This report from Forbes Magazine, published on 27 July 2023.

Mastercard's decision to further reduce options for marijuana consumers means they will have fewer convenient ways to purchase marijuana without cash.

This comes at a time when the marijuana industry has become legal in almost half of the U.S. states, but it still lacks federal regulation.

Mastercard has instructed payment processors and banks not to accept marijuana transactions on its debit cards.

"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," a Mastercard spokesperson said, as reported by Bloomberg, which first covered the news.

After receiving cease-and-desist letters from Mastercard last week, companies that previously facilitated PIN debit payments for marijuana dispensaries are facing challenges in providing alternative solutions to their clients.

Mastercard's move comes after Visa sent a memo to banks in 2021, clarifying its stance on cashless ATMs used by marijuana businesses and stating that they violate the company's rules. Due to Visa's policy against marijuana, the cashless ATM method is prohibited.

Although adult-use marijuana has been legalized in more than 23 U.S. states, it remains illegal at the federal level, creating challenging implications for both marijuana consumers and state-legal businesses that are hard to overcome.

Because of its federal illegality, the marijuana industry operates primarily in a cash economy, resulting in limited non-cash options for purchasing marijuana products.

Cashless ATM and PIN debit options have gained popularity among dispensaries, offering customers a secure and convenient method to buy marijuana products without cash. These solutions not only boost revenue and streamline the checkout process but also help dispensaries mitigate the risks associated with handling large amounts of cash.

But the move by Visa first, and now Mastercard, is significantly reducing available options for making transactions in the marijuana space.

While smaller regional banks may still serve marijuana companies, major institutions and credit-card networks like Visa and Mastercard avoid facilitating marijuana transactions on their networks due to federal illegality.

While automated clearinghouse (ACH) payment solutions appear to offer lower compliance risk and may be one of the few remaining options for transactions involving marijuana products, they can be inconvenient for customers, requiring them to provide a bank routing number and account number. 

Cash, although widely used in the industry, is considered riskier for dispensaries as it exposes them to potential theft.

But what both consumers and businesses in the marijuana space are asking for are credit card payments. However, dispensaries can't accept credit card payments due to federal-level marijuana illegality.

In order to get access to credit card payments, marijuana should become legal at the federal level, but the current situation suggests this is not going to happen anytime soon.

However, the Secure and Fair Enforcement Banking Act could take up the slack on the issues with marijuana transactions and, more broadly, with the current problems of the access of the marijuana industry to the financial system in the U.S.

The long-waited SAFE Banking Act proposes to enable banks to conduct business with marijuana companies operating legally in states that have legalized marijuana.

It would prevent federal regulators from penalizing financial institutions for serving marijuana companies, their owners, and employees.

Additionally, the act clarifies that funds obtained from state-regulated and compliant marijuana businesses would not be treated as proceeds from illegal activities while protecting against federal liability for banks, insurers, and other financial institutions working with such companies.

In 2022, the Senate was on the verge of voting on the SAFE Banking Act, but ultimately, it didn't pass during the lame-duck session.

As of July 2023, bipartisan support is building to pass the SAFE Banking Act. The Senate Banking Committee chair intends to schedule a committee vote this month, although the date for the final vote remains uncertain, as recently reported by Marijuana Moment.

If approved, the act would offer several advantages to the marijuana industry, such as minimizing safety risks, enhancing access to capital, and improving transparency.

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