What to expect for the future legal aspects of marijuana payment solutions.
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.
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.
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.
Currently, 19 states (along with D.C. and two territories) have legalized cannabis at the recreational level.
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 comparable to what exists for industrial hemp-derived products today. A challenge for cannabis suppliers will be finding ways to minimize fees and ensure payments are consistently processed.
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.
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