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Banks continue to be leery

True normalization will require unobstructed access
to FIs. While cannabis is legal (for medicinal and/
or recreational uses) in 40 states and the District of
Columbia, FIs that want to accept deposits and process
payments for cannabis businesses must file paperwork
with the Financial Crimes Enforcement Network,
whose job is to root out money laundering and other
financial crimes.

Just over 800 of the 10,000-plus FIs in the United States
have done so, according to FinCEN. Most of those are
community banks and credit unions that contract with
third-party technology providers to support FinCEN-
required reporting.

Meanwhile, legislation has been introduced in
Congress, with bipartisan support, that would pave
the way for more FIs to work with cannabis businesses.
The SAFE Banking Act (in the House) and the SAFER
Banking Act (in the Senate) would provide safe harbor
to state-licensed dispensaries from federal penalties or
loss of deposit insurance and exemptions from anti-
money laundering laws.

In its statement to the Senate Banking Committee
last year, Flowhub urged lawmakers to act on the
legislation, asserting that "despite its rapid growth and
economic contributions, the industry remains stifled
by banking discrimination."

Will that be cash, ACH or debit?
According to a survey by MJBusiness Daily, the typical
dispensary generates about $2 million in sales yearly.
Cash is the predominant form of payment, but there
are non-cash alternatives. One of the most popular is
pay-by-bank. Most pay-by-bank offerings leverage the
fintech Plaid, which routes payments through the ACH.
However, this appears to violate Nacha rules. (Nacha
is the rule-making authority for the ACH.) "Under the
Nacha rules, organizations and processors agree not to
originate payments that violate the laws of the United
States," a spokesperson told The Green Sheet.

Another popular payment method is cashless ATMs,
a PIN debit solution in which the POS device emulates
an ATM. Mastercard and Visa rules prohibit the
routing of cashless ATM transactions through their
networks. Visa has taken an especially hard line.
According to published reports, it levied a $950,000
fine on Colorado-based Pueblo Bank & Trust in 2024
for processing cashless ATM transactions through its
network.
Patti Murphy is senior editor at The Green Sheet, president of
ProScribes Ink (www.proscribes.net) and self-described payments
maven of the fourth estate. Her Today in Payments reports are a
regular feature of the Merchant Sales Podcast.

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