Most cannabis consumption transactions are made in cash, legal or otherwise. Since the United States classifies cannabis as a Title IV drug, the banking industry is unwilling and unable to provide services to cannabis-related transactions. This leaves dispensaries to manage and protect huge sums of money, and stores cannot provide a modern retail payment system to the consumer.
SuperNet has a solution. The company will issue and process credit cards that will work in dispensaries. The service is expected to launch in January 2022 and accepted at 100 outlets in California.
“It’s a real credit card that they’ll get from us,” CEO Michael WK Tsang told TechCrunch. “It’s like any other credit card in your wallet, except instead of a VISA or MasterCard logo, it’s a SuperNet logo. You can spend it anywhere Supernet is accepted.
The advantages are obvious. Consumers can leave money at an ATM and pay with a plastic card or NFC app. Retailers can reduce the amount of cash on the spot and collect more data on their customers who are no longer cash transactions. There is even a loyalty program.
Consider the cannabis regulations, and SuperNet’s platform becomes more compelling: this platform was designed for the complex world of cannabis. CEO Tsang explained.
“Regulators want to see fewer cash deposits, and they want to see electronic payments,” Tsang said. “The beauty of what we offer is that our money – electronic money – is tracked from the point of purchase. It is traceable. We know where the money is coming from. In cannabis, with cash you have to put a lot more effort into tracking where the cash came from.
The amount of money used in legal cannabis transactions is staggering, and money laundering is still a concern for regulators. Cash management is often considered one of the costliest parts of running cannabis businesses. There are countless examples of clinics hiring paramilitary security guards, storing wads of cash in plastic bins, and hiring staff just to count piles of bills.
The co-founder and president of SuperNet, Wedding Dress, knows this pain well. In 2006, along with Steve DeAngelo, Wedding founded Harborside Health Center, one of the first cannabis retailers in the United States. Wedding stayed with Harborside for 13 years, where he oversaw clinic operations, inventory management and banking relationships. It was there that he first worked with Michael Tsang, CEO and co-founder of SuperNet.
Tsang has a long history in the banking world. At Harborside, Wedding hired Tsang to tackle the growing challenges with cannabis payments. In 2014, Tsang founded SuperNet’s parent company, Super Processor, a payment processor for consumer and niche retailers.
“A lot of people think Square and Stripe are payment processors, but they’re not,” Tsang explained. “They still depend on a processor, so we had to become a processor. Our first bank sponsor didn’t let us use its technology, so we had to develop it as well.
“Today we have our own platform, back end and front end, and we are a full processor,” Tsang said.
SuperNet cards work like regular credit cards. Users must apply and SuperNet will issue the card based on typical credit factors. In-store transactions take seconds or less. Cardholders pay their balances online, and there is an NFC component for contactless and smartphone transactions.
There is a compromise for the consumer. This is a credit card, not a debit card. The card carries an interest rate and fees. I asked CEO Tsang and COO Debra Wholrab about the costs. Both declined to give details, saying the card instead would have competitive rates and fees.
For the retailer, SuperNet offers a new solution. SuperNet provides a credit card processing service and a loyalty program – both of which provide the retailer with additional customer information. There is also an opportunity for store branded credit cards. For example, Harborside could offer its customers a Harborside credit card.
SuperNet sees a future where consumers use a SuperNet card just like a Discover or American Express. To do this, the company must sell the product to consumers and retailers, and the company starts with the cannabis industry primarily out of desperate need. But don’t call SuperNet a cannabis company.
COO Wholrab pointed out that SuperNet is not a cannabis company. The goal is to create a new credit facility, she said, and not just for the cannabis industry.
“I don’t want people to think that we are a cannabis company,” Wholrab said. “Were not. We’re a fintech company that serves the cannabis industry as part of our strategy. That’s our goal. [Cannabis] was not my goal when I decided to help Michael.
“We’re bigger than a cannabis supplier,” Wholrab continued, “because we’re building a basic payment system. It’s not just for cannabis. Our first product is for cannabis. build can be used in normal credit or debit card processing, can be used to network and support the payments industry in general.
SuperNet launches its first credit card in January 2022 and is now recruiting California retailers. The company is also looking to work with different financial outlets. Tsang explained that SuperNet was looking to use its rails to fuel other payments from other financial providers.