How Did We Get Here?


As of the November 2018 midterm election, ten states and the District of Columbia have legalized marijuana recreationally while a total of thirty-three states allow cannabis consumption on a medical basis. Clearly, marijuana has been a hit with the states.

While cannabis is booming state-wide, federal policies have yet to catch up with the times. This federal illegality creates a massive problem for cannabis payment because credit cards, ACH transactions, and debit cards are all processed through federally-regulated banks. Unfortunately, this means that traditional means of payment (aside from cash) cannot be used legally in cannabis. While debit card machines have become increasingly common in dispensaries, these are almost exclusively noncompliant Point of Banking Solutions (see Point of Banking Solutions below).


Legality of Cannabis


How Do Other Cannabis Payment Solutions Compare?

The system most cannabis buyers are familiar with. Cash only stores don’t accept any forms of electronic payment. You can only purchase products using cold hard currency.”
The Spinner Account
This is a system where businesses constantly switch between merchant accounts to try and stay one step ahead of regulators. However these systems are illegal and non-compliant by nature. When using these workarounds merchants need to constantly worry about having their payment services shut down. With Zodaka, you set up one account and use it forever, no switching needed.
Offshore Bank Accounts
This solution involves securing businesses merchant accounts based in overseas territories like Cyprus or China. Maintaining these accounts can cost merchants upwards of 10% transaction fees, and they will also maintain a rolling reserve which can be well over six figures. When the specific offshore solution is shut down (which they all eventually are) the American merchant has no recourse for recovering that money due to cannabis being federally illegal in the U.S.
Point of Banking Solutions
Point of Banking Solutions (or P.O.B.s) are systems that harness the ATM network to code marijuana purchases as cash withdrawals rather than debit card payments. Customers can tell when a dispensary is using a P.O.B. system because they have to round the transaction to the nearest $5 and return the change to the customer.
Cryptocurrency solutions work by accepting the user’s money at the point of sale, transferring it in some sort of digital currency like bitcoin or litecoin, moving it to the merchant’s bank account, and transferring that coin back into hard currency. The problem with this sort of system is that cryptocurrencies are, by nature, unstable. Take the recent collapse of Bitcoin or the even more recent shuttering of Stablecoin (a cryptocurrency literally built to eschew the problems with other crypto softwares). . Zodaka operates in U.S. Dollars, a system which, suffice to say, has a bit more history to fall back on.
The E-Wallet
This system requires customers to preload an electronic wallet with funds before any sort of payment can be made. This preloading can take up to several days, and customers cannot access these funds once they are in the wallet except to spend them at merchants on the system. Zodaka requires no preloading, and your money remains yours until you decide to spend it.