As Canada legalizes pot, Amex, Visa, Mastercard agree to handle payments

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This week marks the official start of Canada’s legalized recreational cannabis industry — and American Express, Visa and Mastercard are ready to handle the new market's payments, in a stark contrast to their stance in the U.S.

In the U.S., cannabis sales that are legal on the local level are still prohibited on the federal level, and this hazy legal status has scared off most mainstream payment companies. But in Canada — the second country to legalize the recreational use of marijuana, after Uruguay in 2013 — the major card brands have no fear of a federal crackdown.

Canadian prime minister Justin Trudeau has said that legalizing marijuana is about taking the market out of the criminal realm. Card payments add to this market's legitimacy; in the U.S., even legal pot sales are largely cash-based, despite companies offering workarounds such as cashless ATMs and digital currencies dispensaries.

In the U.S., CanPay has created an entire bank network leveraging ACH rails to facilitate cannabis merchant payments. The Tokes Platform provides payments solutions and blockchain infrastructure for data provenance geared for the cannabis accept its form of mobile payment. Merchant processor Alt Thirty Six recently entered into a partnership with CannTrade to support the cryptocurrency Dash for cannabis payments.

“At Visa, we strive to make our payment services available for transactions that are consistent with federal and provincial/territorial laws," said Jeanette Volpi, head of North America communications at Visa. "The Government of Canada has set forth a framework which legalizes the sale of cannabis for recreational use, and as such, transactions in Canada involving the purchase of recreational cannabis which comply with all applicable law will be permissible on the Visa network.”

Amex has taken a similar stance, and even opened the door to U.S. consumers coming to Canada to buy marijuana — as long as what happens in Canada stays in Canada.

“Only approved, licensed retailers in Canada are permitted to accept American Express Cards for cannabis purchases," said David Barnes, vice president for public affairs and communications at American Express Canada. “U.S. cardmembers that meet local requirements, for example with respect to minimum age for purchase, will be able to make in-person purchases in Canada on their American Express Card. Cannabis purchases made in Canada cannot however be brought over the border.”

Interac, Canada’s local debit network, reports that it too will process cannabis transactions in Canada. “Interac will continue to support businesses with payment solutions that allow Canadians to purchase legal products and services,” said Bryan Bossin, senior manager, public affairs and corporate communications at Interac.

"With the recent changes to Canadian law, Mastercard products can now be used to purchase recreational cannabis at legally licensed retailers in Canada. We operate our network on the basis our products can be used for legal transactions," said Sandra Benjamin, vice president of communications at Mastercard Canada.

Canadian Imperial Bank of Canada (CIBC) estimates that market for legal cannabis in Canada will reach CAN$6.5 billion (about US$5 billion). As a reference, the Colorado Department of Revenue reported that marijuana sales topped US$1.5 billion in 2017 and over US$1 billion has been sold in 2018 through August.

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Compliance Network rules Marijuana banking Payment processing Credit cards American Express Visa Interac Canada