Not cool, man.
Unplugged
Cash or credit? For potheads, payment processors are leaving them with little say in the matter.
Bloomberg reports that Mastercard has told financial institutions to stop allowing weed payments on debit cards — which won’t really stop your average stoner, but could be a massive blow to the struggling marijuana industry.
Though the drug is legal or decriminalized in most states, marijuana remains illegal at the federal level. That tension notwithstanding, the vast majority of financial institutions have long erred on the side of caution, keeping weed companies on their blacklist.
Mastercard, now, is belatedly reaffirming that as official policy. According to the report, it has sent out cease-and-desist letters to companies that facilitated debit payments to marijuana vendors.
“As we were made aware of this matter, we quickly investigated it,” a Mastercard spokesperson said on Wednesday, as quoted by Bloomberg. “In accordance with our policies, we instructed the financial institutions that offer payment services to cannabis merchants and connect them to Mastercard to terminate the activity.”
Joint Operation
Mastercard’s ban is the latest financial setback for weed vendors and dispensaries, which have been struggling to hold on to ways to process their customers’ money. By and large, it remains a cash-driven industry, in a time when people use less paper money than ever.
Starting late last year, cannabis companies lost one of their prime workarounds: so-called cashless ATMs, a payment solution that more or less masked payments as cash withdrawals.
By December, ATM processors reportedly began to cut off these cashless alternatives. In January, Visa followed suit with its own crackdown.
Among the many issues with these cashless ATMs — other than dubious legality — is that they create a potentially multi-billion dollar loophole, and also make the withdrawals look like they’re occurring at a completely different address.
The loss of cashless ATMs drove many businesses to take their chances with old-fashioned debit transactions this year, leading to Mastercard’s crackdown.
“The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems,” Mastercard said in a statement, per Bloomberg.
Buzzkill
Naturally, pot peddlers haven’t been all too happy with Mastercard’s decision.
Following the move, Sunburn Cannabis CEO Brady Cobb decried it as “another blow to the state-legal cannabis industry and patients/consumers who want to access this budding category,” as quoted by Reuters.
Senate Democrats, who currently have a a slight majority, have been looking to pass legislation that would let cannabis companies enjoy regular financial services and access.
The SAFE Banking Act, as it’s known, could come to a vote this summer — but its future remains hazy.
More on weed: Potheads Sue Weed Company for Not Getting Them Stoned Enough
Share This Article