Posted January 10, 2014 by Chris Warren in Debit Cards

Pot Purchases with Plastic? The Credit and Debit Cards Question

Paying for pot purchases with plastic in Colorado?
Paying for pot purchases with plastic in Colorado?

One of the first major news stories of 2014 is all about marijuana. Starting January 1, pot has been available for commercial purchase by non-medical customers in Colorado. In other words, Colorado residents are now able to purchase marijuana for recreational use by walking into a store, making a selection and paying for it at the counter – just as if they were purchasing a gallon of milk or an iPad.

But one question that has accompanied the rollout of legal pot sales in the Rocky Mountain State is whether customers would only be able to make purchases with cash. It’s an issue because marijuana sales, while legal in both Colorado and Washington State, are still prohibited by the federal government. So, out of this arises this: pot purchases with plastic? It opens up the credit and debit cards question on pot purchases.

In the past both Visa and MasterCard said that they would not allow illegal transactions to flow through their payment systems. But a recent article in the Denver Post indicates that credit and debit cards are being used to buy marijuana in Colorado. In part, this is due to the fact that Visa and MasterCard are leaving the decision about whether credit and debit cards bearing their logos can be used up to individual merchant banks.

“In this instance, the federal government considers the sale of marijuana legal but has announced that it will not challenge state laws that legalize and regulate marijuana sales,” Visa said, in a statement to Denver Post reporter, David Migoya. “Given the federal government’s position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers (banks) are best suited to make any determination about potential illegality.”

While experts quoted in the Denver Post story maintain that Colorado pot retailers still face a risk in choosing to offer credit and debit card payment options, the motivation to do so is clear. In his story, Migoya quotes a customer who decided to make a bigger purchase when he found out that the store accepted plastic. “I showed up with some cash on hand because I had read prior that these places would be cash only,” said the customer, who would give only his first name, Kevin. “Once I found out that they were taking cards, I decided to buy more than the $25 in cash I had with me.”

Chris Warren