Financial institutions have been ordered by Mastercard to stop enabling marijuana purchases on their debit cards.
Customers in the 38 states where marijuana is legal are typically required to pay with cash because it is still prohibited at the federal level in the US.
Mastercard (MA) claimed the action was taken in response to its discovery that some businesses accepted debit payments despite the federal restriction. Currently, 38 states have legalized marijuana for medical use. Additionally, 23 states permit adults older than 21 to purchase it for recreational purposes.
In spite of the fact that marijuana has been made legal for medicinal and recreational purposes in many states, the majority of banks in the US do not provide banking services to cannabis businesses.
Mastercard said in a statement on Wednesday, “As we were made aware of this matter, we quickly investigated it. 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 federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.”
The SAFE Banking Act is a critical piece of legislation that would simplify access to banking services for the cannabis sector.
Bloomberg News was the first to report on Mastercard’s policy decision.
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