Mastercard prohibits debit card transactions for marijuana purchases.
Mastercard Cracks Down on Marijuana Purchases
Mastercard has taken a firm stance against the use of its debit cards for buying marijuana, citing the drug’s illegal status under federal law. The credit card company recently discovered that some individuals were using Mastercard debit cards to purchase pot and swiftly contacted banks to put an end to this practice.
“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,” said a Mastercard spokesperson on Wednesday.
The spokesperson emphasized, “The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.”
Legalization vs. Federal Law
Despite the fact that 38 states have legalized medical marijuana and 23 states have legalized its recreational use, cannabis remains illegal under federal law. Even Washington, D.C. has legalized both uses.
Most banks in the country refuse to service marijuana companies due to the federal illegality. However, some buyers and sellers have found a loophole by making PIN transactions using debit cards.
Marijuana companies were quick to condemn Mastercard’s decision.
Industry Reaction
“This move is another blow to the state-legal cannabis industry and patients/consumers who want to access this budding category,” said Sunburn Cannabis CEO Brady Cobb in a statement.
“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.,” said marijuana firm Verano’s president Darren Weiss.
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The marijuana industry is already facing challenges despite increased legalization. New York, in particular, has experienced disappointing profits since legalizing the drug for recreational use.
New York City expected to generate $56 million in tax revenue in its first year of legal weed. However, it is instead losing millions due to sluggish legal marijuana sales while the illegal market thrives. Currently, only 15 dispensaries are operational in the state, while New York City alone has hundreds of illegal pot dealers operating under the radar of regulators. A report supported by medical marijuana operators revealed that the state had only generated $16.5 million in retail revenue since opening its first legal dispensary in December.
In Canada, cannabis was legalized nationwide in 2018, allowing customers to make payments with credit or debit cards.
Public Opinion and Concerns
Support for legalizing marijuana has surged over the past two decades, with a majority of Americans now in favor of both medical and recreational use. According to an October Pew Research Center survey, approximately 88% of Americans support legalizing marijuana for medical purposes, while 59% support legal recreational use.
However, despite increasing legalization, marijuana still faces criticism. Scientific research has linked the drug to various issues, including anxiety, memory problems, lung complications, and even psychosis. Several studies have shown a connection between marijuana and schizophrenia, particularly in individuals with a genetic predisposition to the condition. One study revealed that THC, the active compound in cannabis, exacerbates schizophrenia and psychosis symptoms, leading to more relapses and hospitalizations.
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