Demonstrating the perilous state of marijuana banking, Mastercard has directed credit unions and banks to stop offering payment services to marijuana-related businesses even in states where cannabis is legal.
In a statement, Mastercard said that when its officials became aware that financial institutions were providing payment services to marijuana businesses, they acted quickly.
“In accordance with our policies, we instructed the financial institutions that offer payments services to cannabis merchants and connects them to Mastercard to terminate the activity,” the company said, in the statement first provided to the Washington Post. “Our rules require our customers to conduct lawful activity where they are licensed to use our brands. The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.”
Backstory and context
Legislation that would provide financial institutions with a regulatory safe harbor for serving marijuana-related businesses remains stalled in the Senate.
Senate Majority Leader Sen. Chuck Schumer, D-N.Y., had identified marijuana banking as one of his top priorities for consideration before the Senate’s August recess.
However, the legislation has not yet been marked up by the Senate Banking Committee, which has jurisdiction over the issue.
What comes next?
The legislation appears to be hung up over one provision that would prohibit a federal banking agency from formally or informally requesting that a financial institution terminate a specific customer account or group of customer accounts.
In the past, that provision has been added to the bill in order to gain Republican support. It was intended to keep federal regulators from refusing to serve specific industries, such as gun manufacturers. It is included in the Senate bill, but some Democrats, most notably Senate Banking Committee member Sen. Jack Reed, D-R.I., have said the provision would make it more difficult for federal banking regulators to raise an alarm about a specific customer who poses a risk to a financial institution.
In the House, where marijuana banking proposals have passed several times, Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., has said the legislation is not one of his top priorities.