Marking another setback for the marijuana industry, Mastercard recently sent cease-and-desist letters to banks and payments processors that assisted in the purchase of legal cannabis.
In the letters, the credit card giant told the recipients to suspend accepting marijuana transactions using PIN debit cards on its network, according to a July 26 Bloomberg report.
Mastercard did not respond to Kiplinger’s request for comment.
For an already-struggling cannabis industry, this latest move leaves customers scrambling for additional purchasing options. Cannabis transactions are usually carried out with debit cards or cash.
Although medical and recreational marijuana is legal in 38 states, retailers often find themselves left out of standard banking and payments processing systems because pot remains illegal at the federal level, according to MarketWatch.
“Mastercard’s move is another blow to the payments industry and cannabis operators nationwide,” Justin Kahn, CEO and co-founder of Reepher, told Kiplinger.
Many operators have been caught off guard
“Its actions and the subsequent actions taken by the payments providers that serve the cannabis industry have caught many operators off guard. Operators have had their funds frozen and services turned off. It’s just another nail in the coffin of cannabis payments,” said Kahn, whose company offers the first behavior-based product with insurance coverage.
The American Trade Association for Cannabis and Hemp as well as cannabis trade groups in 16 states and Washington, D.C. recently lobbied Senate leaders to pass the Secure and Fair Enforcement (SAFE) Banking Act.
The legislation, which was reintroduced in the House and Senate last April by a group of bipartisan lawmakers, is unlikely to move out of committee before Congress breaks for its August recess. It aims to enable cannabis businesses to access banking services by circumventing cash-only transactions that can expose businesses to public safety concerns, including robberies.
Meanwhile, the 17th annual Benzinga Cannabis Capital Conference take place on September 27-28 in Chicago. Among the featured speakers this year are J.B. Pritzker, governor of Illinois, and Albert Bryan Jr., governor of the U.S. Virgin Islands.
