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Marijuana Decriminalization Could Pave Way For More Payment Processing Options For Cannabis Businesses

·4 min read

In a vote that is largely seen as symbolic, the U.S. House of Representatives in December approved legislation that decriminalizes marijuana at the federal level. While enactment this year isn’t expected, it’s a first for Congress and could portend some type of decriminalization legislation finding its way to the President’s desk in the not-too-distant future. And that, in turn, would mean more payment acceptance choices for businesses selling cannabis and related products and services.

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act — which removes cannabis from the federal Controlled Substances Act (CSA) — also creates a framework for erasing non-violent federal marijuana convictions and tax sales of cannabis to invest in communities severely impacted by the war on drugs. The bill doesn’t stand a chance in the Senate because Senate Majority Leader Mitch McConnell (R-KY), who controls what legislation is voted on in that chamber, is on record opposing any loosening of federal marijuana laws. But the House vote, which was largely along party lines in the Democratic Party-controlled chamber, is seen as a major step forward on several counts.

For starters, the passing of the MORE Act marks the first time in history that a chamber of Congress has approved legislation decriminalizing marijuana. This makes the likelihood of similar legislation coming up in the next session of Congress a distinct possibility. Since the political makeup of the Senate is still uncertain should Democrats gain control of the Senate, which is possible if both Democrats in run-off elections for open Senate seats from Georgia win on January 5th, such legislation has a better chance of making it to the President’s desk. President-elect Joe Biden repeatedly stated in the run-up to the November elections that he favored the decriminalization of cannabis and the expungement of federal criminal records of those convicted of non-violent marijuana crimes.

The inclusion of cannabis in the federal Controlled Substances Act has been a major roadblock to marijuana dispensaries and other businesses selling cannabis and related products and services gaining access to the financial system. Most federally-insured banks and credit unions — fearful of attracting unwanted attention from financial regulators — refuse to open accounts for businesses that they know operate in the cannabis sector. And the major credit card networks, which were built and originally owned by federally-insured financial institutions, have refused to knowingly process payments originating from cannabis and related businesses. 

This has led marijuana dispensaries and others to find workarounds that support card acceptance without running afoul of credit card network rules. Many, for example, have implemented cashless ATMs that route PIN-authorized credit and debit card transactions through ATM networks. These solutions may eliminate costs and risks associated with managing mountains of cash, but they are not robust enough to support the unique needs of cannabis businesses.

However, it’s important to note that the credit card network prohibitions on cannabis-related transactions have been lifted in countries such as Canada that have legalized adult recreational uses of marijuana. So, chances are good that once cannabis is decriminalized by the United States government, the networks will open up to transactions from marijuana dispensaries and related businesses.

If you run a business selling cannabis and related products and services you should start looking now for a payment processing partner that can support your payment acceptance needs today and into the future. Here are six questions you’ll want answers to when evaluating prospective payment processors.

  1. Can the company support current and prospective payment preferences? These include card acceptance at the point of sale, mobile and online payments for consumers, and B2B solutions such as electronic checks and ACH payments.

  2. How long does it take to get a solution set up and running? Approvals shouldn’t take more than a couple of days and setups shouldn’t be complicated.

  3. Does the solution set integrate easily and readily with your POS and back-end systems?

  4. Are there robust risk management controls and proven chargeback prevention tools?

  5. Can the provider support loyalty and rewards programs? 

  6. Can they be counted on to provide technical support whenever and wherever needed? 

Photo by manish panghal on Unsplash

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