As the cannabis industry matures and state markets expand, one area remains persistently tangled in legal and operational uncertainty: online payments. While consumers in other industries take digital wallets, debit cards, and one-click checkout for granted, dispensaries and cannabis businesses must navigate a gray zone created by the clash between state legalization and federal prohibition. That tension makes every transaction a balancing act between convenience and compliance.
The root challenge is federal law. Cannabis remains a controlled substance under the Controlled Substances Act. Even as the Department of Justice pushes forward with rescheduling cannabis to Schedule III, the plant is not federally legalized. For payment providers, that means cannabis transactions are still viewed as high risk and potentially unlawful. National card networks and many banks refuse to process them, leaving dispensaries to rely on cash-heavy operations or explore alternative payment systems that often carry hidden liabilities.
Some banks do serve cannabis businesses under FinCEN’s 2014 guidance, which technically allows relationships but requires strict compliance. Financial institutions must perform enhanced due diligence and file specialized Suspicious Activity Reports for every cannabis-related client. This oversight is costly, and it creates volatility: a dispensary might one day find its account closed or deposits frozen simply because a bank re-evaluated its risk tolerance. That fragility makes business planning difficult and payment reliability inconsistent.
Card networks present another hurdle. Workarounds like “cashless ATMs”—where purchases were disguised as ATM withdrawals rounded to the nearest $5 or $10—once gained traction. But networks such as Visa and Mastercard cracked down, calling it miscoding and instructing partners to terminate those services. The fallout has included sudden shutdowns and legal exposure for operators that relied on the method. By 2025, lawsuits connected to cashless ATM transactions were still unfolding, showing how risky these shortcuts can be.
Digital wallets and ACH transfers offer more transparent options, but even they are precarious. These systems depend on partner banks willing to touch cannabis funds. If a sponsor bank changes its stance, the entire payment channel can collapse overnight. In addition, operators must carefully comply with NACHA rules, conduct strict customer verification, and monitor transactions for fraud or illegal activity. Any misstep can bring regulatory action or account termination.
Legislation like the SAFER Banking Act has been proposed to ease these challenges by giving banks and payment processors federal protections for working with state-legal cannabis businesses. Yet as of 2025, it remains just that—a proposal. Without congressional action, the gap between state-level legalization and federal prohibition leaves dispensaries exposed, their payment solutions fragile, and their customers inconvenienced.
Even the prospect of rescheduling cannabis to Schedule III will not resolve these issues outright. While it may reduce the tax burdens imposed by IRS Section 280E and encourage more banks to open their doors, it won’t guarantee acceptance from card networks or eliminate anti-money-laundering requirements. For the foreseeable future, operators will still need to navigate a maze of inconsistent rules and enforcement.
The safest path for cannabis businesses is to prioritize transparency and compliance over convenience. That means avoiding schemes that disguise transactions, choosing payment vendors that use proper merchant coding, maintaining backup payment systems, and documenting procedures thoroughly in line with FinCEN’s guidance. While this approach may slow innovation, it provides a buffer against sudden disruptions and enforcement actions.
Ultimately, the biggest obstacle to smooth online payments in cannabis is not technology—it’s the law. Until federal policy catches up with state-level legalization, dispensaries will remain in a payment gray zone where every solution carries risk. The businesses that endure will be the ones that treat payments not as a simple service, but as a critical compliance program built to withstand uncertainty.