Ban Cannabis Purchase: Mastercard moves to ban cannabis purchase on its debit cards
Mastercard, one of the leading global payment processing companies, has dealt a significant blow to the cannabis industry in the United States by instructing financial institutions to cease allowing marijuana transactions on its debit cards. This move comes at a time when the cannabis industry already faces challenges operating on the fringes of the financial system due to the federal illegality of marijuana, despite its legalization for medicinal and recreational use in several states.
At present, medical marijuana enjoys legal status in 38 states within the United States. Additionally, 23 states, including Washington DC and all US West Coast states, have also legalized the recreational use of marijuana for adults aged 21 and above.
In Canada, cannabis was nationally legalized in 2018, allowing customers to frequently make purchases using credit or debit cards. But, the company’s decision upon ban cannabis purchase is rooted in the fact that cannabis sales remain illegal at the federal level, and as such. Mastercard cannot support transactions related to this prohibited activity within its systems. Consequently, most banks in the country have been reluctant to provide banking services to cannabis companies, leaving the industry with limited access to traditional financial tools.
Ban Cannabis Purchase: Challenges That Will be Appear
Brady Cobb, the CEO of Sunburn Cannabis, expressed dismay over Mastercard’s action on Ban cannabis purchase. He stated that it further exacerbates the challenges faced by state-legal cannabis businesses and the patients and consumers seeking legal access to marijuana products. Similarly, Darren Weiss, President of Pot firm Verano, emphasised the need for ongoing advocacy efforts to push for cannabis reform in Washington. He aims to engage with elected officials and stakeholders to foster discussions supporting the safe and legal growth of the cannabis industry throughout the United States.
The situation of Mastercard’s decision on ban cannabis purchase is further complicated by the status of the SAFE Banking Act. A critical piece of legislation that would alleviate banking restrictions for the cannabis industry. The Act aims to make it easier for cannabis companies to access banking services, which would, in turn, enhance the industry’s legitimacy and financial stability. However, Republican Senator John Cornyn recently expressed skepticism about the bill’s passage, suggesting that it might face hurdles in Congress.
As the cannabis industry continues to navigate the complex legal and financial landscape in the United States, stakeholders, including businesses, consumers, and lawmakers, remain engaged in ongoing discussions about the future of marijuana legalization and its integration into the mainstream economy.
Ban Cannabis Purchase: Industry Executives Criticized the Move.
Morgan Paxhia, a prominent figure in the cannabis industry as co-founder and managing director of Poseidon Asset Management, which oversees the popular AdvisorShares Poseidon Dynamic Cannabis ETF (PSDN), expressed concern over Mastercard’s recent decision to block debit card transactions related to cannabis purchases. This move by Mastercard serves as a stark reminder of the current classification of cannabis as a Schedule I substance under federal law, placing it in the same category as heroin.
Paxhia believes that such actions by financial institutions are indicative of the ongoing challenges faced by the cannabis industry due to its legal status at the federal level. By being classified as a Schedule I substance, cannabis companies and retailers often encounter obstacles in accessing traditional banking services, leading to an increased reliance on cash transactions.
The consequence of Mastercard’s move, according to Paxhia, could potentially lead to an influx of cash transactions in legal cannabis retail stores. This, in turn, raises concerns about heightened risks associated with handling large sums of cash. The situation may create an opportunity for criminal organizations to take advantage of the cash-heavy environment, potentially leading to an uptick in criminal activities.
It is evident that the current regulatory landscape surrounding cannabis poses significant challenges for both the industry and consumers. Until there is a change in federal cannabis policy, such financial restrictions will likely continue to impact the cannabis market, making it essential for stakeholders and policymakers to address these issues proactively to ensure the industry’s safety and growth.