for years some if not most cannabis retailers have been obliged to employ a wworkaround to function within the restrictive system now that is no longer an option marijuana merchants have been relying on cashless atms to bypass limitations on the types of sales payment cards they can legally accept these “point of banking” systems enabled buyers to use a bank card instead of cash this technology made cannabis purchases look like atm withdrawals coming from various addresses why they had to do this it all boils down to the biggest problem of the cannabis industry – banking cause of the issue – schedule 1 status of the plant which makes it federally illegal being illegal under federal law financial institutions don’t want anything to do with it which means cannabis businesses don’t have access to standard banking and financial services now weed companies can no longer rely on this workaround because some of the biggest processors of atm transactions such as ncr’s ncr columbus data services have cut off their services according to three people familiar with the matter reported bloomberg law these transactions seem to have moved around 7 billion past the standard moneylaundering controls of the banking system this year or around a quarter of all us marijuana sales the move comes almost a year after one of the largest payment processors in the world visa inc v issued a compliance memo to customers warning them that incorrectly coding pointofsale transactions via cashless atms could be penalized or punished by unspecified enforcement procedures does this mean that pot shops should have expected this to happen to find this out and more on the issue benzinga reached out to sahar ayinehsazian a partner at vicente sederberg llp and cochair of the banking and financial services access group at the firm vicente sederberg is a national cannabis law firm providing legal and policy services to marijuana hemp and psychedelics businesses ancillary companies investors and governmental bodies “the recent shutdown of cashless atm processing capabilities for cannabis operators was expected” ayinehsazian told benzinga “it should come as no surprise given the credit card networks’ longstanding stance on cannabis reiterated by visa’s 2021 memo on the subject cannabis businesses using cashless atms should have moved away from this payment method at the end of last year beginning of this one and planned for a shutdown like this this shutdown further underscores the ongoing need for banking and financial reform for cannabis businesses and the passage of the safe act” small pot shops in arizona california and massachusetts have all had disruptions according to workers who were advising customers to use cash what’s more big dispensary chains of multistate operators were also said to be affected for example curaleaf holdings curlf said last april that it processes almost a third of its transactions via cashless atms but is now telling customers at some stores that it is unable to accept bank cards reported bloomberg law what can pot companies do now “closed loop transactions may be a path forward for the time being” ayinehsazian said “any business looking to use cashalternative payment methods should very thoroughly examine the processor and every step funds will go through from the moment of sale until the moment it hits their account to ensure that the method they may be using is not prohibited” curaleaf for example also offers another solution – payments based on the automated clearing house technology or ach that transfers funds directly from bank accounts the benefit not using the credit card system the drawback consumers need to share their bank and routing info to sign up some of the companies that offer different payment solutions to weed businesses include canpay hypur aeropay dutchie and kindpay for example a chicagobased fintech aeropay offers a different achbased solution our apifirst solution enables us to embed payments into other platforms such as pos and ecomm to provide an omnichannel experience for retailers and consumers alike this optimization is important to create a seamless checkout flow that meets the expectations of the modern buyer when purchasing cannabis both instore and online founder daniel muller explained the company’s system what about marijuana banking bill is this the answer the news about payment transaction challenges comes at a time when the industry is hanging onto hopes of seeing the marijuana banking bill safe act passed in the lameduck session last week lawmakers opted not to put cannabis reform in the national defense authorization act ndaa defense bill which many were hoping would secure passage of the legislation the bill still has a chance of advancing as part of a different omnibus appropriations bill or perhaps as a standalone in a lameduck session in fact many industry experts have been hopeful including financial analyst pablo zuanic of cantor fitzgerald as well as politicians like democratic representative ed perlmutter of colorado who recently shared his optimism on the issue the question is will the safe banking act resolve all the financial struggles the marijuana industry is dealing with or just some in other words is it comprehensive enough a report dangerous delays written by david borden of stopthedrugwarorg claims that safe only provides depository services and not the acceptance of electronic payments via debit or credit card writes seeking alpha there are knowledgeable participants in the cannabis and financial industries who believe safe will be enough to bring credit card networks in the report states of the people we spoke with those in banking or are close to industry processing and administration were the least optimistic ‘more than just a matter of banking’ ayinehsazian confirmed that although “safe would be a massive movement for the cannabis industry as a whole and the banking front specifically there is no mandate in safe that financial institutions accept cannabis operators or that payment processors allow for cannabisrelated transactions on their networks” “given the growing bipartisan support for safe i am optimistic that its passage may positively impact payment processing but there can be no guarantees” she added like many industry experts ayinehsazian is optimistic about seeing safe form part of the omnibus bill highlighting the importance of this piece of legislation “this is more than just a matter of banking – at its core safe seeks to increase public safety by removing the burdens and dangers that come with cashonly operations from the cannabis industry” she concluded by highlighting the important role of marijuana businesses in providing secure safe and heavily monitored access to cannabis for consumers and patients at the same time making sure that minors can’t access it “these businesses give back to their communities in a myriad of ways including local hiring funding of local projects and providing educational programs the industry has spent the last decade proving that the harmful stereotypes of cannabis operators and consumers are simply incorrect ayinehsazian said it is my sincere hope that the safe act can finally pass and in its passage provide access to the financial services of which the cannabis industry has been unfairly deprived” photo benzinga edit sources energepiccom on pexels budding and pixabay at unsplash