Cannabis merchant services guide for CFOs and finance leads

The hemp industry faces constant change as evolving legislation creates challenges for both short-term operations and long-term strategies. Despite this, the cannabis sector is thriving, with payment systems projected to handle up to $428.22 billion annually by 2032. Once a cash-only market, it's now moving toward mainstream retail integration.

To meet growing demand, operators are adopting modern tools like payment systems, inventory tracking and financial reporting. However, a key gap persists: access to compliant, scalable payment solutions. Partnering with financial providers who understand the industry's complexities is crucial for success.

The need for merchant services amid cannabis reform

Despite industry momentum, federal regulations continue to act as a barrier. Marijuana remains illegal at the federal level, creating friction between expanding state legalization—where 47 states now allow some form of medical marijuana—and restrictive national banking standards. However, legislative relief has stalled with the introduction of H.R.5542, which goes into effect in November 2026 and includes language that bans a significant percentage of all hemp products.

Pending legislation to bridge the gap

One proposed law, the SAFE Banking Act, would protect financial institutions serving state-legal cannabis businesses from federal penalties—ensuring that cannabis businesses gain increased access to essential banking services such as loans, deposits and insurance. Another law, the SAFER Banking Act, would provide even stronger protections. Both acts have been introduced multiple times, but neither has become law as of 2026.

A third proposal—the Clarifying Law Around Insurance of Marijuana, or CLAIM, Act—would allow insurance providers to serve cannabis businesses without risking federal penalties. This legislation creates a legal safeguard for insurers and their employees in states where cannabis is legal.

The cost of inaction

Delayed legislation will continue to leave cannabis merchants operating in a regulatory gray zone. Payment processors often label them high risk, leading to higher fees, fewer services and increased scrutiny. Merchants relying on workarounds—such as cashless ATMs or closed-loop systems—risk disruption when vendors pull out or platforms are shut down due to compliance concerns. This instability makes growth difficult.

"We've seen clients get shut down overnight by other payment providers, without warning and without a full understanding of what the business actually does," says Dana Lomas, Director of Merchant Sales at First Citizens. "They get labeled high risk, and that's the end of the relationship. That is far less likely to happen when you do the compliance and oversight work up front in the banking relationship."

Learn more about challenges facing marijuana and hemp businesses in our State of the Cannabis Industry report.

The hidden compliance risks in generic payment systems

Many cannabis transactions rely on alternative payment methods such as PIN debit, ACH transfers and closed-loop systems. These options can be effective—but only when structured within a robust federally compliant framework. Without this foundation, even well-intentioned systems can be flagged or shut down.

"Some merchants may not realize their system isn't compliant until the service disappears overnight," says Lee Powers, Merchant Sales Officer for First Citizens. "But a strong service provider should spend a lot of time explaining how each option works, what risks are involved and how to structure it properly."

Why do cannabis operators need integrated payments?

The right cannabis payment solution must fit the operational realities of the industry, which means working across the entire operation. This includes integration with inventory management, employee scheduling and state-mandated compliance systems. Whether a dispensary is processing retail sales in-store, online or through mobile operations, its payment infrastructure must be secure, stable and compliant. Every transaction needs to be tracked, reported and auditable—all requirements many off-the-shelf systems can't meet.

"Cannabis payment systems touch every part of the business," Lomas says. "If it's not built to support your other systems, it creates more work and more risk."

Simply put, fully functional merchant services for cannabis businesses must do more than process sales. They should provide a compliant, comprehensive banking solution that supports long-term growth across the operation.

A cannabis success story

Green Leaf Business Solutions, a payroll and HR services company for cannabis businesses, struggled early on to find a stable banking partner. "Being able to establish a banking relationship as a payroll provider is really hard, and then throw cannabis in there—it was basically nonexistent when we started," says co-founder Kira Amundsen.

But after securing a compliant banking partner, the business stabilized and scaled. Access to ACH payments, retirement programs and lending enabled them to offer clients traditional employment tools and provided Green Leaf with a foundation for responsible growth.

"We've experienced triple-digit growth year over year," Amundsen says. "Having access to traditional banking products is a game-changer."

What to look for in a cannabis payment solutions provider

A compliant, reliable payment system begins with choosing the right partner. The strongest providers combine regulatory discipline, operational insight and long-term business support.

Structured onboarding that puts compliance first

A reliable payment processor will perform rigorous due diligence to reduce the potential for service disruptions. At a minimum, this structured onboarding process should include certification review, product validation and a comprehensive assessment by a cannabis compliance team—verifying the business's legal standing, the nature of its products and how it's integrated into the supply chain.

"We ask for every detail to help our clients stay open and stay compliant," Lomas says. "We've built our program to meet bank and regulatory expectations, and we make sure our merchants understand what that means and how to stay aligned."

An integrated, consultative approach

Instead of relying on patchwork workarounds, cannabis businesses need payment solutions designed for real-world operations. This means systems that function seamlessly in retail stores, online and on mobile devices at events. It also means merchant programs built around how cannabis is actually sold—not just how financial institutions operate in traditional markets.

A more consultative approach typically delivers stronger results. When financial partners take time to understand a merchant's products, sales channels and long-term plans, they can design a solution that not only fits today's needs but that also flexes for future growth.

"You might be selling CBD today, but what about tomorrow? Trade shows, e-commerce, pop-up events—all of these are real opportunities a cannabis business might want to pursue," Powers says. "The right banking partner wants to plan for the full life of the business, not just a moment in time."

Industry expertise and transparency

Beyond technology, a strong payment solutions team offers deep industry knowledge, compliance rigor and transparent pricing. With this level of oversight, cannabis retailers gain more than a payment processor. They gain a financial partner who understands their business risks and takes proactive steps to manage them.

For cannabis operators who may be used to being overcharged and underserved, this kind of alignment is both rare and essential.

Getting started with cannabis merchant services

The cannabis industry continues to evolve, even as federal reform remains uncertain. Rather than wait for perfect conditions, operators can prepare to thrive within today's constraints.

Readiness begins with flexibility—staying aware of shifting rules and keeping operations flexible enough to pivot when needed. It also means choosing banking and merchant service partners who treat cannabis as a legitimate, long-term business.

"This industry is still in its early stages," Powers says. "Operators who succeed are agile, pay close attention to changing regulation and build relationships with partners who understand the terrain." With the right foundation—transparent pricing, integrated tools and robust compliance—cannabis businesses can grow confidently, compete effectively and weather whatever comes next.

To learn more about payment solutions that support compliance and long-term growth for cannabis businesses, speak with a First Citizens merchant services specialist.