If you’re about ready to refill your supply of medical marijuana, you might want to stop by an ATM first.
In the past few days, a number of Bay Area dispensaries have told their clients that from now on it’s cash only, because Visa and MasterCard aren’t allowing their cards to be used for marijuana purchases anymore.
"Visa
and MasterCard are now refusing to accept your credit card charges for
your medicine at many Bay Area dispensaries. We are working diligently
to address this issue quickly," Vapor Room, a Haight Street dispensary, told members Sunday.
Harborside Health Center in
Oakland sent its patients a similar message, blaming a "continuing
federal threat of seizure against financial institutions."
In
fact, Harborside, the largest medical marijuana dispensary in the
country, is facing a federal seizure threat of its own. On Wednesday, it
was served notice from the U.S. attorney’s office in San Francisco that
its facilities in Oakland and San Jose are subject to forfeiture
because they are being used to "distribute and cultivate marijuana."
Although
marijuana for medical use is legal in 17 states plus the District of
Columbia, it remains verboten as far as federal law, and the feds
continue to take a dim view of commerce surrounding the practice.
"This
has been going on for at least two years, with major financial
institutions purging medical marijuana dispensaries from their
transactions," said Kris Hermes, a spokesman for Americans for Safe Access, a national advocacy group based in Oakland.
For its part, San Francisco’s Visa said Wednesday, "Visa has not
changed its policy. Our policy is that Visa cards should only be used in
connection with legal transactions. We do not allow the Visa payment
system to be used for any illegal activity and have banned illegal
transactions on Visa cards. Merchant banks, also known as acquirers, are
responsible for ensuring that their merchant customers comply with all
applicable laws."
Calls and e-mails to MasterCard were not returned.
Turned away at banks: Hermes said that the dispensaries are also having trouble finding a bank that will take their business. Bank of America, Citibank and JPMorgan Chase are reported to have closed off their teller windows to the businesses, as has San Francisco’s Wells Fargo, which up until last year was offering accounts to local dispensaries.
"In
view of the complex, inconsistent legal environment relating to medical
marijuana dispensaries, Wells Fargo Regional Banking has opted not to
bank these businesses," the bank said last year. "The policy extends to
all medical marijuana dispensaries, and … we have advised all such
businesses that bank with us that they will need to close their deposit
accounts. Additionally, it has been our policy not to provide merchant
card processing services to businesses of this type."
That means Wells Fargo debit cards can’t be used either, which comes as an additional blow to the dispensaries. Meanwhile, Square,
the San Francisco mobile payments platform, is also cracking down on
dispensaries that use its service. "Dispensaries are a violation of our
terms of service. We have and will continue to shut down any users who
do not follow the rules," Square said Wednesday.
Deaf ears: Responding to the concerns raised by the banks, 15 members of Congress, including Reps. Zoe Lofgren, D-San Jose, Pete Stark, D-Fremont, Sam Farr, D-Monterey – oh, and Ron Paul, R-Texas – asked U.S. Treasury Secretary Timothy Geithner in
May 2010 to assure financial institutions "whose account holders are
involved in a business ostensibly operating in compliance with a state
medical marijuana law," that they would not be targeted by the
department. Two years on and Geithner has yet to respond.
Earlier, in October 2009, U.S. Attorney General Eric Holder issued
a memo telling U.S. attorneys around the country they "should not focus
federal resources in your states on individuals whose actions are in
clear and unambiguous compliance with existing state laws providing for
the medical use of marijuana."
The congressional appeals and Obama
administration memos appear to have had little effect. Besides the
threat of foreclosure, Harborside, for example, is embroiled in a $2.5
million dispute with the IRS over a claim the dispensary illegally
deducted business expenses such as payroll taxes, rent, health insurance
and workers’ compensation, because it was involved in what the IRS
labeled "the trafficking of controlled substances."
All this
means that legalized medical marijuana businesses are having to conduct
transactions in the same way as those who traffic in the substance
illegally – in cold, hard cash. Some dispensaries already have ATMs in
their offices, but that doesn’t lessen the potential criminal hazards.
"Dispensaries
are now having to deal with large amounts of cash," said Hermes.
"That’s not to say security at the facilities aren’t adequate, but it
does put them at greater risk of being robbed. These are issues everyone
is struggling with."
