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The Future Legal Aspects of Cannabis Payments

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Cannabis Legal Status

The Future Legal Aspects of Cannabis Payments

What to expect for the future legal aspects of marijuana payment solutions.

April 2, 2024
The Future Legal Aspects of Cannabis Payments


Over the past decade, the cannabis industry has witnessed incredible changes. But these changes are only the beginning. Over the next few years, there will likely be several more remarkable changes that alter the legal status of cannabis and corresponding marijuana payment solutions.

Secure and Fair Enforcement (SAFE) Banking Act

Re-introduced in 2021, the purpose of this Act is "To create protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses." When passed, more banks and financial institutions should feel comfortable providing additional banking services to the cannabis industry. However, until cannabis is federally legal or removed as a Schedule 1 drug, big banks and credit card companies may continue to prohibit cannabis-related transactions.

Removal of Cannabis as a Schedule 1 Drug

Per the Controlled Substance Act of 1970, cannabis is currently a Schedule I drug. There has been an ongoing, bipartisan push to reschedule or remove cannabis, which will help destigmatize cannabis while providing legal legitimacy to the industry.

SAFER Banking Act:

The Secure and Fair Enforcement Regulation (SAFER) Banking Act addresses challenges faced by businesses, particularly State-sanctioned cannabis businesses, in accessing essential financial services due to conflicts between Federal and State laws.

The SAFER Banking Act aims to ensure access to deposit accounts, insurance, and financial services for all businesses, including State-sanctioned cannabis businesses. It also seeks to establish standards for banks and credit unions to maintain customer relationships and expand access to deposit accounts, especially for underbanked groups.

Despite cannabis legalization in many states, financial institutions are reluctant to engage with legitimate cannabis businesses due to legal conflicts, limiting their access to crucial services such as deposit accounts, credit lines, and mortgages.

The SAFER Banking Act aims to resolve the financial challenges faced by cannabis businesses, providing a framework for safe and sound banking practices while promoting access to essential services for a diverse range of companies.

The critical distinction between the SAFER Banking Act and the SAFE Banking Act lies in their specific emphases and provisions. The SAFE Banking Act provides a safe harbor for financial institutions to engage with cannabis-related businesses, shielding them from federal penalties and regulatory actions. On the other hand, the SAFER Banking Act, while sharing the goal of facilitating financial services for cannabis businesses, takes a broader approach. It establishes a safe harbor and emphasizes the creation of standards for banks and credit unions to maintain customer relationships and expand access to financial services, particularly for underbanked groups. The SAFER Banking Act appears to encompass a more comprehensive framework for addressing economic challenges businesses face, extending beyond the cannabis industry to promote broader financial inclusion and safety considerations.

Section 28(e)

Initially introduced in the Securities Exchange Act of 1934, this regulation helps promote "safe harbor" banking. By leveraging this regulation, and others like it, cannabis companies can bank compliantly.

Legal future of cannabis payments

With each passing year, the legalization of both recreational and medicinal cannabis is becoming more accepted across American society. With greater acceptance, creating cannabis payment systems and their supporting infrastructure has become increasingly more possible. A Pew Research Center Poll from April 2021 revealed that 91% of Americans now support the federal legalization of cannabis—an all-time high.

As more states allow some form of legal and licensed cannabis, payment processing options will continue to expand. Within the next ten years, most states with a licensed cannabis market will incorporate payment processing infrastructure. A challenge for cannabis suppliers will be finding ways to minimize fees and ensure payments are consistently processed with little chargeback.


While traditional banking services and credit card payments may become available for cannabis-related businesses at some point in the future, cannabis transactions will likely be considered high risk for quite some time. High risk regarding credit card payments will lead to significantly higher processing fees than seen with ACH payments.

As a result, bank transfers will continue to remain a popular payment option throughout the cannabis industry as consumers enjoy the smooth user experience each time they return.

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