Mastercard has issued a statement instructing financial payment companies to discontinue the acceptance of its debit cards for the purchase of legal marijuana in shops by cannabis consumers in the United States. The decision is rooted in the fact that marijuana still holds illegal status at the federal level.

Because of its illegal standing, customers in the 38 states where medical marijuana is legal must often conduct cannabis transactions in cash due to the restrictions imposed on card payments.

The impetus behind Mastercard’s directive came to light when it discovered that certain shops accepted debit payments for marijuana purchases, despite the existing federal ban. To align with federal regulations, the company deemed it necessary to stop such transactions to avoid any potential legal repercussions.

“As we were made aware of this matter, we quickly investigated it. In accordance with our policies, we instructed the financial institutions that offer payment services to cannabis merchants and connect them to Mastercard to terminate the activity,” Mastercard said in a statement, according to the BBC. “The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems.”

Advocates Call for New Laws

Federal legalization still seems like a remote possibility with Republicans controlling the House of Representatives. Without legalization, cannabis advocates now say new laws are required to protect all parties in a cannabis transaction.

They want laws that would facilitate the smooth and lawful sales of legal cannabis, thereby addressing the challenges faced by both businesses and customers in the industry.

Brady Cobb, the CEO of Sunburn Cannabis, criticized the decision from Mastercard, calling the move “another blow” to the cannabis industry legally set up in so many states, according to the BBC.

Democrats in the U.S. Senate hope to pass a law that would make it easier for cannabis businesses to interact with financial institutions. But top Republican Sen. John Cornyn of Texas has called talk about passing the bill “wishful thinking.”

The Rules Are Different Over the Border in Canada

The primary objective of the crackdown by Mastercard is to prevent marijuana dispensaries from providing customers with the option to pay using a debit card and entering their account’s PIN number as a method of payment.

At present, medical use of marijuana is legal in 38 states within the U.S. Further, 23 states, along with Washington DC and the entire West Coast, have legalized its recreational use for adults aged 21 and above.

In contrast, Canada took a national-level step to legalize cannabis in 2018, resulting in customers being frequently allowed to make payments using credit or debit cards for their cannabis purchases.

Despite the hurdles in the U.S., the cannabis industry continues to grow. National sales could exceed $57 billion a year by 2030 just from states where such sales are permitted, according to the New York Times. When states that may soon legalize recreational cannabis are factored in, the national forecast bumps up to $72 billion in sales.