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Part of the reason for those who won't accept anything but cash is purely because they're not actually homeless but instead learned that they can make more begging than they can working a crap fast food job for example. I've even heard of groups of people coordinating their efforts so they can make sure they aren't oversaturating a given part of town or in a some cases pooling the takings at the end of the day to help even out the inevitable variability
Certainly there are people that do that or want to use the money for drugs, which is why I always volunteer to buy it for them vs give them money. And I don't carry cash anyway.
If they're genuinely hustling for cash they're unlikely to walk away with you to get food, a bus ticket, whatever because they're wasting time. I've had a few take me up on the offer and then still try to talk me out of cash while walking, but most hustlers just walk away immediately when you call their bluff and offer to buy it for them.