The Cost of Doing Business in Cash

Creative collage image of business person folded arms black white colors hundred dollars banknote instead head isolated on painted background
Illustration: Roman Samborskyi / Shutterstock

Although medical or adult use is legal in thirty-eight states, four United States territories, and Washington D.C., the fight to legalize the plant on a federal level is ongoing. This creates multiple challenges for industry businesses, many of which find themselves operating on a cash-only basis. In fact, recently reported 70 percent of cannabis businesses resort to cash-run operations.

“Imagine running a multimillion-dollar business on the envelope system,” Naomi Granger, founder of the National Association of Cannabis Accounting and Tax Professionals, offered as an analogy.


Running a business using a cash-only (or mainly cash) system is literally pricey. Some expenses to consider include:

Labor costs

Employees must be paid, which means businesses must always have a significant amount of cash on hand. And let’s not forget the complexities of navigating benefits like healthcare and paid time off in a harshly regulated environment.

Security, storage, and safety

Where will you store your cash? How many trips to the bank will you need, and how do you ensure the safety of your security personnel and staff when transporting the cash? You’ll also need to pay for onsite security personnel.

Business costs

In addition to the costs of providing security and safety measures, cash-only businesses face bank depositing fees and other costs businesses in other sectors may not encounter.


According to one 2021 study, 90 percent of all financial and product loss is attributed to employee theft—a startling statistic that underscores the importance of finding the right employees (and paying them well), running background checks, and having a monitored work environment.

While there is a lot of red tape when it comes to accessing banking services as a regulated business, there are many things cannabis business owners can do to navigate their cash-only operations.

One vital mitigation practice? Always keep multiple eyes on the cash. Managers and assistant managers should verify cash and product counts as a checks-and-balances measure, and the business should have a solid inventory-auditing process. To stay on top of this, make sure your staff and system can do spot inventory and cash audits and can track the audits long-term.

You’ll also need an in-depth security system. To help prevent employee theft, screen your employees and build a workplace culture that empowers employees to feel ownership in their work and accountability for loss prevention in their workplace. Businesses also can utilize onsite kiosks that accept cash or debit cards and create secure cash-recycling processes.

In addition to these measures, utilizing an enterprise resource planning (ERP) system can help cash-based businesses mitigate cash and product loss. Vet whatever systems you’re considering to make sure they’re appropriate for highly regulated industries. In addition, make sure their features match your needs. Retail operations, for example, may require different features from those needed by manufacturers or cultivators.

Business owners must proactively utilize technology such as ERP systems to mitigate risk and safeguard inventory and cash. When choosing a software provider, retailers should focus on systems that offer day-to-day support, provide emergency assistance, and can monitor employees, cash, and inventory seamlessly. Software (and the employees who use it) also should be able to track and trace compliance, identify suspicious transactions, and look at data from multiple locations. Detailed reporting is crucial from a compliance perspective.

In addition to the right technology, cannabis businesses should prioritize compliance by doing their research and working with accounting and financial professionals who are experienced in the cannabis sector and know the specific rules and regulations of the jurisdiction(s) in which they operate.

While operating in a cash-only system comes with extra hurdles to clear, lawmakers are continuously navigating how to keep up with the growing cannabis sector, including presenting legislation to make financial transactions easier. Until Congress sorts out banking at the federal level, prioritizing mitigation practices, fostering a quality work environment with the right employees, utilizing the right technology, and hiring industry experts can go a long way toward moderating the downsides of operating in a cash-heavy business environment.

Dawne Morris Dawne Morris is co-founder and chief marketing officer for Proteus Business Solutions Inc., an online enterprise resource planning (ERP) system for businesses in ecommerce, retail, healthcare, and highly regulated industries including alcohol and cannabis. With decades of finance, digital marketing, and design experience, she previously helped grow and expand the digital agency and developed the successful hosting enterprise Illuminated Hosting Service LLC.



  1. […] Descheduling cannabis, or rescheduling it from the Schedule I, or most restrictive, classification, would signal a seismic shift in how financial institutions view CRBs. The move potentially could open doors for these businesses to access traditional banking services, allowing for greater transparency and oversight, thereby addressing concerns related to cash-based transactions. […]