Looking to pick up some pot at the dispensary? Don't pull out your Mastercard. On Wednesday, the payment processing company announced it had informed financial institutions that it would not be allowing marijuana purchases on its debit cards, in what Reuters describes as "a blow to an industry already on the fringes of the financial system" in the US. The reasoning? Although pot is legal for medicinal use in 38 states and DC—and in nearly two dozen states and DC for recreational purposes—it remains illegal at the federal level.
"As we were made aware of this matter, we quickly investigated it. 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," a company spokesperson says in a statement. The Washington Post notes some buyers and dispensaries had been taking advantage of a "loophole" that allowed purchases to go through on debit cards with PINs. Bloomberg, which first reported the news, notes that the company sent its cease-and-desist letters to the financial firms last week. Visa has made similar moves to nix cannabis purchases on its networks in the past, though it hasn't yet commented on Mastercard's most recent announcement.
"If the PIN debit solutions go away, it leaves people back with ACH [automated clearinghouse, which requires bank routing and account numbers] or cash," Tyler Beuerlein, of cannabis banking firm Safe Harbor Financial Services, tells Bloomberg. Those advocating for cashless purchases are noting the dangers of dispensaries harboring large sums of cash on their premises, setting them up for possible robbery and potentially putting workers in harm's way. The Democrat-supported SAFE Banking Act, which would offer protections to banks that service cannabis businesses legal in individual states, is still being debated in Congress, with some GOP detractors worried the bill could lead to money laundering. (More Mastercard stories.)
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