HomeBusinessMastercard Moves to Stop...

Mastercard Moves to Stop Use of Debit Cards at Cannabis Shops

Mastercard instructed U.S. financial institutions this week to stop allowing purchases of cannabis on its debit cards, stripping customers of a convenient way to purchase marijuana without cash. Cannabis businesses say the decision will increase the risk of robbery and violent crime.

Because federal law prohibits the sale, possession and use of marijuana in all its forms, Mastercard said that purchases were not allowed on its systems, even when customers use bank cards and PINs to access their own cash to buy cannabis in states where the drug is legal for recreational or medical reasons.

“As we were made aware of this matter, we quickly investigated it,” a spokesman for Mastercard, one of the world’s largest payment processors, said in a statement on Friday. “In accordance with our policies, we instructed the financial institutions that offer payments services to cannabis merchants and connects them to Mastercard to terminate the activity.”

Medical marijuana is legal in 38 states, three territories and the District of Columbia. Recreational use of the drug is legal in 23 states, two territories and the District of Columbia.

Because most big banks and credit card providers will not work with marijuana businesses, many operate by cash only, making them targets for a growing number of robberies, particularly when transporting large amounts of cash for deposit.

Despite the hurdles with banks, the cannabis boom continues to help local economies thrive, proponents of legalization say. National sales could exceed $57 billion annually by 2030 just from states where such sales are permitted, Quartz reported. When states that are poised to legalize it are factored in, the national forecast exceeds $72 billion in sales.

Cannabis companies have begun criticizing Mastercard’s decision, some raising concerns about safety.

Morgan Paxhia, a co-founder of Poseidon Investment Management, which oversees AdvisorShares Poseidon Dynamic Cannabis, said in an interview on Friday that small stores might not have the financial resources to fight against crime. Once taxes are paid, he said, “there’s really not a lot of cash left for, you know, for just operating expenses like security. And so, that’s where I see a disproportionate impact on the smaller businesses in this industry.”

Mr. Paxhia said Mastercard’s decision was a “painful” example of the federal government being unwilling to recognize cannabis as an industry. “We’ve also seen this over the years where a payment solution starts to take shape in our industry and then they get shut down,” he said. “It’s really because we have not seen federal laws changed that gives the banking industry confidence to bank.” He expects Visa to follow in Mastercard’s footsteps soon.

Darren Weiss, the president of Verano, a multistate marijuana operator, said on social media that it “never ceases to amaze me that an industry that employs hundreds of thousands of people, provides billions in economic benefits, and promotes safer alternatives to pharmaceuticals and commonplace vices continues to be treated like a pariah.”

Paul Armentano, the deputy director of NORML, an organization that works to change public opinion in favor of legalization, said in a statement on Friday that no industry can operate safely, transparently or effectively without access to banks.

“Ultimately, Congress must amend federal policy,” he said, “so that these growing numbers of state-compliant businesses and those millions of Americans who patronize them, are no longer subject to policies that undermine their ability to conduct transactions safely and effectively.”

Going cashless has not been easy. In 2017, Hawaii became the first state in the nation to have a cashless dispensary system with the use of the payment app CanPay. The app can be used for cannabis transactions in a handful of other states, including California and Colorado, The Associated Press reported.

More recently, Congress has been evaluating the proposed Secure and Fair Enforcement Banking Act, or SAFE Act, which would legalize marijuana banking by stipulating that the proceeds of a state-sanctioned marijuana business would not be considered illegal under federal laws against money laundering.

The Senate Committee on Banking, Housing and Urban Affairs held its first hearing on the measure in May. In his opening remarks, Senator Tim Scott, Republican of South Carolina, noted that the Justice Department was concerned that the bill “could create loopholes in our money-laundering laws, making it harder to catch criminals that traffic weapons, fentanyl and even people.”

But the senator, a former small business owner, said he also understood the importance of having a relationship with a financial institution. “A banking relationship is crucial to providing safety and stability for a company,” he said, “both employees and the customers it serves.”

Source link

Most Popular


Please enter your comment!
Please enter your name here

More from Author

Read Now

Team India Squad for T20 World Cup 2024 Announced: Here’s India’s official team for T20 WC – Republic World

India T20 World Cup squad announcement | Image:APTeam India's squad for the upcoming ICC T20 World Cup 2024 has been announced. On Tuesday, the selection committee led by chief selector Ajit Agarkar convened in Ahmedabad and zeroed in on a 15-member unit, which they deem is the...

Justice Minallah says state has to protect judges, independence of judiciary

Justice Athar Minallah on Tuesday said the state had to protect the judges and the judiciary’s independence as the Supreme Court took up a suo motu case pertaining to allegations of interference in judicial affairs.A six-member bench resumed...

Stock futures slip slightly as investors look ahead to Fed decision, megacap earnings: Live updates

Traders work on the floor of the New York Stock Exchange during morning trading on February 29, 2024 in New York City. Michael M. Santiago | Getty ImagesU.S. stock futures fell slightly Tuesday morning after a positive start to the week, as investors brace for megacap earnings,...

Europe’s Economic Laggards Have Become Its Leaders

Something extraordinary is happening to the European economy: Southern nations that nearly broke up the euro currency bloc during the financial crisis in 2012 are growing faster than Germany and other big countries that have long served as the region’s growth engines.The dynamic is bolstering the...

Trump’s Plans for the Fed Make No Sense, Even for Him

A second Trump administration might be very different from the first, and that includes how the president treats the Fed. Donald Trump complained a lot about the US Federal Reserve when he was president, jawboning for lower interest rates and questioning its competence. Yet at the...

Police to launch raids to find migrants to deport to Rwanda, Cabinet Minister claims

Police will mount raids to find missing migrants so they can be deported to Rwanda, a Cabinet minister has said.Health Secretary Victoria Atkins was commenting on reports that the Home Office has lost contact with thousands of people who are set to be removed from the...

The French #Metoo Scandal Unraveling in Weinstein’s Shadow

French actor Gérard Depardieu was ordered to stand trial for allegedly sexually assaulting two women on a film set three years ago, marking the latest legal escalation for the 75-year-old movie star who has become a central figure in France’s #MeToo movement.The announcement coincides with a...

Hong Kong Bitcoin and Ether ETFs Have Soft Debut

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired...

Customization Overview | Halo Infinite CU32

Operation: Banished Honor arrives on April 30 and you’re gonna want to look the part! After all, the Banished welcome all who pledge their service to Atriox, and your new allegiance and mindset demands a new outfit, so let’s find out more about the customization that...

T20 World Cup 2024 Squads: From India To Australia, Check Here Team-Wise Full Players List, Venues, Fixture, Timings And More

ICC T20 World Cup 2024 Cricket Matches Full Schedule: The T20 World Cup 2024 promises to be an exhilarating showcase of cricketing talent from around the globe. With teams from various nations competing for the prestigious title, fans can expect intense matches filled with thrilling moments...

How the Twins’ summer sausage celebration got made: It sparked the offense, but should they eat it?

CHICAGO — With Abe Froman unavailable, I called sausage expert Elias Cairo to address Rocco Baldelli’s concerns about a potentially hazardous pre-encased meat currently residing in the Minnesota Twins clubhouse.Nearly a week after it arrived and with the package showing visible signs of wear, tear and...