Here's How Mastercard Just Dealt a Blow to Cannabis Stocks

On July 27, Mastercard (NYSE: MA) demanded payment processors and banks issuing its debit cards to stop all cannabis-related transactions. Now, U.S.-based marijuana companies like Curaleaf (OTC: CURLF) and Trulieve Cannabis (OTC: TCNNF) will have a much harder time accepting payments from their customers, and they'll also have a harder time paying their own bills. 

Is there any hope of the industry recovering from this latest blow? Let's investigate exactly what's going on and what the long-term implications are.

In case you're not familiar, the current state of affairs in most U.S. states where recreational or medicinal marijuana is legal is for payments by customers to be either cash or via debit card. Credit cards aren't canonically allowed, and now, people won't be allowed to take money directly from their bank account using a Mastercard. Therefore, marijuana businesses need to keep lots of cash on hand in their retail locations, which implies higher physical security costs as well as some additional friction in getting the cash from sales into the corporate coffers. Both of those pain points will be exaggerated in the aftermath of Mastercard's edict. 

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Source Fool.com