A Nevada marijuana dispensary called Blüm processes credit card payments that appear on statements as purchases from "Midgrun Eats LLC food truck." This tactic allows Blüm to accept cards in a cash-dominated industry, potentially boosting sales through convenience amid federal banking restrictions. Experts view it as a risky workaround that invites legal scrutiny.
Skirting Federal Barriers with Creative Disguise
Marijuana remains a Schedule I substance under federal law, equivalent to heroin, barring federally insured banks from handling related transactions. Credit cards, processed through these banks, stay out of reach for most dispensaries, forcing reliance on cash, ATMs, or debit systems. Blüm sidesteps this by routing payments through a merchant account disguised as a food truck, confirmed by calls to its six Nevada and California locations.
Jeremy Skaff, vice president of sales at Journey Business Solutions, described the approach as entering through an "upper window" rather than a back door. His Colorado firm advises cannabis businesses nationwide on finances, noting that such fronts enable rare credit card acceptance. No other Washoe County dispensaries offer this option, giving Blüm a clear edge in customer convenience.
Profit Gains Meet Heightened Legal Risks
Customers favor credit cards for rewards and ease, as cannabis advocate Will Adler of Silver State Government Relations pointed out. "People love using credit cards, you get points! It’s a competitive edge," he said. Skaff added that more payment options draw business since few carry cash today, though he stops short of endorsing the method.
Banking attorney Candace Carlyon warned of felony risks in disguising federally illegal proceeds, potentially violating money laundering laws. These statutes target transactions that conceal the source of unlawful funds. Nevada's U.S. Attorney Nicholas Trutanich emphasized federal enforcement duties in June, and his office neither confirmed nor denied scrutiny of Blüm last week.
Industry-Wide Struggles Fuel Desperate Measures
Cannabis firms face chronic banking woes, with many enduring account closures. Credit unions, lacking federal insurance, serve more of them—633 institutions by the first quarter per Treasury data analyzed by Marijuana Business Daily, up from over 400 in early 2018. Still, waitlists stretch months, pushing operators to improvise.
Skaff recommends safer alternatives: debit cards, on-site ATMs, and gift cards, which avoid direct bank involvement. He has witnessed food truck facades in Colorado but discourages them as short-lived. Blüm, owned by California cannabis firm Terra Tech, recently settled a fraud lawsuit with a former partner, adding to its profile.
State tax rules impose no credit card bans, shielding customers from chargeback risks. Yet the practice exposes businesses to fines or probes, highlighting tensions between state-legal markets and federal prohibitions.
