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A Step-by-Step Look at the Cash Cycle for Cannabis Operators

Dealing with large volumes of cash comes with many risks, but the industry has evolved to include safe, simplified solutions.

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As with just about everything in the cannabis industry, the cash cycle for dispensary operators is complex. Dealing with large volumes of cash comes with many risks, but the industry has evolved to include safe, simplified solutions. Before choosing a cash management solution for your company, you'll want to fully understand the cash cycle itself.

A Brief Overview of the Cannabis Cash Cycle 

Step 1: Customer to Dispensary 

As a predominantly cash-only industry, dispensaries receive a large amount of cash from their customers each day. The transfer of cash from customers to dispensaries is the first step in the cash cycle. 

Step 2: Cash Vault Services or Smart Safes 

The money will then be placed in the back of the store in a secure vault, awaiting its scheduled pick-up from an armored carrier. The armored carrier will move the money to a safe holding vault—often called a virtual vault or outsourced currency vault, where a financial institution keeps a small repository in the branch of the armored carrier. 

Alternatively, operators can use a smart safe on location. Rather than store the cash in the back of the store and wait for the armored carrier to pick it up, dispensaries can feed their cash into the smart safe as it comes in. Smart safes are connected to the cloud, allowing retailers and armored carriers to access real-time reporting. 

Step 3: Secure Transportation 

The carrier will take currency (inventory) from the Federal Reserve, going back and forth to pick up currency and keep it in the vault. Cash and coins are kept in separate inventories. If ATM inventory is included, its contents will also have a separate inventory. 

Step 4: Reporting

The armored carrier can pack out change orders for the dispensary and pick up their cash on location. They can also bring cash back to the dispensary, carry out cash processing and note verification, and deposit processing on behalf of the financial institution. The armored carrier will then alert the financial institution that the process is complete. 

Dispensaries using smart safes don't have to worry about this aspect of reporting, as the device automatically performs all of the reports, reconciliations, and balances. 

Step 5: Money in the Bank

Armored carriers are crucial in recounting cash, ensuring all bills are present without discrepancies, and taking the money to the Federal Reserve. Assuming everything is legitimate, dispensary owners will receive a provisional credit in their bank account in about one to two business days. 

Alternatively, banks give out daily provisional credits to those using smart safes. For example, money fed into the machine on Monday will result in a daily credit in their account on Tuesday. 

Armored Carriers vs. Smart Safes 

There are very few benefits to not using an armored carrier—the most notable being money saved. If you walk your cash to the bank, you save money on armored carrier services but also invite plenty of security risks handling large volumes of cash. Just one robbery or safety incident with an employee can bring massive liability. 

Smart safes come with a heftier price tag because they include more upfront costs and still require using an armored carrier to transport the cash. Additionally, you will pay the bank for turning on their daily credit service. However, the benefits, such as next-day provisional credits, automated reporting, and increased security, make them a solid choice for many operators. 

Final thoughts 

Ari Raptis, founder and CEO of Talaria and National Secure Transport.Ari Raptis, founder and CEO of Talaria and National Secure Transport.Whether you run a large multi-state operation or a local retail store, you have much to consider when it comes to cash management. Employee safety and internal security are two major factors that operators should never neglect. As you better understand the cannabis cash cycle and look into different options for cash management, keep safety and security at the forefront of your decision making. 

Ari Raptis is the founder and CEO of Talaria and National Secure Transport (NST), which offer innovative end-to-end logistics, cash management, turnkey ATM solutions, and a cashless payment system. NST uses the industry's leading fully integrated cash management software, ensuring accuracy, reducing risk, and eliminating time-consuming data entry with real-time reporting. NST uses advanced tracking, vehicle safety, and 24/7 surveillance for their fleet of armored vehicles.

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