The use of cannabis is widespread across the United States whether it be legally, medically, or illegally. For the old school, “Marijuana”. Since States have begun legalizing the drug, the highly anticipated industry has investors flocking to it. The opportunity is expected to be worth $75 billion by the year 2030. Similarly, the emergence and use of cryptocurrency, a non-regulated digital asset, has an astounding worth of $600 billion and is quickly growing.
Both industries continue to rise at exponential rates with eager investors wanting to get into the game early. However, as you may have heard, there are large risks surrounding both the sale of cannabis and cryptocurrency, primarily due to stringent government regulations. Nonetheless, the growing use of cryptocurrency can bolster the cannabis market in a legal fashion, propelling both industries into a legitimate dynamic economy. High risks, high reward becomes easy money.
Cannabis and the Banks
When it comes to federal rules and mandates, banks must act according to Federal law. And since cannabis is deemed illegal under federal regulations, banking institutions are prohibited from servicing such an industry. You can’t use credit or debit cards because those transactions must be cleared by banks, therefore, dispensaries across the US operate on a cash-only basis. The banks are federally regulated and the coordination of state law, national drug policy and Federal public safety operations just have not aligned. We are a long way from allowing bank transactions to manage cannabis profits.
For a while an approach was for cannabis companies to acquire an account with the local credit union, but the costs associated with maintaining the accounts is undesirably high. The credit unions also walk a fine line in maintaining lawful operations under their federal oversight. Thus, many credit unions have abandoned these programs, as well.
As a result of all the cash transactions, dispensaries are dealing with between $0-$75,000 per day in cash. This large sum of money makes for an extremely unsafe environment for not only the employees, but customers, as well! It also creates challenges in paying taxes to the U.S. Government. This is required by the Internal Revenue Service on all income. Often store owners use duffle bags to transport the money or bury it in the ground. Cryptocurrency can be the answer in alleviating many of the concerns associated with the buying and selling of cannabis. Most importantly, it can allow the “safe” management of profits.
Cryptocurrency can minimize the amount of cash exchanged within the cannabis industry. That’s not to say it would eliminate cash transactions. Rather, cryptocurrency can create safer and more desirable outcomes for all parties involved. Store owners, employees, and the government would all have a win-win situation. Tax revenue would be predictable, and the safety conditions would improve for dispensaries and their customers. The use of cryptocurrency has exploded in the last few years and has gained a following through its use are ransom compensation. This negative connotation may work against the use we propose.
Of course, as the cryptocurrency stocks is increasing, uncertainty follows closely. As the name insinuates, there is a cryptic factor to this form of currency because there is no government regulation or endorsement of the currency. For many, it brings about questions such as “what transactions are acceptable, legal, trustworthy, etc.”. However, there are a few new forms of cryptocurrency being introduced in the cannabis market. One example is “Potcoin”, a digital coin is meant to create a more transparent transaction process. Organizations like WeedMD have created incentives for users to complete their transactions with Potcoin. WeedMD rewards those using cryptocurrency with points and special offers.
The Highway to Profit
There are currently nine U.S. States that have legalized marijuana for medical and recreational use; while sixteen permit only medical use. The new cannabis world is ever-evolving, so who knows what tomorrow may bring as it relates to law and acceptance. Like “weed”, once eerie and unpredictable, cryptocurrency can have a major positive affect in solving financial issues across the cannabis community. The profits are “real” and the new millionaire are proof. It is another one of those societal issues that will take leadership to connect dots. We know the high risks will lead to high rewards, John Boehner, former Speaker of the U.S. Congress just joined the Board of a Marijuana firm.