Cannabis, in both its medical and recreational forms, is legal in many U.S. states. But the substance remains illegal at the federal level. This unique legal status causes issues with some entities.
Mastercard is the latest major company to attempt to distance itself from cannabis. It was reported that the payment processing corporation sent letters to banks and other financial services asking them to stop facilitating marijuana purchases. The company stated that its decision to drop payment support for marijuana purchases was under federal law.
The effect on cannabis businesses
As some marijuana business leaders have commented, Mastercard’s decision to drop support could mean more cash transactions. This can expose cannabis dispensaries to more significant theft and crime risks.
Cash-only transactions also make B2B transactions between cannabis licensees much trickier to maintain. Payment cards may have withdrawn their support, but it doesn’t mean cannabis businesses can buy, sell or transport their products without maintaining records.
Penalties for failure to issue receipts
According to California rules, a marijuana business that fails to produce a receipt or sales invoice for its commercial activities violates the law. The business also faces a maximum fine of $30,000 per individual violation. California Department of Cannabis Control could also suspend the violating business for up to 15 days. In the most extreme cases, the department can also revoke the business license of the offending dispensary.
Running a cannabis business can be challenging, especially since the laws surrounding the substance are constantly changing. Business owners may need legal advice to determine if they comply with state standards.