With Jeff Sessions out, will pot payments thrive?
During his time as U.S. attorney general, Jeff Sessions was an outspoken opponent of the legalization of cannabis sales. Now that Sessions has resigned — and states such as Michigan, Utah and Missouri voted in favor of legalization in this week's midterms — legal marijuana is poised to become a growth industry.
Sessions had taken a hard line against legal cannabis, urging federal prosecutors to be more aggressive in enforcing federal laws that may contradict more liberal state laws. Early in Sessions' tenure, this position had a clear effect, as debit card processors discontinued business with some dispensaries in New England.
Because cannabis remains illegal at the federal level, merchants are largely unable to access the banking system and are precluded from accepting credit and debit cards. However, the U.S. card brands appear eager to move into this market. Just last month, when Canada legalized recreational cannabis sales, American Express, Visa and Mastercard rushed to handle those payments.
Sessions began pushing back on pot legalization last year, sending letters to members of congress requesting they repeal the Rohrabacher-Farr Amendment which protected medical marijuana companies. Sessions also tabled more than two dozen applications for medical research, frustrating pot industry organizations.
Though Sessions' stance contradicted Obama-era policy, marijuana legalization has its supporters on the Republican side of the aisle. Notably, former Speaker of the House John Boehner joined the advisory board of a dispensary holding company this year.
Earlier this year Trump said he might support legislation enabling states to regulate their own cannabis industries.
Some observers say Sessions' tough stance on marijuana helped drive discussions forward, but it's hard to predict what his replacement will do. Sessions' chief of staff, Matthew G. Whitaker, will become acting attorney general. An earlier letter Whitaker wrote to President Obama, resigning as U.S. attorney for the southern district of Iowa, cited Whitaker's commitment to "reducing the availability of meth, cocaine, and marijuana in our communities."
The market for legal weed is massive as the consumer demand which has been pent up for decades is finally being addressed. Though Canada legalized recreational marijuana only this year, it has allowed medicinal use since 2001; Mexico approved cannabis for medical use in June of 2017.
According to the Frontier Financial Group, businesses sold more than $7 billion in medical and recreational marijuana products across the U.S. in 2017. Even with Sessions as attorney general, this figure was expected to rise to more than $10 billion in 2018 and jump to over $24 billion in 2025.
Several companies are working on ways to reduce the legal cannabis industry’s reliance on cash. CanPay is offering a “Starbucks-like” mobile app to make purchases. Alt Thirty Six has created a cannabis payments platform for marijuana dispensaries. Meanwhile companies such as the Tokes Platform and Dash are using cryptocurrencies to solve the problem. GreenStar Payment Solutions has developed the cashless ATMs to serve merchant needs.
Pot stocks rose Wednesday on the news of Sessions' departure.
John Adams contributed to this article.