Business & Finance: Mastercard Informs US Cannabis Shops To Stop Accepting Its Debit Cards
A blow to the budding industry.
Words by Damian Nicholas
MIKE ADE. KIKA KEITH, OWNER OF GORILLA RX WELLNESS, LOS ANGELES, CA
As a frequent visitor to cannabis shops within Los Angeles and New York City, I have always appreciated the convenience of paying with my debit card. It provided an added layer of security and eliminated the need to carry cash. However, recent news that Mastercard has instructed US cannabis shops to stop accepting debit cards is a low blow to the cannabis industry. This decision has left many stunned and raises questions about the future of financial support from other card companies in this growing economic lane.
The cannabis industry has been experiencing exponential growth over the past decade. With more states legalizing recreational and medicinal use, the current landscape has provided the perfect opportunity for financial institutions to embrace this budding industry. However, Mastercard's recent decision feels like a step backward in terms of progress. Mastercard stated that “the federal government considers cannabis sales illegal, so these purchases are not allowed on our system.” Mastercard warns financial institutions that offer payment services connected to cannabis merchants to terminate the activity. This action from Mastercard highlights the remaining stigma associated with cannabis and it’s businesses.
Cannabis dispensaries have dropped off duffel bags and suitcases full of cash to pay their taxes.
– Fiona Ma. 34th State Treasurer, California
One cannot overlook the significant impact this decision will have on local cannabis dispensaries, especially if other companies follow suit. These businesses have flourished in recent years, contributing to job creation and economic growth. By negating the option of debit card payments, Mastercard is effectively setting a standard and creating a hurdle for these establishments. Without a business bank account, legal cannabis dispensaries are forced to operate on a cash-only basis, and the reliance on cash could potentially pose safety concerns for both customers and businesses, making them a target for armed robberies. Additionally, handling a significant amount of cash opens the door for potential financial reporting challenges, and simple actions like paying taxes can become a security risk. California’s State Treasurer, Fiona Ma, stated in a committee meeting “Cannabis dispensaries have dropped off duffel bags and suitcases full of cash to pay their taxes”.
While the news of Mastercard's decision is undoubtedly discouraging, it may serve as the catalyst needed to explore alternative payment solutions in the cannabis industry. Business owners, customers, and financial institutions need to come together and find a resolution that suits everyone's needs. Thankfully, some companies are already working towards providing secure and efficient payment options specifically tailored for businesses looking to sell cannabis legally, such as cryptocurrency or specialized digital wallets.
Damian Nicholas covers cannabis legalization and legislations in New York. More about Damian Nicholas
Aug 11, 2023More in Journal
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