IMHO it's not that JoAnne's wants to discourage business from Canadians, as much as it is that they want to minimize the risk of fraudulent transactions. With card-not-present transactions, such as mail order / phone order / online purchases, the risk of a customer using a stolen card is much higher than in person. Here's a link to read:
http://www.pcmag.com/article2/0,2817,2216470,00.asp ... The rate of fraud on international transactions is apparently almost triple the rate for domestic sales.
What happens when there's a fraudulent transaction? As a merchant who has been stung this way several times, I can tell you... the cardholder wins, and the merchant loses. Not only does the merchant lose the merchandise, and the shipping cost, and the money, the merchant also has to pay a fee of $25 or so. If this happens too many times, the merchant's reputation with the bank gets damaged, and then the merchant has to pay a larger fee each time they process a credit card.
Apparently the owners of JoAnns have decided that the risk is not worth the reward. We can disagree, but as the business owners, it's really entirely their call.
In my store, we do sell internationally, but only to certain countries, and we fraud-screen all of our orders. One rule we do stand firm on is that a customer cannot order from country A, and ask for us to ship it to country B. The only exception we make is for Canadian or Mexican customers who want to ship to a border state; we understand that many people have mailboxes in border towns, and come across periodically to collect their mail and packages.
It's also worth mentioning that some card-issuing banks have rules set in place that do not allow for, say, a German credit card to be used outside of Europe. In this case, such a credit card purchase is declined by the card-issuing bank, and not by the merchant. So if anyone from outside the US is trying to make a purchase online with a card that they know is good, and has funds, they should call their card-issuing bank to see if they can correct the problem.