The cannabis industry is an untraditional multi-billion-dollar industry that operates in a legislative gray zone at the federal level. The complicated legal environment creates unique challenges for entrepreneurs in the industry. While cannabis is legal for recreational sale in nine states, cannabis banking remains illegal. Another budding untraditional industry, cryptocurrency, may have the solution.
The federal government still classifies cannabis as a Schedule 1 Drug, alongside heroin and cocaine. Any firm caught handling the proceeds from cannabis sales can be charged with money-laundering. This eliminates a potential consumers ability to purchase legal cannabis with a credit card.
Without access to traditional banks, cannabis operations are forced to deal almost exclusively in cash. The money can pile up quickly. It took Colorado just eight months to reach $1 billion in cannabis sales, in 2017. This makes cannabis operations a target for thieves.
A large cannabis operation may have upwards of $300,000 of cash-on-hand. A typical suburban credit union will start the day with just $10,000 of physical cash. It is thirty times more lucrative for a thief to rob a cannabis shop than a bank, often with less risk.
Police departments have incentive to keep cannabis cash un-bankable. Forfeiture laws allow the police to seize your cash if they suspect it includes proceeds from crime. No charges are even needed to be filed. Attorney General, Jeff Session, encourages this practice and has called it “an effective tool to reduce crime.”
It is hard for owners of a cannabis business to ensure a safe work environment with the lingering threat of robbery. Some entrepreneurs are pursuing cryptocurrency technology to solve the cannabis industries unique problems.
Consumers can benefit from the adoption of cryptocurrency in the cannabis industry. Many consumers don’t carry a lot of cash on them, instead relying on credit cards to make purchases on the go. If you’re low on cash and want to buy cannabis, Visa or Mastercard, won’t be an option for you because their cards are offered via partnerships with federally regulated banks. You could, however, use your card to quickly purchase a cryptocurrency to use in exchange for your cannabis purchase.
One promising cannabis industry focused cryptocurrency is PotCoin. This token offers consumers zero transaction fees and touts transaction speeds of 40 seconds. Incredibly fast compared with Bitcoins transaction speed of 10 minutes.
Cryptocurrency can benefit the owners of cannabis operations by lowering the supply of physical cash circulating in the cannabis industry. If cannabis companies carry less cash, their risk of robbery dwindles.
Cryptocurrencies can provide transparency, accountability, and reduce risks for cannabis companies. Cannabis companies can provide cryptocurrencies with a dedicated and stable user-base for their currency. As both industries develop, it seems cannabis and cryptocurrency will have a budding future together.