In the first month of legal, recreational marijuana sales in Washington, two welfare clients withdrew cash at pot stores using their electronic benefits transfer cards in violation of state law.
That's according to the Office of Fraud and Accountability within the Department of Social and Health Services.
"We were a little behind the curve because we weren't aware that the stores were going to have access to banking services," said Steve Lowe, director of the fraud unit.
Twice in July, EBT cardholders withdrew cash at ATMs located within marijuana retail locations - one at a store in Bellingham, the other in Vancouver. DSHS is not identifying the stores. The transactions were flagged in a monthly "match" report that looks for EBT card use at prohibited locations.
The amount of cash withdrawn was $80 at one marijuana retail store and $20 at the other. A third ATM transaction occurred at an unlicensed medical marijuana location that later reopened as a licensed recreational pot shop, according to DSHS. State officials say they have no control over EBT card usage at medical marijuana dispensaries because they are unlicensed and not recognized by state law.
A 2012 law requires businesses where persons under the age of 18 are not permitted to block the use of EBT cards at in-store ATMs and point-of-sale machines. Licensed marijuana retail stores are just the most recent addition to the list of prohibited businesses, which also includes strip clubs, tattoo parlors and casinos. The legislature passed that law following media reports of widespread EBT card use at adult businesses.
After the ATM transactions were identified, both the marijuana stores and the EBT clients received warning letters. In addition, all newly licensed marijuana retail stores are being notified of the law and instructed to use a special code to block the use of EBT cards at their in-store ATMs and on their point-of-sale machines.
"Once we get the businesses to block, there isn't an opportunity for our clients to make the purchases at those locations, so that really does solve our issue," said Lowe of the fraud unit.
Lowe said so far the new pot businesses have been "responsive" to the issue.
As for the clients, Lowe said the warning letters have proven effective in the past. Repeat offenders can face fines, a loss of benefits and even prosecution. He's hopeful the August report - due in mid-September - shows no use of EBT cards at marijuana retailers.
However, that wouldn't necessarily mean welfare cash isn't being used to buy legal pot. That's because, barring a fraud tip, the state has no way to police an EBT client who withdraws cash elsewhere and then uses that money to purchase marijuana.