Mastercard Inc. has demanded that U.S. financial institutions block cannabis purchases on its debit cards, in another setback for the legal marijuana industry.
Bloomberg News reported Wednesday that Mastercard
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sent cease-and-desist letters last week to banks and payments processors that facilitated debit-card purchases of pot.
“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,” a Mastercard spokesperson told MarketWatch in an email Wednesday night. “The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.”
Although medical and recreational marijuana is legal in many states, cannabis retailers are largely shut out of the U.S. financial system because it remains illegal at the federal level. Transactions at legal cannabis retailers are generally conducted through cash or debit cards.
A bill to open up the financial system to pot companies, known as the SAFE Banking Act, has advanced in Congress but still faces an uphill climb. Earlier this week, an analyst said no major pot-legalization breakthroughs in the U.S. are expected in the next 18 months.
It was unclear if Visa Inc.
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— which has cracked down on ATMs at cannabis dispensaries — would also crack down on debit-card usage at dispensaries, and the company did not immediately respond to a request for comment.
Mastercard is scheduled to report quarterly earnings before the opening bell Thursday.