New York, NY--In a move that underscores the tenuous relationship between the financial sector and the cannabis industry, Mastercard recently directed financial entities to cease allowing marijuana transactions on its debit cards.
This decision further marginalizes an industry needing help finding a firm foothold within the US financial ecosystem.
The Cannabis Conundrum in the US Financial Sphere
Despite legalizing cannabis for medicinal and recreational use in several states, marijuana is still considered illegal at the federal level in the United States. This classification has resulted in many banks in the country steering clear of servicing cannabis companies.
Upon being informed about cannabis transactions on its debit cards, Mastercard took swift action.
A company spokesperson explained to Reuters, "In accordance with our policies, we instructed the financial institutions that offer payment services to cannabis merchants and connects them to Mastercard to terminate the activity."
The spokesperson clarified to the publication that the federal government considers cannabis sales illegal, so their systems do not allow these purchases.
Repercussions on the Cannabis Industry
Stakeholders in the cannabis industry have not well received the move by Mastercard. Sunburn
Per the outlet, Cannabis CEO Brady Cobb lamented that the decision is yet another setback for the state-legal cannabis industry and consumers interested in accessing this emerging market segment.
Similarly, Darren Weiss, the president of cannabis firm Verano, expressed his firm's commitment to pushing for cannabis reform in Washington.
"We will continue to advocate for cannabis reform in Washington through further dialogue with elected officials and stakeholders to advance conversations supporting the growth of safe, legal cannabis across the U.S," he said, per the report.
Looking Forward: The SAFE Banking Act
In July, Republican Senator John Cornyn dismissed Majority Leader Chuck Schumer's plan to pass a marijuana banking bill as unrealistic. The proposed SAFE Banking Act is considered critical legislation that could facilitate more accessible access to banking services for the cannabis industry.
As reported by Politico, legislation extending financial services to the marijuana industry faces bipartisan resistance in the US Senate. Senate Majority Leader, Chuck Schumer, has made the cannabis banking legislation a priority, but disagreements between Democrats and Republicans are causing delays.
Per the outlet, Republicans oppose last-minute changes to the SAFE Banking Act's text introduced by Sen. Jack Reed (D-RI), while Democrats want Republicans to garner more co-sponsors to ensure the bill's passage.
If passed, the SAFE Act would provide easier access to banking services for cannabis companies, promoting public safety. The stalemate, however, remains unresolved, with both sides currently unwilling to compromise.