Despite the fact that you can legally purchase marijuana in several states across the nation (including recreationally in Colorado and Washington), cash is still the only method of payment.
While some dispensaries that sell marijuana may have had the ability to accept plastic at one time or another, most banks and credit card issuers have severed ties with such businesses due to ambiguity concerning federal and state laws.
In short, banks and credit card companies don’t want to get in to bed with the wrong people and be held accountable for their wrongdoings, simply for providing financial services.
But a new memo from the Department of Justice released in late August made it somewhat clear that federal prosecutors are mainly concerned with illegal activity related to the sale of marijuana.
In other words, even though state and federal laws differ in the treatment of marijuana, prosecutors are concerned with things like sales to minors, trafficking of other drugs, laundering, and other more serious criminal activities.
Outside of these types of things, the Feds made it seem like they’d let individual states supervise the dispensaries on their own.
This has led some to believe that the credit card companies may ease policies on doing business with these entities, though that doesn’t seem to be the case just yet.
American Express and Weed Don’t Mix
One of the nation’s top credit card issuers, American Express, does not do business with medicinal marijuana dispensaries.
After this latest guidance, they told creditcards.com that they continue to stand by their original policy of not doing business with such companies, which adheres to federal law.
It appears as if all the other major credit card companies feel the same way. While they might be missing out on a big chunk of untapped business, the potential penalties involved seem to outweigh the benefits.
Sadly, the companies that peddle marijuana legally on the state level have no other choice but to deal in cash. Notice the ATM machine in the image above.
Unfortunately, that comes with its own consequences, including the risk of robbery for having all that cash on hand, or tax evasion by the companies conducting business.
Put simply, without a legitimate banking relationship, the dispensaries are actually posing more of a risk to the neighborhoods they operate in, and potentially allowing things like laundering to take place.
So one could argue that it’d be in the Fed’s best interest to make their stance very clear on banking within the legal marijuana industry to prevent such negative consequences.
Of course, opponents will probably be outraged at the idea of stoners charging bags of weed on credit cards they eventually default on.
Stay tuned for more on this subject…it’s an interesting one.
Update: Apparently you can use a credit card to buy marijuana now in states where it’s legal. Visa told the Denver Post that it will allow merchant banks to determine the legal ramifications of accepting payments for pot, a softer stance that its original more anti-pot position. Shoppers are reportedly buying more than they originally intended because they can put it on their plastic…