Denver-based Akerna Corp., a leading enterprise software company and the developer of the comprehensive technology infrastructure, ecosystem and compliance engine powering the global cannabis industry, this week issued a statement in Q&A form to help inform members of the cannabis industry and those interested in investing in it about recent news of so-called “Cashless ATM” usage in the cannabis industry.
According to the statement, Akerna and its family of brands have always sought to strictly adhere to all state and federal legislative guidelines and compliance regulations around banking and payments in the cannabis industry. Akerna does not offer a Cashless ATM product and has never collected revenue relating to Cashless ATM transactions. Akerna fully vets all integration partners, including payment providers.
Q: What is a Cashless ATM?
A: Cashless ATMs, also referred to as Point of Banking, are point-of-sale (POS) devices driven by payment applications that mimic standalone ATMs. The devices are used for cannabis purchase transactions which are miscoded as ATM withdrawals. They are referred to as “cashless” because the cardholder receives product instead of cash.
Q: How do Cashless ATM transactions work?
Consumers insert or swipe their debit card into a Cashless ATM device and enter their PIN. The transaction amount is rounded up to a multiple of $5 to give the appearance of an ATM withdrawal. One of the problems with Cashless ATMs is that transactions are submitted to card networks as ATM cash disbursements, not retail transactions.
Q: Why are Cashless ATMs used in cannabis? Are Cashless ATMs prevalent in cannabis?
A: Cashless ATMs are used to intentionally disguise cannabis purchase transactions from banks and networks that would otherwise prohibit the transaction. The use of Cashless ATMs is widespread in the cannabis industry – Akerna believes Cashless ATMs are used by approximately half of all cannabis stores across the country.
Q: Why are Cashless ATMs being shut down?
A: It has been reported that Visa sent a memo to banks entitled “‘Cashless ATM’ and Misuse of ATM Transactions Prohibited,” which makes it clear that Cashless ATMs are prohibited for purchase transactions and that violations would be subject to penalties. Other networks are expected to follow suit.
Q: Does Akerna provide Cashless ATMs or generate revenue from Cashless ATMs?
A: No, Akerna does not offer a Cashless ATM product and has never collected revenue relating to Cashless ATM transactions. Akerna fully vets all integration partners, including payment providers. As a compliance company, Cashless ATMs do not align with Akerna’s primary mission of ensuring our clients and their consumers have trusted systems that make it easy to follow governing legislation and compliance regulations without putting their business or license at risk.
Q: Are there other methods of payment Akerna clients can use?
A: Yes. Akerna currently partners and integrates with cannabis payment solutions such as Hypur and Tendr.
As the banking obstacles remain for much of the hemp-CBD and cannabis industry, progress has been made with educating legislators regarding the validity of the industry’s commercial activity.
“We sit poised on the precipice of true change,” said Akerna CEO Jessica Billingsley. “We believe we have a favorable position in Washington D.C. This is a day we have worked so hard to achieve. In an industry where we have to work doubly hard to prove our legitimacy, the actions around Cashless ATMs by others in the industry jeopardize the entire industry’s efforts and businesses.”
Akerna is an enterprise software company focused on compliantly serving the cannabis, hemp and CBD industries. The company’s mission is to create the world’s most transparent and accountable supply chain by building a cannabis technology ecosystem connecting data points across the global cannabis supply chain from seed to sale to self.
Using connected data and information to propel the cannabis industry forward, Akerna empowers businesses, governments, patients and consumers to make smart decisions. The company’s cornerstone technology, MJ Platform – what it bills as the cannabis industry’s leading infrastructure as a service platform – powers retailers, manufacturers, brands, distributors and cultivators.
Akerna also offers a complete suite of professional consulting services and data analytics for businesses as well as solo sciences, MJ Freeway, Leaf Data Systems, Trellis, Ample Organics, Viridian Sciences and 365 Cannabis.