Chicago is home to some of the fastest high speed financial trading operations, built around a small but influential group of financial technology companies housed on Jackson Boulevard, next to the Chicago Board of Options Exchange. Now, Spence, a payments collaboration between a fintech veteran and a Chicago bank with roots in trading with high risk clients, was publicly rolled out this week with the aim of solving cannabis dispensaries’ cash payments problems.

“It’s like creating a Venmo account,” says Spence CEO Chris Rentner, “We verify your information, you connect your bank account and get a QR code personalized for yourself. When you buy something at a dispensary, you show your QR code. That’s part of the mobile experience, and you can insert it to your Apple or Google wallet, so you can use that for payment. You click authorize and you can move money from your bank account to the dispensary.”

Working with Chicago-based Burling Bank, who will manage payment clearances from buyer to seller, Rentner’s app is unlike many other current cannabis payment apps on the market because it does not require buyers to pre-load cash to a holding account, nor does it charge an ATM fee. 

Rather than rely on credit card rails or an ATM system, Spence utilizes Automated Clearing House (ACH) payments, the system typically used for transfers between banking institutions for automated bill pay and payroll direct deposit. Burling Bank is managing these transactions, ensuring the compliance and oversight, Rentner says.

Payments are a constantly vexing problem for American dispensaries, since the federal government still classifies cannabis sales as illegal, Visa, Mastercard and federally-chartered banks don’t want to risk getting shut down by investigators from the Department of Justice. Burling Bank is state-chartered in Illinois.

“Because the federal government has said this is an illegal substance, there is no nationally chartered, FDIC insured bank that will do this – knowingly,” says Beth Horowitz Steel, a partner at payments consulting firm Glenbrook

“Credit unions, and local banks in states where it’s been legalized are the ones who have been supporting this. Because it’s not federally legal, Mastercard and Visa say it’s against their rules. The only way to do it that’s legit is an account to account transfer when both the buyer and seller are both in states where it is legal.”

And that is exactly what Spence seems to be able to do.

“Square had a trial with some dispensaries,” said Horowitz Steel. “I bet what happened then was that Wells Fargo, who is Square’s bank, said you can’t do this. So Burling Bank is our hero in this, because they have a fair amount of oversight they can comply with.”

Burling Bank is one of the few banks banking cannabis in Illinois, and probably the only one that publicly acknowledges its role in cannabis. Most banks in the cannabis space keep their role quiet.

For dispensaries able to convince a large number of customers to use Spence – PharmaCann’s North Aurora Verilife store is currently testing the app – the app offers a number of boons over ATM payments or even credit cards, if they were legal for cannabis. Rentner says dispensary customers pay no fees, and Spence’s fees will be cheaper than credit cards, which often run 5 to 8% for CBD stores. Payment transfers are executed in 4 to 18 hours, where credit cards often take three to five days. Fees to sellers are based on processing volume and other services purchased from Spence, which also operates loyalty and discount programs through the app.

Spence’s app, which could also be used legally for online payments or stores anywhere in the U.S., must be paired with a compatible point of sale system, which for now is only the Microsoft 365 Dynamics Nav system, the POS used by PharmaCann. One other is currently in development, Rentner says, with more to come soon.

“A POS transaction with a credit card can lift the transaction by 18%,” says Rentner. “We think our system has the ability to lift transaction size.”

Note: The original article suggested Burling bank had “roots in cryptocurrency.” The bank does deal with cryptocurrency from its trading clients, but does not manage it as a key part of its business. The article has been updated to reflect this.


Editor Mike is a co-founder and the editor of Grown In, a U.S. national cannabis industry newsletter and training company. His career has taken him from Capitol Hill to Chicago City Hall, from...