The STATES Act will bring needed clarity to cannabis payment law
Currently, more than 30 states and Washington, D.C., have legalized marijuana (cannabis) and/or marijuana-based products for various purposes.
Unfortunately, however, this legalization conflicts with federal laws, which still cite cannabis as a Schedule 1 drug under the Controlled Substances Act (CSA). In the banking world, federal law trumps state laws — making it illegal for banks to work with merchants in this particular vertical. As a result, cannabis sales declared legal by states are transacted in cash.
Can you imagine being a business owner with a garage full of unprotected cash and the inability to make large purchases the legitimate way? For many cannabis merchants, that scenario is their reality.
Fortunately, however, a bipartisan bill known as the Strengthening the Tenth Amendment Through Entrusting States Act, was recently introduced to allow legal cannabis businesses to secure merchant accounts at financial institutions in states that have legalized marijuana.
Although National Merchants Association does not have a stance on cannabis or marijuana as a whole, our company does support the STATES Act. It is our job and responsibility to ensure that we are empowering businesses — of all types — to succeed and do business the right way. This can’t be done without legitimate financial accounts. Without banks behind them, cannabis businesses not only impact the payments ecosystem, but the economy, as well.
There are thousands of cannabis businesses in the United States alone. Each business rakes in ample revenue. However, if they’re only able to accept cash, that’s all they have — subsequently meaning that their employees are paid in cash, transactions may not be reported appropriately, and money doesn’t circulate back into the economy.
Without the STATES Act, everyone loses. But with the STATES Act, we have the opportunity to build a better payments ecosystem, industry and country by untying the hands of merchants. The STATES Act allows the industry to resolve conflicts between state and federal laws by granting legitimate cannabis companies access to the financial system in marijuana-legalized states; and protect payment processors by clearly outlining that compliant transactions are not — and should not — be considered trafficking.
Regardless of where you stand on Cannabis, its use and its legalization, one fact remains clear — it’s here, and it’s here to stay.
Now, we have to do our part to integrate this robust, albeit controversial, new industry into the business world the right way, while simultaneously taking advantage of all it has to offer.