For more than a decade, cannabis operators have fought for the same legitimacy every other business enjoys, opening storefronts, paying taxes, and creating jobs. Yet every time they try to process a digital payment, they’re reminded they are still treated as outsiders.
We call this the cannabis industry’s Stockholm Syndrome. Dispensaries cling to credit card services like Visa and Mastercard despite repeated fines, frozen funds and sudden shutdowns.
Because in a system designed to punish them, relying on the same financial networks that move money between banks feels safer than venturing into the unknown, even though those networks also cause harm.
The Trap
Visa and Mastercard dominate the payments ecosystem, controlling nearly three-quarters of global debit rails.
When they say no, the answer is no.
Over the past several years, dispensaries have faced a revolving door of shutdowns and fines. From secret shoppers and cease-and-desist letters to frozen funds, Visa and Mastercard enforce rules inconsistently, sometimes waiting a year to act, other times shutting merchants off overnight.
Cannabis merchants, still federally prohibited, are pushed into gray-area workarounds that feel more like survival tactics than real solutions.
That unpredictability fuels the Stockholm Syndrome. Operators know the risks, yet many still cling to cashless ATMs and debit workarounds because consumers demand the convenience of cards. If the cannabis retailer down the street is accepting cards, you’d better do it too.
As a result, merchants accept frozen accounts and sudden outages as the cost of doing business, even as millions of dollars in revenue are lost to arbitrary enforcement and complicated workarounds.
In early 2024, Visa sent secret shoppers into dispensaries and flagged more than 100 locations using cashless ATMs on Switch Commerce’s system, including transactions tied to Colorado-based Pueblo Bank & Trust. Visa fined Pueblo $950,000, forcing the bank to pay $250,000 upfront and reserve $700,000 more for possible collection. Pueblo then sued Texas-based Switch to recoup the losses, and Switch in turn filed suit against Florida-based multistate operator Trulieve, alleging fraud and misrepresentation.
There have been no public updates indicating resolution or settlement, which suggests the litigation is still active.
Why Dispensaries Stay
If dispensaries know the risks, why do they keep clinging to Visa and Mastercard? Because convenience sells.
Consumers expect to pay with plastic. If one store takes cards, even through risky workarounds, customers will gravitate there. Cash-only operators lose business.
Merchants have been conditioned to see card workarounds as normal. Cashless ATMs have been around for more than a decade, creating a sense of inevitability. On top of that, cannabis is one of the few industries where transaction fees are pushed onto the consumer. Customers often pay $3–5 per swipe while merchants pocket the margin. This creates a hard incentive to abandon in an industry already squeezed by taxes and compliance costs.
For shops that stick to cash, the risks only multiply. Staff are forced to handle thousands of dollars in bills every day, making dispensaries prime targets for theft and robberies. As a result, cash-heavy operations face higher insurance premiums and greater compliance burdens.
Over time, that combination of consumer demand, merchant incentive and safety concerns has created a cycle that feels impossible to break. Even after high-profile lawsuits and millions lost, many operators still accept frozen accounts and sudden shutdowns as the cost of doing business.
Liberation
Dispensaries don’t have to keep living in fear of the next shutdown. Companies like Lüt are offering a way out. For the first time in 40 years, there’s a new set of rails—one that dispensaries can actually trust.
Instead of relying on Visa and Mastercard’s rails, Lüt built its own. It’s the first new payment infrastructure since Discover launched in 1986. It’s designed from the ground up to serve high-risk industries like cannabis and gaming without fear of being cut off by card networks.
The system runs on closed-loop technology. Consumers fund their Lüt account directly from their bank, not a debit or credit card, which means transactions never touch Visa or Mastercard’s rails. Money stays at an FDIC-insured bank and merchants get paid the next day—not two or three days later.
Beyond stability, Lüt adds incentives such as cashback on every qualified purchase, exact ticket amounts, and no ATM rounding fees. In addition, budtenders receive residual income on every transaction from customers they enroll. For merchants, Lüt offers loyalty and offer tools, reduced cash handling, smartphone or terminal options, e-commerce support, and PCI Level 1 certified with next business day settlement.
Lüt reframes payments from a constant liability into an engine for growth.
What About SAFE Banking or Rescheduling?
For years, industry leaders have pinned their hopes on federal reform. But neither SAFE Banking nor rescheduling offers a guaranteed fix.
The SAFE Banking Act was first introduced in 2017—nearly a decade ago—and despite repeated attempts, it still hasn’t passed. Even if it did, SAFE only protects banks that handle cannabis deposits and loans. It doesn’t compel Visa or Mastercard to process transactions.
Rescheduling is no clearer. Moving cannabis to Schedule III could add compliance burdens or reinforce card networks’ reluctance. The truth is, nobody knows what would happen. What is certain is that dispensaries can’t afford to wait on Washington. They need stable payments today.
Prison Break
Cannabis operators don’t have to remain captives. The industry’s prison break from Visa and Mastercard has finally arrived.
Dispensaries can step off the rails that have abused them for years. Payments become stable, compliant and fast, with rewards that benefit consumers, budtenders and merchants alike.
It’s time for cannabis to stop playing defense against arbitrary shutdowns and start building on offense. Every other industry takes reliable payments for granted. Cannabis deserves the same.
