While the cannabis industry has been touted as a “cash-only” enterprise since medical marijuana was first legalized in California nearly 20 years ago, recent reports indicate that the recreational sector has become fed up with handling massive stacks of cash and have since established a clever method for accepting credit cards payments.
Colorado pot shops have struggled for the larger part of the past year to adhere to federal statutes in an attempt to avoid provoking the DEA from sending in a team to shut them down. Part of this challenge has been conducting legal pot sales, which generate about $14 million per month, without the use of financial institutions.
Even though former U.S. Attorney General Eric Holder devised a set of rules in 2014 that would supposedly allow banks to work with marijuana businesses without the risk of prosecution, there have not been many willing to take a chance on these threatening endeavors because no changes to federal policy have been set in stone. Marijuana remains listed a Schedule I drug under the Controlled Substances Act, which has prevented retail pot shops and banks from getting into bed together. It seems that no one is interested in being sent to prison for money laundering.
However, a recent investigational report by FOX31 in Denver found that almost half of the state-licensed dispensaries (47 percent) operating in Colorado admit they are willing to accept MasterCard or Visa payments. This discovery does not suggest that financial institutions are now welcoming the cannabis industry with open arms, but rather, it seems that pot shops have devised a clever and seemingly legal scheme to throw the hounds of the drug war off their scent.
Some pot shops are apparently conducting credit card transactions under the guise of holding companies, which are entities that would have legitimate banking relationships. Yet, many of those companies are doing business in such a way that never suggests any involvement with the cannabis trade. For example, a credit card used in a Colorado dispensary might show up on a bank statement under the name “MA Garden Supplies,” instead of a pot-themed identity that could possibly raise a red flag with major credit card issuers, like Wells Fargo and Chase, which reportedly monitor for these types of felonious discrepancies.
Interestingly, while in Denver for the 2015 Cannabis Cup, I purchased several marijuana products from two different dispensaries, both of which were more than willing to accept my major credit card as payment. So, it is likely that more reefer retailers are making this method for procuring pot available to their customers than what the mainstream media has managed to uncover. Of course, the ability for dispensaries to accept credit cards is great for all parties involved, as it is convenient for the customer and it limits the amount of cash these stores are forced to keep on hand.
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