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Underwriting

What is a rolling reserve in cannabis processing?

Short answer

A rolling reserve is a percentage of your settled volume that the provider withholds for a set period — commonly a single-digit percentage held for three to six months — and releases on a rolling schedule. It protects the provider and sponsor bank against refunds, returns, disputes and losses, and it is a real cash flow cost to the merchant.

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The fuller explanation

Reserves come in three shapes: rolling (a percentage of each settlement, released after a defined window), capped (accumulating until a ceiling is reached, then releasing), and upfront (a deposit taken at boarding). Which one you get depends on your risk profile, history and the sponsor bank's policy.

Negotiate the structure, not just the number. A lower percentage with an indefinite hold can be worse than a higher percentage with a firm ninety-day rolling release and a written cap. Get the release schedule, the review cadence and the conditions for reduction in the agreement.

Important caveats

  • Reserves can be increased mid-relationship if risk indicators change, subject to your agreement.
  • Release schedules pause during disputes or investigations.
  • Reserve funds are usually not interest-bearing for the merchant.

Other ways people ask this

These phrasings share the same answer, so they live on this page rather than on duplicate URLs.

  • Cannabis processing reserve explained
  • Why is my processor holding a percentage?
  • Merchant account reserve requirements

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Where this fits

GuideTHCA Payment Processing: Merchant Accounts for Hemp-Derived THCA SellersTHCA sits in a grey zone that most processors treat with more caution than ordinary hemp, not less. This page explains how underwriters actually look at a THCA business, what documentation carries weight, and how to build a setup that survives scrutiny.Open GuideCommercial: applying for and getting approved for a cannabis merchant account.This page is about approval. Not which method to use — that is the pillar guide — but what a reviewer looks at, what makes a file fail, and how to assemble an application that gets a decision instead of a silence.Open QuestionWhat makes a dispensary a high-risk merchantProviders classify cannabis as high risk because of federal illegality, heightened Bank Secrecy Act obligations, network acceptance restrictions, cash-heavy operations, state-by-state regulatory variability and the reputational and enforcement exposure the sponsor bank carries. The classification drives pricing, reserves, documentation demands and monitoring intensity.Open QuestionWhat makes a merchant account high riskA high-risk merchant account is an ordinary merchant account that an acquiring bank has classified as carrying above-average financial, regulatory or reputational risk. The mechanics of accepting and settling payments are the same; what changes is the underwriting depth, pricing, reserve and monitoring attached to the account. High risk is a bank classification, not a legal status or a mark against the business.Open QuestionHow to get payment processing for a dispensaryYou apply through a provider whose sponsor institution knowingly serves cannabis, disclose the business fully, and submit a document pack covering licensing, ownership, compliance procedures, financials and processing history. Underwriting review commonly takes days to several weeks, and approval usually comes with pricing, reserve and monitoring conditions.Open Articlereduce merchant account reserveA reserve is money a processor holds back from your settlement to cover the cost of disputes, refunds, or an abrupt account closure, and cannabis reserve terms…Open

Read next

  1. 1THCA Payment Processing: Merchant Accounts for Hemp-Derived THCA SellersTHCA sits in a grey zone that most processors treat with more caution than ordinary hemp, not less. This page explains how underwriters actually look at a THCA business, what documentation carries weight, and how to build a setup that survives scrutiny.
  2. 2Commercial: applying for and getting approved for a cannabis merchant account.This page is about approval. Not which method to use — that is the pillar guide — but what a reviewer looks at, what makes a file fail, and how to assemble an application that gets a decision instead of a silence.
  3. 3What makes a dispensary a high-risk merchantProviders classify cannabis as high risk because of federal illegality, heightened Bank Secrecy Act obligations, network acceptance restrictions, cash-heavy operations, state-by-state regulatory variability and the reputational and enforcement exposure the sponsor bank carries. The classification drives pricing, reserves, documentation demands and monitoring intensity.

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