The Penny Shortage Is a Serious Cannabis Retail Problem
The penny shortage is pushing dispensaries into cash rounding that can trigger receipt gaps, reconciliation headaches and compliance scrutiny.
The penny shortage is not showing up as a national emergency. It is showing up where it always does first: at the register, in the drawer, on the receipt, and in the quiet panic of a closing shift that cannot get the numbers to tie out.
For most retailers, a missing one-cent coin is a mild annoyance. For cannabis dispensaries, the penny shortage can feel like a compliance trap disguised as pocket change. Cannabis remains more cash-heavy than conventional retail because federal illegality still chills mainstream banking and card-network participation, even as workarounds and limited payment options spread. Cash-heavy operations mean more customers paying in bills, more change-making, more opportunities for tiny rounding differences to snowball into the kind of variance that attracts uncomfortable questions.
This is happening as the federal government has moved from debating the penny’s value to pulling the plug on producing new ones. The Treasury has said it has stopped manufacturing new pennies, while the Federal Reserve will keep recirculating the billions already out there for as long as it can. In practice, that combination creates the worst version of the transition: the penny remains legal tender, but the penny shortage makes it unreliable as a tool for daily commerce.
A federal decision, a very local problem
The U.S. Mint has framed the shift plainly: the Treasury secretary decided to suspend production of the one-cent coin after concluding it is no longer necessary to meet the nation’s needs, with the decision influenced by rising production costs. Treasury guidance has been equally direct about the reality that matters to store operators: the government has stopped making new pennies, yet the Federal Reserve will continue to recirculate roughly 114 billion pennies currently in existence for as long as possible.
Those two truths can coexist on paper. They collide in real life.
A dispensary can operate in a city where customers swear they have “tons of pennies” at home, while the store cannot get a single roll from its bank on a Tuesday. Penny supply is less about national totals than circulation. Coins get hoarded, lost in couch cushions, dumped into charity jars, and stranded in homes where no one bothers to spend them. The penny shortage becomes a distribution problem as much as a production problem.
The Federal Reserve’s own recent moves underscore the point. In January, the Fed said it would resume accepting pennies from banks and credit unions at commercial coin distribution locations beginning Jan. 14, a change meant to support circulation for commercial activity. Even that type of back-end adjustment does not guarantee a smooth front-end experience for a cashier trying to make 37 cents in change without pennies in the drawer.
Why cannabis feels the penny shortage first
Cannabis retail runs on tight controls because it has to. Every gram and every sale is tracked, reconciled, and auditable, with regulators and tax agencies expecting clean documentation. In Arizona, adult-use marijuana is subject to a 16% excise tax on retail sales, on top of transaction privilege taxes that vary by location. That layered tax structure makes the “to the cent” math unavoidable, even before a store starts thinking about rounding.
On top of tax complexity, the operational reality is still shaped by the banking gap. The American Bankers Association has stressed that banks must comply with both federal and state law, and cannabis’ federal status creates risk that continues to limit full participation by many financial institutions. Congress has not delivered a clean legislative fix, either. As of late January, industry reporting noted that neither the SAFE Banking Act nor the SAFER Banking Act had been passed.
That is why the penny shortage lands differently in cannabis. More cash transactions mean more times a budtender has to make exact change. More change-making means more chances for a transaction total that ends in $0.01, $0.02, $0.03 or $0.04 to become a human decision instead of a system output.
The penny shortage also hits cannabis culture in a specific way. Dispensaries lean hard on pricing psychology: the $19 eighth, the $29 vape, the $99 ounce deal. Those prices are built to move product and feel competitive, especially in markets like Arizona where consumers can compare menus across Phoenix, Tempe, Mesa, and Tucson in seconds. Add taxes, local rates, and a receipt total that lands on an odd cent amount, and the penny shortage turns a carefully built price point into a messy checkout moment.
Rounding is easy to explain, hard to run
Most customers understand the concept of rounding. They have seen it in Canada, heard about it from relatives, or dealt with it at a corner store. The failure point is not the concept. The failure point is execution.
The penny shortage forces a dispensary to choose between improvisation and policy. Improvisation looks like one register rounding down to avoid complaints while another rounds up because the drawer is short. Improvisation looks like a manager telling staff to “just make it work” during a rush. Improvisation looks like a customer arguing over two cents because the total on the receipt does not match the cash that changed hands.
A predictable rounding policy turns that chaos into something that can be defended. Treasury and Mint guidance around this transition has emphasized that pennies remain legal tender, and rounding is mainly relevant when a business cannot make exact change in cash due to penny scarcity. The takeaway for dispensaries is not that rounding is optional. The takeaway is that rounding has to be consistent, transparent, and reflected in records.
That is where point-of-sale systems can become either a shield or a liability. Many systems still calculate every line item, discount, and tax to the cent, then produce a final total with two decimals. The cash drawer, stuck living in a penny shortage reality, needs a second step: a cash total rounded to the nearest nickel. If the POS cannot display that as a separate adjustment, the store ends the day with paperwork that looks wrong even when the math is honest.
Refunds and exchanges complicate things further. A return processed “to the cent” can create a mismatch if the original cash transaction was rounded. A store can handle that cleanly if the receipt shows a rounding adjustment line item and the system stores both the exact total and the rounded cash tender. A store can stumble into daily variance if it relies on memory and manager overrides.
The compliance risk is not theoretical
Cash variances happen in every retail segment. Cannabis does not get treated like every retail segment.
