Mastercard Weed Ban Not Surprising; Visa Could Be Next, Says Lawyer

Over a week ago, the legal cannabis industry was dealt a major blow when Mastercard announced that it would no longer accept cannabis purchases on its debit cards. Explaining the sudden ban, the credit card giant cited the lack of uniform state laws and the fact that cannabis is still federally illegal. Will this setback be enough for Congress to finally pass the SAFE Banking Act, which would allow banks and financial institutions to work with cannabis businesses without penalties? Or is it just another reversal in an already beleaguered industry? Zachary Kobrin, a cannabis partner at law firm Akerman LLP, offers his insight.This Q&A was edited for conciseness and clarity.Iris Dorbian: How big of a blow is this to the legal cannabis industry?Zachary Kobrin: This is a pretty big blow to the industry from a larger macro sense, but not a surprising one. Mastercard’s actions, which are understandably motivated by legal concerns, appear to be focused on the use of pin-based debit transactions. Pin-debit payment processing had emerged in the last year or so as a strong and viable, although still not fully approved, alternative to cashless ATMs, especially due to its use of regional debit networks to process transactions. Mastercard can penalize financial institutions that continue to process these transactions in a number of ways, mostly by refusing to allow them to use Mastercard products or the Mastercard network.On a micro level, I don’t know that it will have an immediate impact. It will take time to filter this through to dispensaries and despite efforts to shut them down, cashless ATM is still a very prevalent option in dispensaries.Dorbian: What are other financial options that are open to practitioners and consumers?Kobrin: Cashless ATM is prevalent enough so that remains an option, despite questions about whether its use is legal. In the short term, there will likely be a larger influx of ATMs and an increase in cash transactions. This also opens the door for the use of payment tokenization platforms like CanPay that don’t rely on the credit card networks. The one real cashless option that has been able to navigate these times is ACH, but ACH isn’t always the most efficient for consumers. I also think some people in the industry are going to try and pivot to a crypto or blockchain type payment system, but I don’t know how well that will work.To Continue Reading The Full Story, Click Here