Dispensaries Defend Cashless ATM Smokescreen From Fraud Claims
Switch Commerce claims that Trulieve deceived financial institutions
An international cannabis dispensary and its Arizona-based subsidiaries told a judge Friday that its use of cashless ATMs did not directly violate the rules of or deceive credit card companies that still prohibit cannabis purchases.
Fighting against fraud and racketeering claims in Arizona state court, Trulieve Cannabis Corp argued that fines imposed by Visa onto a Colorado bank, Pueblo Bank and Trust, should not be passed onto the dispensaries, and are instead the responsibility of the bank and the payment processing company that approved the cashless ATM transactions. The payment processor, Switch Commerce, claims that Trulieve deceived the institutions by masking the card payments as cash withdrawals.
“Trulieve knew the cashless ATMs were not proper,” Switch attorney Marcus Fettinger said in opposition to the defendants’ motion to dismiss. “They knew it was for point of sale transactions and not cash withdrawals and that’s the fraud.”
Because cannabis is still federally illegal, major credit card companies like Visa prohibit their customers from purchasing cannabis with their cards. To get around the potential loss of business, dispensaries use cashless ATMS that disguise point of sale transactions as simple cash withdrawals, transmitting a code to payment processors and sponsor banks that are indistinguishable from regular cash withdrawals.
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