educational

The Legal Gray Area of Cannabis Transactions

The Legal Gray Area of Cannabis Transactions

Across 30 states and the District of Columbia, marijuana consumption is now legal in some form. With more than half the country buying and selling cannabis products legally, there’s still a large gray area when it comes how these transactions are handled.

For example, as of Jan. 2, anyone 21 and older may legally buy and consume an ounce of marijuana in California, whether you’re a resident of the state or not. On the federal level, this is a problem. Agents can still prosecute anyone caught with marijuana bought in a recreational store.

At this point, there aren’t many payment processors willing to stick their necks out until there is more definition and regulation of the market. However, if and when lawmakers do act, there is no doubt that medical dispensaries will come online in the U.S. and to many other countries.

Owners, distributors and growers could also be federally prosecuted, essentially treating them as drug dealers. Banks caught handling cash from these transactions could be prosecuted under organized crime laws. Even though the industry is expected to generate $7 billion a year for California, at this time the cannabis business is considered illegal under federal law.

Banks subject to federal regulations are reluctant to open accounts forcing businesses across California to handle all transactions in cash. We believe this issue must be addressed, sooner rather than later, at the federal level — by Congress defining what is legal and establishing regulations.

A tipping point may have come for California. On Jan. 25, state Sen. Robert Hertzberg, D-Van Nuys, Calif., introduced a bill (SB930) allowing California chartered banks, credit unions and other financial institutions to open checking and savings accounts for marijuana retailers.

This would enable them to issue checks, and pay their employees and other bills like most businesses, with something other than cash. It’s an attempt to deal with U.S. Drug Enforcement Administration rules that still classify cannabis as a Schedule I drug.

Can you legally buy cannabis online? That depends on where you live. In Canada, Buds2Go.ca is considered an online dispensary. It’s also possible in parts of California: we found eight online delivery services listed at KushCa.com backed by payment processors. Technically, it’s not federally legal to deliver across state lines.

There is crossover from the adult market to the cannabis space as well, and we are seeing it as a growth channel for some of our existing clients.

At this point, there aren’t many payment processors willing to stick their necks out until there is more definition and regulation of the market.

However, if and when lawmakers do act, there is no doubt that medical dispensaries will come online in the U.S. and to many other countries. Once this legal channel opens up there is a big opportunity for payment processors. Laws will need to be put in place to control where the money goes and credibility will need to be developed in the marketplace.

At SegPay we believe the legal sale of cannabis online will ultimately happen and we are focused on this issue. We are exploring how we can help sellers of cannabis products, including CBD oil, process payments online.

When the legal and regulatory landscape becomes clearer, we plan to take a leadership role in this process, as we believe it offers a huge growth opportunity (pun intended) in the online payment processing space. We’re also exploring options with banks in both the U.S. in Europe. When the smoke clears, SegPay wants to be a clear leader in this movement.

It took only three years for Cathy Beardsley to turn startup SegPay into a profitable company. As president and CEO, Beardsley oversees the day-to-day operations and long-term strategic planning for the company. SegPay is one of four companies approved by Visa USA to operate as a high-risk internet payment service provider in the U.S. Since 2005, SegPay has offered online merchants a state-of-the-art billing platform that provides realtime payment processing around the globe.

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

profile

WIA Profile: Cathy Turns Creator Platform Experience Into a Model-First Playbook

As both a model and industry executive, Cathy lives in two worlds at once — and that’s exactly why so many creators trust her. “Since I do both things, I can act as the liaison between the model community and the rest of the SextPanther team,” she tells XBIZ.

Jackie Backman ·
opinion

From Compliance to Confidence: The Future of Safety in Adult Platforms

In numerous countries and U.S. states, laws now require platforms to prevent minors from accessing age-inappropriate material. But the need for safeguarding doesn’t end with age verification. Today’s online landscape also places adult companies at uniquely high risk for inadvertently facilitating exploitation, abuse or reputational harm, or of being accused of doing so.

Andy Lulham ·
opinion

What Adult Businesses Need to Know About Florida's Age Verification Law

The rise and proliferation of age verification laws has changed the landscape for the online adult industry. A recent and compelling example is the state of Florida, where Attorney General James Uthmeier has filed multiple complaints against major platforms as well as affiliates accused of violating the state’s AV law.

Corey D. Silverstein ·
opinion

Maintaining Brand Trust in the Face of Negative Press

Over the last year, several of our merchants have found themselves caught up in litigation over compliance with state age verification laws. Recently, Segpay itself was pulled into the spotlight, facing scrutiny over Florida’s AV statute, HB 3. These stories inevitably get picked up by both industry and mainstream news outlets.

Cathy Beardsley ·
opinion

How to Switch Payment Processors Without Disrupting Business

For many merchants, the idea of switching payment processors can feel pretty overwhelming. That’s understandable. After all, downtime can stall sales, recurring subscriptions can suddenly fail, or compliance gaps can put accounts at risk. Operating in a high-risk sector like the adult industry can further amplify the stress of transition.

Jonathan Corona ·
profile

WIA Profile: Katie

Katie is the ultimate girl’s girl. As community manager at Chaturbate, she answers DMs, remembers names, and shows up for creators and fellow businesswomen when it counts. She’s quick to credit the people around her, and careful to make space for others in every room she enters.

Women in Adult ·
opinion

How to Stay Legally Protected When Policies Get Outdated

The adult industry has long operated in a complex legal environment subject to rapid change. Now, a confluence of age verification laws, lawsuits, credit card processing and data privacy rules has created an urgent need for all industry participants — from major platforms to independent creators — to review and potentially overhaul their legal and operational policies.

Corey D. Silverstein ·
opinion

From Compliance Chaos to Crypto Clarity: Making the Case for Digital Payments in Adult

These are uncertain times for adult merchants. With compliance tightening and age verification mandates rising, the barrier to entry keeps getting higher.

Cathy Beardsley ·
opinion

Real-Time Insights to Streamline E-Payments and Stop Lost Sales

A slow checkout process is more than just annoying — it’s expensive. In a high-risk sector like the adult industry, even small delays or declined transactions can cost businesses thousands in lost revenue every month.

Jonathan Corona ·
profile

FSC's Valentine Leads Charge for Sex Worker Rights and Financial Access

Before ever stepping into a courtroom, Valentine already understood the power of presence. After all, they’ve shimmied on stages as a burlesque performer, consulted behind the scenes for creative businesses and moved through the adult industry not just as an advocate, but as a participant.

Jackie Backman ·
Show More