While many consumers still prefer to pay for cannabis with cash, fears concerning health and safety amid the COVID-19 pandemic are driving many toward alternative payment methods, according to a new survey from digital payments provider Hypur.
“Cannabis is such a cash-intensive business,” said Martha Johnson, chief marketing officer at Hypur. “What COVID has done, I think, is it's catapulted what technology needs to do -- and companies like Hypur -- what we need to do and continue doing in order to be able to keep up with consumer demand.”
Throughout the month of September, Hypur surveyed 400 cannabis consumers over the age of 18, some of whom used Hypur’s digital payment offerings already. Hypur’s digital payment app recreates the experience of paying for cannabis with credit or debit through ACH transactions and next-day wire service.
Overwhelmingly, consumers surveyed preferred to pay for cannabis in cash, with roughly 47 percent listing cash as their top pick of payment option. But about that same amount -- 47 percent -- reported using cash less frequently within the past year. The most common reasons cited for reducing cash usage included health and safety concerns about spreading or contracting COVID-19, retailers no longer accepting cash, and a proliferation of cash-free payment options at retail shops.
Research suggests that even though the COVID-19 virus can survive on cash, the likelihood of someone contracting it after touching cash is relatively low, according to an Associated Press Fact Check. Even so, the CDC does recommend contactless payment options over using cash, keypads or even credit cards. While the fear around cash may be mostly unfounded, various reports show that the pandemic is, indeed, driving people away from cash.
Johnson said these new consumer preferences are good for innovation and have accelerated the adoption of cashless and cash-light payment options, even for cash-heavy industries like cannabis. Once consumers get used to paying with credit, debit, or contact-free digital payment apps like Hypur and CanPay, Johnson said it’s hard to turn back.
“Consumers are ready, right? And I believe that they became ready, meaning ready to use contactless, ready to use less cash. COVID really kicked it into gear,” she said. “Once the consumer has a certain expectation...I have an expectation. Why am I going to change that? Right? Why am I going to go back?”
In spite of a big move toward contactless or cashless payments options, the survey also revealed a contingent of consumers who said they had begun using cash more often in 2020 -- roughly 31 percent of those surveyed.
Those who still preferred to use cash for cannabis cited convenience, budgeting, and privacy as the top three reasons why. The percentage of respondents who mentioned privacy concerns actually fell about 6 percent to 27 percent since Hypur last surveyed consumers in May of this year. Johnson said that drop could be evidence of declining stigma surrounding cannabis use amid a broader trend of marijuana in popular culture and after many states designated their medical and adult-use cannabis markets essential amid the coronavirus pandemic.
“One point is, it's essential. Two: you're finding more and more [people], from spokespeople celebrities to athletes to whomever -- we’re seeing more people saying, ‘Hey, I use cannabis,’ or ‘Cannabis helps me with stress,’” Johnson said. “And, my gosh, who doesn't suffer from stress or from you know, occasional insomnia?”
Despite differing payment preferences, most survey respondents seemed to agree on one point: legitimizing the industry. Some 84 percent of consumers surveyed said they would change their payment method -- whether to credit, debit, apps like CanPay and Hypur, or otherwise -- if it meant legitimizing and growing the cannabis industry.
“I would say my favorite thing is that 84 percent,” Johnson said.
October 15, 2020 10:15 am ET: Corrected quote from Johnson, adding the bolded words: "What COVID has done, I think, is it's catapulted what technology needs to do -- and companies like Hypur --what we need to do and continue doing in order to be able to keep up with consumer demand.”