A customer pays for his marijuana at the Euflora Dispensary in Denver on March 11, 2015. (RJ Sangosti, Denver Post file)

New Canopy Boulder startup’s app allows pot shops to offer cash back

BOULDER — Cannabis services accelerator Canopy Boulder welcomed its spring class Monday, and one of the most potentially disruptive startups has nothing to do with pot.

Santa Monica-based Spare is an ATM-replacement app, giving merchants the power to dispense cash to consumers — and decide how much, or if, to charge for the service.

The app uses the debit card cash-back model: Money is transferred from a bank account to the merchant, who hands real dollars to the customer. Swap a phone for the card and you get Spare.

Founded in 2013 by D’ontra Hughes, Spare isn’t specifically targeted to the marijuana industry. But Hughes sees a major opportunity for businesses that deal primarily in cash.

“The objective is to extract cash from the businesses,” Hughes said. “We are giving the dispensary the ability to limit the amount of cash they have on hand” and limit the hassle and liability that comes along with it.

Because their product is federally illegal (and banks need federal insurance to operate), only about half of dispensaries have bank accounts, according to research from cannabis investing network ArcView Group.

Take into account the $996 million of pot sales in Colorado last year, and that adds up to a heck of a lot of cash floating around — cash that costs money to track and transport.

“For the people that do not have a bank account, that (free-floating cash is) the most risky and subject to IRS action,” said Travis Howard, owner of Gunbarrel’s of Green Dream Cannabis. “Any service that takes that out is going to have an advantage.”

Howard’s dispensary does have a bank account, but he said the potential to generate revenue from Spare is still “interesting” to him — and to any other business hoping to make an extra buck from their spare change.

Canopy managing director Micah Tapman compares Spare to other “slack-capturing” companies like Uber or Airbnb.

“Exactly the way Airbnb takes a spare room and turns it into a hotel for homeowners,” Tapman said, Spare finds a use for the “slack” cash dispensaries have sitting in their registers and turns it into a way to make money.

“The access to dispensing cash — Spare brings that regardless of the industry you’re in,” Hughes added.

Shay Castle: 303-473-1626, castles@dailycamera.com or twitter.com/shayshinecastle

This story was first published on DailyCamera.com