking to serve cannabis dispensaries, growers, testing labs, armored car services, wholesalers, and other CBD/hemp businesses.
close

Email a Friend

The $61 billion cannabis industry is getting its first dedicated digital payments platform

In 2020, Americans purchased $18.3 billion in cannabis products, up $7.6 billion from the previous year. The vast majority of those transactions happened in cash, and as we round up 2021, that might finally begin to change. Valley Bank, a New Jersey-based bank with $41 billion in assets, has announced that it is launching the country’s first digital payment platform designed specifically for cannabis-related businesses, called Valley Pay. 

With Valley Pay, the bank wants to migrate cannabis business’ cash usage to a secure, web application, “easing the burden on cannabis operators who are reliant on cash transactions today.” The new platform comes as part of Valley Bank’s push for cannabis banking, a project it calls its Cannabis-related Business (CRB) banking program. The bank says the program is designed to give legal cannabis enterprises access to banking solutions that will help them effectively grow and manage their business. Valley Bank wants to work with cannabis dispensaries, cultivators, testing labs, armored car services, wholesalers, and other CBD/hemp businesses.

Today, it is legal to buy and sell cannabis in 18 states. The cannabis industry in the US was worth $61 billion at the end of 2020, and that is projected to rise to $100 billion by 2030. Couple that with the fact that, in 2020, Gen Z and Millennial cannabis sales went up by 127% and 46% respectively, and you might find yourself wondering why digital payments took so long.

The answer lies in the legal hurdles that plague the path to banking the cannabis industry. Still illegal under federal law, the cannabis trade, in states that have legalized it, is maturing and growing. However, banks are still reluctant to serve them, fearing heavy compliance regulations or federal punishment. Without the presence of banks in the ecosystem, state-compliant cannabis businesses have been unable to accept credit cards, receive loans, set up deposit accounts, write checks, run payroll or pay taxes. Without banking, the industry has been forced to work with a tremendous amount of cash — it has been common practice in the industry to pay salaries and taxes in cash — leaving it vulnerable to money laundering and presenting a safety hazard. Some argue this may even render American industry uncompetitive in the race to global cannabis competition.

 


This content is available exclusively to Tearsheet Outlier members.

Tearsheet Outlier information and signup Missing out? Subscribe today and you’ll receive unlimited access to all Tearsheet content, original research, exclusive webinars and events, member-only newsletters from Tearsheet editors and reporters and much more. Join Outlier now — only $49/mo. Already an Outlier member? Sign in to your account

0 comments on “The $61 billion cannabis industry is getting its first dedicated digital payments platform”

Finance Everywhere, Payments

Google launches digital wallet: 5 questions with Payments GM Arnold Goldberg

  • Google launched its digital wallet and virtual cards at its latest I/O developer conference, marking its first move in the payments space since the Plex project was scraped late last year.
  • Tearsheet spoke with Google's head of payments, Arnold Goldberg, about what this means for the Big Tech's journey in financial services.
Iulia Ciutina | May 13, 2022
Member Exclusive, Payments

Payments Briefing: ‘We penetrated the blue ocean opportunity of the Spanish-speaking market’ – NovoPayment’s Anabel Perez

  • This week, we take a look at Miami-based BaaS provider, NovoPayment.
  • We also discuss Bumped, a firm that rewards customers with equity in the brands they shop from.
Ismail Umar | May 12, 2022
Payments, Podcasts

What’s Happening in Payments Ep. 6: Quontic’s payment ring, Visa’s move into NFTs, and the new Square Stand POS system

  • This week, we discuss why Quontic Bank decided to launch a contactless payment ring.
  • We also talk about Visa's recent crypto and NFT-related activities, as well as Block's upgraded Square Stand POS system.
Ismail Umar | May 05, 2022
Payments

Rewarding shoppers with brand ownership: Bumped expands with a new browser extension

  • Bumped runs a service that rewards customers with fractional ownership of partner brands that they shop from.
  • The firm’s new browser extension notifies online shoppers every time their purchase is eligible for a stock reward.
Subboh Jaffery | April 27, 2022
Member Exclusive, Payments

Payments Briefing: ‘We want to be the bank that got people into wearables’ – Quontic Bank’s Steve Schnall

  • This week, we discuss Quontic Bank’s new contactless payment ring.
  • We also take a look at Square’s upgraded Square Stand POS system.
Ismail Umar | April 25, 2022
More Articles