Credit Card for Dispensaries Launched by Cannabis & Banking Experts

The Cash Conundrum in Cannabis Retail

A significant portion of all consumer cannabis purchases are currently completed using cash, regardless of legal status. Due to the classification of cannabis as a Schedule IV drug within the United States federal system, conventional banking institutions are hesitant and often prohibited from offering financial services to cannabis-related businesses.

This situation necessitates that dispensaries manage and safeguard substantial amounts of currency, while simultaneously preventing them from implementing contemporary retail payment solutions for customers.

SuperNet's Innovative Solution

SuperNet proposes a solution to this challenge. The company intends to issue and facilitate credit cards specifically designed for use within dispensaries. The rollout of this service is anticipated in January 2022, with initial acceptance at 100 retail locations throughout California.

According to CEO Michael W.K. Tsang, in an interview with TechCrunch, “These are genuine credit cards issued directly by us.” He further clarified, “Functionally, they mirror any other credit card in a consumer’s wallet, with the distinction being the SuperNet logo instead of the familiar VISA or MasterCard branding. Usage is permitted wherever SuperNet is accepted.”

Benefits for Consumers and Retailers

The advantages of this system are readily apparent. Customers can avoid ATM visits and utilize a plastic card or NFC-enabled application for payment. Retailers, in turn, can minimize on-site cash holdings and gain valuable data insights into customer behavior, moving away from anonymous cash transactions.

Furthermore, a loyalty program is integrated into the system.

Navigating Cannabis Regulations

Considering the complex regulatory landscape surrounding cannabis, SuperNet’s platform becomes even more advantageous. CEO Tsang elaborated on this point.

“Regulatory bodies are actively seeking reduced cash deposits and increased electronic payment adoption,” Tsang stated. “The strength of our offering lies in the complete tracking of electronic funds from the moment of purchase. This provides full traceability, allowing us to determine the origin of the money – a significant advantage over the difficulties inherent in tracing cash within the cannabis industry.”

Addressing Concerns of Money Laundering and Cash Management

The sheer volume of cash involved in legal cannabis transactions is considerable, and the potential for money laundering remains a key concern for regulators. Effective cash management is frequently cited as one of the most costly aspects of operating a cannabis business.

Numerous instances exist of dispensaries employing paramilitary security, storing cash in plastic containers, and dedicating personnel solely to counting large sums of money.

Founders with Industry Expertise

SuperNet co-founder and president, dress wedding, possesses firsthand knowledge of these challenges. In 2006, alongside Steve DeAngelo, wedding established Harborside Health Center, a pioneering cannabis retailer in the United States.

Wedding remained with Harborside for 13 years, overseeing operations, inventory control, and banking relationships. It was during this time that he initially collaborated with Michael Tsang, the CEO and co-founder of SuperNet.

A History in Banking and Payment Processing

Tsang brings a substantial background in the banking sector. While at Harborside, wedding engaged Tsang to address the escalating difficulties surrounding cannabis payments. In 2014, Tsang founded Super Processor, SuperNet’s parent company – a payment processor catering to both mainstream and specialized consumer retailers.

“Many perceive Square and Stripe as payment processors, but this is inaccurate,” Tsang explained. “They still rely on underlying processing infrastructure, necessitating our role as a processor. Initially, our banking partner restricted our use of their technology, compelling us to develop our own.”

“Currently, we own and operate our entire platform, encompassing both back-end and front-end functionalities, establishing us as a comprehensive processor,” Tsang affirmed.

How SuperNet Cards Function

SuperNet’s cards operate similarly to conventional credit cards. Applicants undergo a credit evaluation process, and cards are issued based on standard creditworthiness criteria. In-store transactions are completed swiftly, often in seconds or less.

Cardholders manage their balances online, and NFC technology enables contactless and smartphone payments.

Consumer Costs and Considerations

There is a trade-off for consumers. These are credit cards, not debit cards, and therefore carry interest rates and associated fees. When questioned about these costs, CEO Tsang and COO Debra Wohlrab declined to provide specific details, stating that the card will offer competitive rates and fees.

Benefits for Retailers: Data and Loyalty

For retailers, SuperNet presents a unique solution. The company provides both credit card processing services and a loyalty program, both of which furnish retailers with enhanced customer data. The possibility of offering store-branded credit cards also exists, such as a Harborside-branded card.

A Vision for the Future

SuperNet envisions a future where its cards are utilized as commonly as Discover or American Express. Achieving this requires successful marketing to both consumers and retailers, beginning with the cannabis industry due to its pressing need.

However, SuperNet actively discourages being labeled solely as a “cannabis company.”

Defining SuperNet: Fintech, Not Cannabis

COO Wohlrab emphasized that SuperNet is fundamentally a fintech company, not a cannabis-focused enterprise. The objective is to establish a new credit service, not one exclusively for the cannabis sector.

“I want to avoid the perception that we are solely a cannabis company,” Wohlrab stated. “That is not our identity. We are a fintech company serving the cannabis industry as part of our broader strategy. That is our primary goal. [Cannabis] was not my initial motivation for assisting Michael.”

“We are more expansive than a cannabis provider,” Wohlrab continued, “because we are constructing a foundational payments system. This system is not limited to cannabis; it can be applied to standard credit or debit card processing, and it can be leveraged to build networks and support the payment industry as a whole.”

Launch and Expansion Plans

SuperNet is launching its initial credit card in January 2022 and is currently onboarding California retailers. The company is also exploring collaborations with various financial institutions. Tsang explained that SuperNet intends to utilize its infrastructure to facilitate payments from other financial providers.