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Provisional Credit: Why Cannabis Businesses Lose Out on the Smart Safe’s Biggest Benefit

One of the nicest things about a smart safe is provisional credit, a practice where banks or credit unions give retailers credit for a deposit before the cash ever leaves the premises.

This arrangement may sound strange, but it actually helps both the bank and the customer by streamlining cash management. Unfortunately, most banks don’t extend this courtesy to cannabis businesses.

How Do Smart Safes Facilitate Provisional Credit?

Provisional credit is a type of retail cash automation that reduces the number of deposits a cash-heavy business has to make by courier or armored car. As a result, provisional credit can save a business time and money by replacing small, daily cash deposits with bulk deposits occurring once or twice per week. A smart safe plays a key role in provisional credit by:

  • Sequestering and securing cash that’s going to be deposited

  • Guaranteeing transaction accuracy

  • Transmitting deposit data to banks so they can provide provisional credit for the secured cash

Why Cannabis Businesses Don’t Benefit From Provisional Credit

Even though good-sized cannabis shops can deal with as much cash as a bank branch on any given day, these businesses can’t obtain provisional credit arrangements from their financial institutions.

It’s not that there’s a specific rule that prohibits it. However, like many things where cannabis and banking are concerned, the relationships are already under the regulatory microscope, making those on the banking side most interested in playing it safe.

Because of these circumstances, a smart safe is just a safe for marijuana-related businesses (MRBs). Even without the provisional credit capability, a smart safe is still a good thing to have--since securing cash is a necessity for a business handling many thousands of dollars every day. However, it’s not quite the time-saver or cost-cutter it is to businesses where provisional credit is allowed.

Does that mean there’s no way for cannabis retailers to shave off some expenses through cash automation? Not quite! Running a register isn’t strictly a cash-in affair; most transactions require a cash exchange. For cash-heavy enterprises like MRBs, the supply of smaller bills needs to be constantly replenished.

Why Cash Recyclers Are a Great Fit for Cannabis Businesses

Replenishing cash can consume just as much time and bank visits as it takes to make deposits. That’s why reducing the frequency of cash replenishment is a welcome capability for any MRB.

Having extra cash on hand that’s secured, accurately accounted for, and easily accessible can be a blessing. A smart safe or regular safe, however, doesn’t offer these key advantages.

This is where the versatility of a cash recycler pays off: Since it provides a free-flowing “two-way street” for banknotes of all denominations, it acts as both your safe and your bill dispenser. Additionally, its high capacity allows for a large quantity of notes to be kept accessible yet secure.

The cash recycler can help your cannabis business make fewer bank draws to keep change on hand. When used as part of the cash handling process near the point of sale, recyclers can also keep your registers’ change stock replenished in real time, cutting down on the number of visits to the safe that you need to keep the drawer balanced.

Why It’s Strategic for MRBs to Deploy Cash Recyclers With a Banking Configuration

In a previous post, we mentioned that bank and retail cash recyclers are often configured a bit differently, with retailers segregating the high-value notes from $20 to $100 for deposit in a separate area of the machine, while banks will allow all denominations to move back and forth freely. That’s because retailers will only rarely give out those bills as change. Banks, however, might get a withdrawal request for any amount. This is another area where cannabis retailers buck the trend.

According to a study by the Federal Reserve Bank of Boston, the average pre-pandemic cash sale was about $22, while the average for other payment methods came in at $112.

MRBs are a rare case where even the high-value transactions are carried out in cash, largely because it’s difficult for them to find credit card processors willing to deal with a cannabis business. That’s why you might find cash purchases ranging from $60 to as high as $250 at a cannabis retailer. It’s also not uncommon for an MRB to give out lots of higher-value bills like $20s as change, as they take in a lot of high-denomination notes. For that reason, MRB cash recyclers tend to be set up like banks’ cash recyclers, with more space dedicated to $20s, and more of those cartridges or rolls going both ways in accepting and dispensing cash.

Bring Cash Automation to Your Cannabis Business

As a cannabis business, you’re not eligible for provisional credit so smart safes don’t deliver as much value to your cash operations. However, you can gain the strategic advantage of cash automation with a cash recycler. You’ll be able to secure cash on hand, reduce deposits, and streamline cash replenishment, tracking and accounting.

Discover how quickly your business can achieve a return on investment on a cash recycler. Contact us for a complimentary consultation.


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