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Visa Passive Aggressively Calls Out Cannabis Industry for Using Cashless ATMs
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The payment processing giant just issued a warning against dispensaries using cashless ATMs to facilitate purchases of cannabis products with credit or debit cards.
Published on December 14, 2021

Visa just issued a warning against dispensaries using cashless ATMs as a way to circumvent the restrictions on cannabis payments. Cashless ATMs are meant to offer customers and patients a more convenient way to purchase weed products without requiring cash. 

On Dec. 2, Visa said in a statement that the company is “aware of a scheme where [point-of-sale] devices marketed as ‘Cashless ATMs’ are being deployed at merchant outlets,” in violation of Visa rules, according to Marijuana Moment.

Cashless ATMs are point-of-sale devices driven by payment applications that mimic standalone ATMs, according to Visa. Rather than receiving cash, however, no disbursements are made to cardholders. Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance that money has been disbursed.

People who frequent dispensaries often may recognize this process. We definitely do! But for those who don’t, the cashless ATM process usually goes down like this: You make a $65 purchase at a dispensary. While checking out, the cashier rounds up the purchase to $80. The charge is then coded as a "cash back" disbursement. The cashier then subtracts the purchase price plus taxes from the apparent $80 withdrawal and returns the change to the customer. To the payment processor, it would look like an $80 withdrawal from an ATM, but to the customer, it seems as though they bought cannabis with a card.

While the memo fails to specifically call out state-legal cannabis companies, Visa said that “Cashless ATMs are primarily marketed to merchant types that are unable to obtain payment services — whether due to the Visa Rules … or legal or regulatory prohibitions.” The latter clause is obviously pointed specifically at cannabis businesses.

Visa’s warning feels like a particular slap in the face, considering the US Senate recently removed marijuana banking from the Defense Bill, which would have allowed banks to legally work with cannabis businesses and given retailers the opportunity to legally accept credit and debt. That’s why many cannabis business owners see the use of cashless ATMs as a convenience for customers, and thus, a smart business decision. It allows customers to swipe plastic like they would at any other retailer. As of now, federal cannabis prohibition remains steadfast, so the weed industry continues to be a cash-only business.

Nathaniel Gurien, CEO of Fincann, a company that provides financial services specifically to cannabis businesses, estimated that thousands of cannabis retailers in the US currently use what he called “the cashless ATM solution” in order to accept cards, a setup he described as “clever, attractive and likewise fraudulent.”

“What keeps me up at night is that when, not if, one or more eager assistant U.S. attorneys with their eye on advancement sinks their teeth into this, it has the catastrophic potential to derail our industry’s momentum and inflict great damage,” he said in an email to Marijuana Moment.

Visa’s compliance statement is brief when it comes to enforcement and repercussions. Misuse of cashless ATMs “will be subject to non-compliance assessments and/or penalties” or “subject to further compliance enforcement,” it says, but doesn’t include details.

The discrepancy between federal and state cannabis laws in the US continues to complicate business operations in the industry. Unfortunately, federal legalization doesn’t currently seem like a priority in 2022. But that doesn’t mean banking reform has to wait.

Mary Carreon
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Mary Carreon is an award-winning journalist from Southern California and the Associate Editor at MERRY JANE. She’s drawn to stories about cannabis and the environment, social equity, veterans, the history of weed in California, and the rise of psychedelics and plant medicine in the 21st century. You can find her bylines in Forbes, Kitchen Toke Magazine, OC Weekly, (the OG) LA Weekly, High Times Magazine, Sensi Magazine, and more. Mary loves green juice, coffee, and red wine equally — but not at the same time. When she’s not working, you can find her doing yoga to Ravi Shankar, or migrating towards the nearest venue playing the best music. Follow Mary on social media @maryyyprankster or visit her at marycarreon.com
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