Navigating The Hazy Landscape: Challenges And Solutions In Cannabis Payment Processing

The sale of adult-use cannabis has been legalized in 24 states in the United States. But this does not mean there are no other legal impediments to the cannabis industry in those jurisdictions. For example, cannabis dispensaries can still have a difficult time establishing banking relationships. More important, cannabis dispensaries have not been able to take full advantage of modern payment methods, such as virtual wallets, because major credit card networks have viewed cannabis sales as illegal transactions and therefore prohibit cannabis payment processing. Market participants over the years have come up with workaround solutions intended to enable cannabis dispensaries to take noncash payments without violating card network rules. This blog reviews the background of the crackdown on the "cashless ATM" approach by Visa and Mastercard, outlines the risk mitigants that we recommend cannabis businesses and payment intermediaries consider implementing, and discusses