Dollar bills are refused all the time because of who is spending them not cocaine or whatever. Banks refuse customers who don't have ID, or are on blacklists (I'm sure you know) so unless you are physically in a place to spend that dollar, your dollar isn't fungible.
I don't see a scenario where you have bitcoin, spend it from an address and someone somehow stops you. Maybe the vendor doesn't like you but that's how commerce works. I sell guns and bombs to people I like, not those I don't. Monero makes it so I have to sell my dangerous shit to people I don't know.