In Arizona, the Department of Revenue tells marijuana businesses to expect auditors to request detailed records, including inventory records, returns, and other documentation, with the ability to ask for additional records based on findings. Inventory control is also explicitly tied to documented audits in Arizona’s administrative code. That broader compliance environment is why a small cash reconciliation issue can feel larger than it is.
The penny shortage creates two basic risk pathways. The first is operational drag: staff spend more time investigating pennies instead of running the floor, managing inventory, or helping customers. The second is perception risk: repeated variances, even small ones, can look like weak controls. Weak controls are the one thing a dispensary cannot afford to project in a market where cash handling already raises safety and compliance stakes.
None of this requires bad intent. Sloppiness is enough.
A store that rounds inconsistently across shifts can produce patterns that look suspicious. A store that fails to document its rounding method can struggle to explain why the POS total does not match cash on hand. A store that tries to absorb rounding differences without tracking them can slowly create shrink that never gets tagged correctly.
The penny shortage turns a one-cent coin into a daily systems test.
Who eats the difference, and how do you prove it?
Every rounding decision has a winner and a loser in that moment, even if the amounts are tiny. A customer benefits when a total rounds down. The store benefits when a total rounds up. Over time, consistent “nearest nickel” rounding is expected to net out close to neutral, but the debate is not settled in the minds of consumers or economists.
Research published by the Federal Reserve Bank of Richmond has described a potential “rounding tax,” estimating that rounding cash transactions to the nearest five cents could cost consumers millions annually, even if the per-transaction impact is small. The argument is not that rounding will bankrupt anyone. The argument is that pricing patterns can cluster in ways that create a tilt, especially if retailers keep using price points that frequently land on certain ending digits after tax.
Dispensaries face a practical question that matters more than ideology: does the store let the customer win every time to avoid conflict, or does it apply neutral rounding even if that means the customer sometimes pays a few cents more?
A defensible answer starts with policy and ends with documentation. If a dispensary chooses customer-friendly rounding, it should record that as a defined adjustment rather than letting it disappear into a drawer shortage. If a dispensary applies standard nearest-nickel rounding, it should show that adjustment on receipts so the customer sees the rule applied, not a cashier’s whim.
The penny shortage punishes retailers that cannot prove consistency.
Arizona is already debating “Swedish rounding”
Some states will drift into rounding with informal norms. Arizona appears to be moving toward formal rules.
In early February, Arizona lawmakers were weighing proposals that would require “Swedish rounding” for cash transactions, rounding the final total transaction amount to the nearest five-cent increment after taxes and fees are calculated, while excluding non-cash payments. Reporting in Arizona has also highlighted proposed notice requirements so customers are explicitly told that cash transactions are rounded to the nearest five-cent increment pursuant to state law.
That kind of standardization matters for cannabis because multi-location operators do not want one rule in Phoenix and another in Flagstaff, then a third rule across the state line. Clear state guidance also gives dispensaries something to point to during audits and customer disputes.
Formal rounding rules still leave open questions for regulators and tax agencies. Taxes are calculated to the cent, and Arizona’s cannabis taxes add meaningful complexity to checkout totals. Regulators will likely care less about the rounding itself and more about whether the business can show how it handled the rounding delta in its books.
What “best practice” looks like in a penny shortage world
A penny shortage does not call for heroics. It calls for boring consistency.
A written rounding policy should state that rounding applies to the final cash total, not each item. It should define the method, nearest $0.05, and explain how the store handles the difference. The best version is readable enough to train new staff and specific enough to satisfy an auditor.
Point-of-sale configuration should do the heavy lifting. If the POS can apply end-of-transaction cash rounding automatically, the store avoids staff freelancing. If the receipt prints a separate rounding adjustment, customers see the rule and the drawer reconciles cleanly against recorded tenders.
Staff training should focus on communication and repetition. A cashier should be able to explain, in one sentence, why the cash total differs from the exact total. The explanation should not sound defensive. It should sound routine, since the policy is routine.
Cash controls should treat penny-related differences as a known category, not a mystery. Daily variance thresholds, escalation steps, and recurring issue documentation help a store distinguish between normal rounding noise and a deeper controls problem. In a dispensary, that distinction matters because cash handling is already scrutinized.
Customer communication should be visible and consistent. A sign at checkout and the receipt line item do more than reduce arguments. They create transparency that fits the ethics of regulated commerce. The penny shortage should not require customers to guess what rule is being applied to their money.
The penny shortage will outlast the penny
The transition away from new pennies is not a switch flip. Treasury has made clear that existing pennies will remain in circulation as long as consumers keep using them, and the timeline depends heavily on behavior. That means the penny shortage will likely be uneven and persistent, arriving in waves that vary by bank, by region, and by how aggressively coins get recirculated.
Over the long run, cannabis payment evolution could blunt the issue. If banking access expands and compliant digital payment options keep growing, fewer transactions will require change-making. Federal reform, including rescheduling efforts and banking debates, remains active and politically contested. Dispensaries cannot run their operations on hope, though. The penny shortage is here now, and it is forcing cash management decisions now.
CIGAWEEDS pays attention to these kinds of unglamorous problems because they shape the real customer experience more than any marketing slogan. Arizona’s cannabis market has matured fast, with shoppers who notice the details and regulators who expect precision. A penny shortage sounds like a joke until it is your drawer, your variance report, and your compliance file.
The solution is not improvisation. The solution is a standardized rounding rule, a POS that can display it, and documentation strong enough to make two cents feel like nothing again.
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