© Reuters. A woman holds marijuana for sale at the MedMen store in West Hollywood, California U.S. January 2, 2018. REUTERS/Lucy Nicholson
By Niket Nishant and Tanay Dhumal
(Reuters) -Mastercard has told financial institutions to stop allowing marijuana transactions on its debit cards, dealing a blow to an industry already on the fringes of the financial system in the United States.
Most banks in the country do not service cannabis companies as marijuana remains illegal at the federal level despite several states legalizing its medicinal and recreational use.
“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 (NYSE:) to terminate the activity,” a spokesperson for the company said on Wednesday.
“The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems,” the spokesperson added.
Sunburn Cannabis CEO Brady Cobb said in a statement that “this move is another blow to the state-legal cannabis industry and patients/consumers who want to access this budding category.”
Pot firm Verano’s President, Darren Weiss, said “We will continue to advocate for cannabis reform in Washington through further dialogue with elected officials and stakeholders to advance conversations supporting the growth of safe, legal cannabis across the U.S.”
Earlier this month, Republican Senator John Cornyn said Majority Leader Chuck Schumer’s plan to pass a marijuana banking bill was “wishful thinking”.
The SAFE Banking Act is a crucial legislation that would make it easier for the cannabis industry to access banking services.
Mastercard’s decision was first reported by Bloomberg News.