Mastercard to ban cannabis purchases on its debit cards

The cannabis industry in the United States suffers a blow after Mastercard moved financial institutions to ban transactions for the purchase of marijuana on its debit cards.

The industry is already on the fringes of the American financial system as most banks in the country do not service cannabis companies because marijuana remains illegal at the federal level despite legalisation of its medicinal and recreational use in several states.

"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 connects them to Mastercard to terminate the activity," a spokesperson for the company said on Wednesday.

"The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems," the spokesperson added.

Sunburn Cannabis CEO Brady Cobb said in a statement that "this move is another blow to the state-legal cannabis industry and patients/consumers who want to access this budding category."

Pot firm Verano's President, Darren Weiss, said "We will continue to advocate for cannabis reform in Washington through further dialogue with elected officials and stakeholders to advance conversations supporting the growth of safe, legal cannabis across the US."

Earlier this month, Republican Senator John Cornyn said Majority Leader Chuck Schumer's plan to pass a marijuana banking bill was "wishful thinking".

The SAFE Banking Act is a crucial legislation that would make it easier for the cannabis industry to access banking services.

Mastercard's decision was first reported by Bloomberg News.