Mastercard Demands Cannabis Shops to Stop Accepting Card Payments

With more and more states in the United States recently deciding to legalize cannabis, the financial and legal landscape surrounding the cannabis industry remains complicated.

Mastercard, one of the major payment processors, has decided to take a significant step by ordering banks in the U.S. not to accept cannabis purchases with their debit cards, citing a federal law that makes the sale of cannabis illegal. This decision underscores the challenges faced by the cannabis industry and the limited payment options for cannabis buyers, even in states where cannabis is legal.

Read more about the decision of Mastercard to ban cannabis payments and find the latest cannabis news of the day with the Hemp.im mobile pp.

A legal gray area for cannabis

Despite the legalization of medical and recreational cannabis in many states, cannabis is still illegal at the federal level. This inconsistency between state and federal laws poses a challenge for cannabis businesses. As a result, major banks and credit card companies have typically refrained from allowing cannabis-related transactions, leaving buyers with few payment alternatives in regions where cannabis is legal.

Mastercard reasserted its position in an emailed statement, reiterating that the federal government considers the sale of cannabis to be illegal, making it impossible to accept such transactions on Mastercard systems. The approach complies with federal regulations but raises questions about the financial viability of the cannabis sector.

However, some buyers and pharmacies have found a way around this problem by using PIN transactions with debit cards to make cannabis purchases. Mastercard reacted quickly to the problem, investigating it and then instructing financial institutions to terminate their services to cannabis merchants. The company followed its policies to ensure compliance with federal laws and regulations.

Mastercard decision’s impact on the cannabis industry

Josh Glasstetter, a spokesman for the U.S. Cannabis Council, expressed concerns about the ban. He stressed that the cannabis industry, which is estimated to generate $30 billion in revenue this year, relies primarily on cash transactions. This reliance on cash puts workers and communities at greater risk due to potential security threats.

Those who support cashless transactions in pharmacies argue that cash-based businesses attract criminal activity. Legitimate businesses that are forced to accept only cash could lead to increased risks for employees and customers, as robberies of marijuana stores are on the rise in some states.

In addition, Mastercard’s announcement is a reminder of the urgent need for Congress to act to address issues related to access to banking and financial services for legal cannabis businesses at the state level.

The SAFE Banking Act

The SAFE Banking Act, introduced in Congress, aims to protect banks and their employees from being penalized for providing services to cannabis companies that are legal under state laws. This bill has the potential to revolutionize the cannabis industry in the United States, opening up new payment methods and key funding sources.

However, some legislators are expressing concerns about potential loopholes in money laundering laws and the difficulty of catching criminals if the bill goes into effect. As a result, the Senate Banking Committee is debating the SAFE Banking Act in-depth, and its fate remains uncertain.

Public opinion on the legalization of cannabis

Public opinion on the legalization of cannabis has evolved over the past few decades. A survey by the Pew Research Center found that 88 percent of Americans support legalizing marijuana for medical use, while 59 percent support legalizing it for recreational use.

Mastercard’s decision to ban marijuana purchases with its debit cards underscores the complex and dynamic nature of the cannabis industry. As more states legalize cannabis, the inconsistency between state and federal laws poses major challenges for both companies and consumers in the industry. The SAFE Banking Act remains a key point of contention, with the potential to revolutionize payment options for the cannabis market.

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(Featured image by Blake Wisz via Pixabay)

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