Plastic, weed

Turns out Visa isn’t everywhere you want it to be.

Last week, popular Northern California dispensary Vapor Room announced that it must stop accepting Visa and MasterCard credit and debit payments. Vapor Room customers will have to go cash-only, joining hundreds of thousands of other patients nationwide, as the U.S. Department of the Treasury pressures credit- and debit-card service providers and banks to close legal medical-marijuana business accounts.

Vapor Room’s management wrote on the club’s Facebook page on July 1:

“Dear VRC members- Due to increasing Federal pressure, Visa and MasterCard are now refusing to accept your credit card charges for your medicine at many Bay Area dispensaries. Unfortunately, they will not let MCD’s process your charges any longer. We are working diligently to address this issue quickly. In the meantime, Discover card still works and [there] are ATM’s in the area.”

Though medical marijuana is legal in 17 states and Washington, D.C., the federal government treats it as an illegal, Schedule I drug, officially more dangerous than heroin. According to interviews with bank officials and merchant service providers, the Department of the Treasury has been quietly reminding banks and merchant processors that they risk losing everything if they are even accused of facilitating what they consider to be drug trafficking. Most banks and merchant processors have cut ties to known marijuana businesses.

By doing so, the federal government is actually decreasing public safety, cannabis advocates argue. Forcing clubs to go cash-only creates large amounts of cash, which any police officer will tell you invites patient and dispensary robberies, and makes bookkeeping harder to verify.

Aaron Smith, executive director of the National Cannabis Industry Association, says the Treasury Department can’t ignore federal law. However, Smith told Medical Marijuana Business Daily, “The Treasury Department in our estimation has the ability to change regulations without an act of Congress,” Smith said. “It doesn’t make any sense regardless of what your position is on medical marijuana to force these businesses into a cash-only situation.”

Owners of medical-cannabis dispensaries for years have struggled to work with banks, and the federal government already is pressuring those institutions to not allow pot clubs to open accounts.

Other companies, such as iPad and smartphone credit-card reader Square—which allows businesses to make retail sales on mobile devices—have refused to open accounts for medical-cannabis dispensaries.

Many of Sacramento’s remaining clubs are still accepting plastic, but many also now have an ATM in the lobby. The pool of merchant service providers, however, continues to quickly dry up.