Such direct card or ATM-funded sales would mark a turnaround from the early days of medicinal marijuana, when some independent sales organizations signed sellers but later canceled their merchant accounts because the federal government at the time publicly frowned on marijuana sales even if they were legal in some states, according to payments consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group.

But cash-based industries face theft and loss issues, and in the wake of legalization the pendulum is swinging toward acceptance of cannabis merchants, he says. “With Colorado there’s become some legitimacy to these businesses,” says Ablowitz. “The mainstream and the cultural attitude toward these businesses—there’s a softening in attitude.”

Acceptance, however, still is limited, says Deana Rich of Los Angeles-based Rich Consulting, which advises ISOs on risk issues. She notes that large, national banks issue most payment cards, and transactions from Colorado cannabis stores invariably will flow across state lines during the clearing and settlement process. That means an ISO and any bank or processor supporting its recreational-marijuana payment services could be subject to a crackdown should federal government change its stance.

“Therein lies the issue, we’ve had inquiries from some ISOs that are interested in doing this but are unable to,” Rich says.