Customers purchasing cannabis products online can now link their bank accounts through the online sales platform Dutchie.   

On Wednesday, Dutchie announced the launch of the point of sale component of its software after months of testing with a select group of retailers.

Dutchie is used by more than 5,500 recreational cannabis businesses.

“It is important that companies like Dutchie are attempting to normalize the shopping experience in our industry for both the convenience of the customer and the efficiency of the retailer,” said Paul Zadoff, CEO of Tokyo Starfish, a Bend cannabis retailer. “We hope efforts like this are another step toward acceptance by banks to work with legitimate companies in the cannabis industry.”

Dutchie isn’t the only company to use electronic fund transfers made between banks and credit unions across what is called the Automated Clearing House network, said Zach Lipson, co-founder and chief product officer of Dutchie.

Soon after entering the e-commerce space for cannabis, Lipson, and his brother, Ross Lipson, realized that consumers wanted to be able to process their purchases online just like they do for every other online purchase using linked accounts.

“We started to work with the point of sale system and we realized there was a big opportunity at the point of sale side,” Zach Lipson said. “The missing component was with the payment side. Ninety percent of all transactions are in cash. The industry is behind because companies won’t take the risk on card payments, so we have to rely on cash.”

Since recreational cannabis use was legalized in Oregon in 2014, consumers have had to use cash only to purchase products as federal laws prohibit banks from accepting money from cannabis sales because the U.S. Drug Enforcement Agency has classified it as a controlled substance.

Banking and access to loans have always been an issue for cannabis firms in states where its use is legalized, said Beau Whitney, of Portland-based Whitney Economics, a cannabis economics consultant. Some cannabis firms have been able to tap into funds, but generally at higher interest rates, or have had to be creative in how they deposit funds into banks.

“With recent interest rate hikes by the Federal Reserve, interest rates are so high that (funds) are out of reach for most small entities. It just doesn’t pencil out,” Whitney said. “Access to capital is drying up.”

Dutchie burst onto the cannabis scene in 2017 with a platform that allows companies to sell their products online and keep track of inventory. After just a few years in business, Dutchie garnered $18 million in venture capital and expanded its company.

During the early days of the pandemic, when businesses were shuttered and recreational cannabis companies were deemed essential by the governor, the platform served cannabis retailers well by allowing contactless sales.

Ross Lipson has a history of building online platforms. In 2008, Ross Lipson started an online food ordering program in Canada that he later sold in 2012 called GrubCanada. Online ordering is a big business for retailers. In the first three months of 2022, online orders totaled $250 billion in products in the United States, according to the U.S. Census Bureau. That represented a 6.7% increase over the same period the year before, according to the report.

As the software evolves and expands its services, companies like Substance can improve sales and workflow, said Jeremy Kwitt, owner of Substance in Bend.

“Our (customers) benefit from improved online and in-store experiences,” Kwitt said. “We love to see Dutchie’s advances because they directly impact the work we do, especially our ability to provide an exceptional retail experience in our community.”

 

“It is important that companies like Dutchie are attempting to normalize the shopping experience in our industry for both the convenience of the customer and the efficiency of the retailer.”

Paul Zadoff, CEO of Tokyo Starfish, a Bend cannabis retailer