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Industry Lessons from Multimillion-Dollar Lawsuits

As an industry, we’ve made significant strides in cannabis legalization and cultural normalization in 2019. However, despite this progress, a series of lawsuits and regulatory changes have prompted dispensaries and their vendors to proceed with a growing sense of caution as they seize upon opportunities in the new year.

One vendor that caught some unfortunate spotlight in 2019 was Linx Card. Linx Card offers cannabis customers Linx debit cards they can load at a terminal within dispensaries or via the Linx website via their Visa/MC debit or credit cards.

First Data Merchant Services, a payment processor of card transactions for various Linx entities, claimed in court that it terminated its relationship with Linx Card after discovering a Linx subsidiary “used its account to improperly process transactions on behalf of Linx Card.”

While these are still pending legal matters, Linx Card’s cannabis transactions made with debit cards and gift-card-workarounds are not fully compliant with laws and policies put in place by the federal government, banking institutions and credit card networks (VISA, MasterCard, Discover, and AmEx). Currently, the only fully legal and compliant way to buy and sell cannabis is by using cash or the Alt Thirty Six payments platform.  Click To Tweet

This fact became glaringly clear as 2019 came to a close when Linx Card was faced with a series of lawsuits from cannabis companies alleging the vendor owes them millions. According to court filings throughout the nation, here are at least five cannabis businesses pursuing these lawsuits, claiming they’re collectively owed more than $2.5 million:

Pineapple Express - Locations and Delivery in California
Planet 13 - Superstore location in Las Vegas and California
Reef Dispensaries - Locations in Arizona and Nevada
Silver Stem Fine Cannabis - Locations in Colorado and Oregon
Universal Herbal Center - Locations in Colorado

As we wait for a clearer picture to emerge in court proceedings about Linx Card, it’s important to be aware that this type of “debit card” workaround isn’t fully compliant with payment card network rules or federal cannabis regulations.

Cases like these highlight the importance of using a fully compliant payment solution like Alt Thirty Six to ensure your business doesn’t experience an interruption in operations or cash flow.

Click here to learn about how our payment solutions can boost your cannabis business’ profitability, enhance your customer experience, and ensure comprehensive compliance at all times. Alt Thirty Six welcomes anyone who wants to be a part of the legitimization and normalization of the cannabis space to register for an account.

Click the link below to download Alt Thirty Six's e-book titled "Financial Compliance in 2020: Lessons from Last Year" to learn more helpful insights and tips that'll ensure your cannabis business remains fully compliant while keeping operations profitable and streamlined.

What are your thoughts on "workarounds" within the cannabis industry? Don't forget to share this blog post using the social links below!

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