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were banking cannabis businesses in 2018.
Insider’sreport Dustin Eide, CEO at CanPay, a closed-loop mobile app that

on payments clears pot shop payments using the ACH, told me there are
FIs banking cannabusinesses in every state where cannabis
sales have been legalized.
"At this point, there is not a single market where we couldn't
refer [a cannabusiness] to a bank," Eide said. The over 100
FIs on the CanPay network, which he described as a "closed
Addressing credit unions as well as banks with "a national footprint,"
banking feedback loop," include community banks and
he said.
the cannabis Consumers link their checking accounts to a CanPay mobile

app, which can be used at more than 800 dispensaries in
conundrum 31 states. The app generates single-use payment codes
dispensaries use to collect monies through the CanPay
network. When the card brands finally get around to
By Patti Murphy allowing cannabusinesses on their networks, shoppers will
also have options for adding credit and debit cards to the
don't understand the hoopla over the creation of a app, Eide said.
unique MCC for gun and ammo shops. After all,
thousands of merchants would be delighted to get an Industry barriers keep going up
I MCC. Any MCC. But the card brands say no. CanPay is one in a small army of payments companies
jockeying for position in the burgeoning cannabis market.
I'm talking about businesses legally selling cannabis and
related products, and the mismatch of state and federal Grandview Research estimated that legal sales of cannabis
cannabis laws that has forced most businesses in this products totaled just under $11 billion in 2021, and the
multi-billion-dollar market off the cad networks. market is growing at a compound annual rate of 14.9
percent. It's probably safe to say that 90 percent of those
The major card brands have taken the position that because sales are paid for today using greenbacks.
these products aren't legal under federal law they must be
banned from their networks. I understand their position, Some enterprising ISOs came up with the idea of
but it places ISOs and card acquirers at a disadvantage. offering "cashless ATMs," sometimes called point-of-
banking devices, as an electronic payment alternative
Visa and Mastercard began as associations of federally for dispensaries and CBD shops. A cashless ATM looks
insured financial institutions (FIs). As such, they needed to like a countertop card terminal and mimics a traditional
operate in conformance with the laws and regulations that ATM, except that instead of obtaining cash the cardholder
FIs operate under. authorizes a transfer of funds to the merchant's bank
account. Transactions appear on customer bank statements
These days, the prohibition hinges on the fact that cannabis as ATM withdrawals.
is illegal under federal law. So, transacting payments
derived from sales of cannabis products, even sales deemed Visa, which owns the Plus ATM network, is trying to put
legal under state law, is considered money laundering. the kibosh on this workaround. Late last year the card
Card brands spurn federal guidance giant sent out a warning to acquirers that "miscoding" pot
shop payments as ATM withdrawals violates Plus rules.
This position, however, ignores long-standing guidance While it made no mention of regional ATM networks—
from the U.S. Department of the Treasury and the used by many payments companies to clear cashless ATM
Department of Justice that created a framework for banking transactions—some experts insist the warning applies
cannabis businesses without running afoul of anti-money to any credit or debit cards that display Visa/Mastercard
laundering laws. At year-end 2021, 553 banks and 202 logos.
credit unions were filing required reports with Treasury's
Financial Crimes Enforcement Network on deposits from ATM companies don't like the workaround either. As The
marijuana-related businesses (sometimes referred to as Green Sheet recently reported, the National ATM Council
cannabusinesses) in compliance with that framework. Inc. urged the Cannabis Regulators Association to dissuade
dispensaries from using cashless ATMs, suggesting their
Sure, 773 represents a fraction of the roughly 11,000 use constitutes "Bank fraud under federal law."
federally insured FIs, but it's a far cry from the 30 or so that

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