Mastercard's Cannabis ban makes industry less safe
Mastercard's Cannabis Debit Transaction Ban Raises Concerns About Financial Challenges and Safety Issues in the Industry.
Mastercard’s move to ban cannabis debit transactions last month will cause further financial challenges in an already expensive industry, and may lead to safety issues as more customers are forced to use cash, say local industry leaders.
Chris Vining, co-founder of The Goods, a dispensary located in Somerville's Davis Square, said the ban will have a significant financial impact on local dispensaries.
“The ban burdens our customers at The Goods by limiting their payment options, leading to frustration and potential loss of business,” Vining said.
He added that it's a “stark reminder of the urgent need for comprehensive federal legislation" to fix the banking hurdles small cannabis business face due to the drug remaining illegal at the federal level.
Blandine Reid, vice president of marketing at Ethos Cannabis, said that debit transactions are much easier for consumers. While many dispensaries have ATMs, they often includes fees, which adds to purchase already taxed at 20%. Reid said that Ethos is trying to get its ATM providers to lower the fees to make it easier on customers.
“You really are hurting the consumer as much as they're hurting the businesses by not allowing them to use debit cards, because debit cards are the way people shop now. Most people do not carry cash,” Reid said.
She said that a greater reliance on cash "just makes everyone more vulnerable.”
“It's also disheartening when you start hearing stories about dispensaries being robbed of $50,000 cash, employees being held at gunpoint,” Reid said. “They're just going to make the problem worse."
James Whitcomb, the founder and CEO of cannabis insurance company Frontier Risk, said it's too soon to say if cannabis property insurance will become more expensive because of Mastercard's change. But he said a big risk from the change, outside of thefts, is fraud.
“Everybody should be concerned about these alternative forms of payment that customers or patients are forced to use,” he said. "When you take away PIN debit-based solutions — that's what MasterCard and Visa are in this context — and you go more towards cashless ATM or cryptocurrency solutions, you're really opening the door for potential money laundering."
Cannabis advocates are pushing Congress to pass the SAFE Banking Act, which would make financial services like bank accounts and loans more accessible to the cannabis industry.
There's also a push to move cannabis, now a schedule one substance on par with heroin, to schedule three, a lower classification which would reduce pressure on banks to limit purchases.
“If cannabis is removed from being a schedule one to schedule three or below substance, then this is something that Mastercard and Visa and any payment processor or merchant bank for that matter, can deal with. I think that makes things safer for operators and safer for customers,” Whitcomb said.
