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Friday, July 6, 2012

Cash-Only Pot: Credit Cards No Longer Accepted at Medical Marijuana Dispensaries

Posted By on Fri, Jul 6, 2012 at 7:36 AM

click to enlarge Cash rules everything around here
  • Cash rules everything around here

High FICO score be damned: Your credit is no longer any good at California medical marijuana dispensaries, whose accounts with credit card processors have been canceled, thanks to pressure from the federal government.

Merchant services providers -- the intermediaries between retailers and credit card companies who process customers' payments -- began informing their medical marijuana dealing clients that cannabis credit card transactions would not be processed after July 1, according to Stephen DeAngelo, Executive Director of Oakland's Harborside Health Center.

No government agency is taking credit for making marijuana a cash-only business. But the "factual pattern" is as follows, DeAngelo said: Officials from the Treasury Department flexed on credit card companies, who then informed merchant services providers that they'd be "dropped from Visa and MasterCard forever" unless they stopped processing medical marijuana payments.

This is a safety concern for medical marijuana seekers, who must now

tote around wads of bills in order to purchase their preferred medicine.

It's also part of a larger federal "multi-agency campaign" to

marginalize medical marijuana, said DeAngelo, whose dispensary is also fighting the IRS over business taxes.

Harborside first announced the cash-only move with a tweet and online posting last week. Other dispensaries, including Haight Street's Vapor Room, also announced via the web that they'd gone cash-only.

DeAngelo declined to reveal the name of his dispensary's merchant services provider, but the dispensary did as of Thursday still take debit cards.

Harborside, the nation's largest dispensary, is also fighting the IRS over business tax deductions. The IRS claims that Harborside and other dispensaries owe back taxes because costs made for employee, healthcare, and other deductions are invalid under a section of tax code, 280E, intended to punish cocaine traffickers.

Some unscrupulous merchant services providers have already contacted Harborside, offering to process credit cards in return for a 5, 7, or 10 percent processing fee, but "we don't want any part of that," DeAngelo said.

In San Francisco, some dispensaries have always been cash-only. Some, like HopeNet on Ninth Street, continue to accept debit. At least one rented an ATM machine and set it up at the counter. "It [the machine] is really ugly," said one employee, not authorized to speak with the media. "It's like we're in a cheap convenience store."

It appears a few other dispensaries are working around the feds, using devices like the iPad-equippable Square to process card transactions. It's possible those Square accounts are connected to "sharks" that are either using a different business name or category to hide the marijuana sales from the feds, or using an off-shore bank, DeAngelo surmised.

Being unable to use a credit card to pay for medical cannabis hurts low-income patients, according to Americans for Safe Access: someone on a fixed income wishing to buy, say, an ounce for the month at $270 must now spend $320 in $40 eighths.

Not to mention the crime aspect -- a medical marijuana customer is now a guaranteed cash-carrying target for petty criminals.

Not to mention that getting away from the cash-only lifestyle, having a bank account and paying taxes was what going legal was supposed to be all about, DeAngelo said.

Shutting off cannabis buyers' credit is "a crazy policy," he said. "And it only helps criminals."

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About The Author

Chris Roberts

Bio:
Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.

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