Weed is legal in Uruguay (restrictions apply, but you can do some paperwork and you'll then be able to buy it) yet the Central Bank suggested pharmacies to only sell it in cash, out of fear that it would have negative consequences for other CC transactions in the country, or for the country as a whole I suppose.

I can understand CC companies not wanting to accept payment for weed in another country if the card was issued in the US, but for local cards, that's basically enforcing one country's laws over another. And you could have local CC companies, which we do, but then those are only accepted here. So if someone local wants to have a CC that can be used abroad, they need to accept the fact that the CC company will enforce the laws of the US even if they do a transaction outside of that country.