Mastercard Halts Cannabis Debit Transactions in the U.S. Due to Federal Law

Mastercard has instructed U.S. financial institutions to cease processing debit card transactions for cannabis purchases, citing the federal prohibition of cannabis. This decision comes as a response to the discovery that some dispensaries were still accepting debit card payments despite the federal restrictions

The move by Mastercard highlights the ongoing conflict between state and federal laws regarding cannabis. While 38 states have legalized medical cannabis and 23 states have approved recreational use, the federal government still classifies cannabis as illegal, complicating financial transactions for the industry

Mastercard's directive specifically targets cannabis dispensaries, preventing them from using debit card systems that require PIN entry. This restriction could significantly impact both businesses and consumers, who often seek convenient payment methods

In contrast, Canada, where cannabis is legal nationwide, allows consumers to use debit and credit cards for cannabis purchases. The U.S. cannabis market, however, remains largely cash-based due to federal regulations, posing challenges for businesses and consumers alike

Efforts are underway in the U.S. to address these financial hurdles. The SAFE Banking Act, which aims to protect banks working with legal cannabis businesses, is being pushed by the Democrat-controlled Senate. However, despite multiple attempts, the bill has yet to pass, leaving the industry in a precarious financial position