Cannabis Producers Could Use Some Crypto After Snub From Banks
Cannabis and crypto go a long way. They share the same “high” and miseries.
Still a taboo in many countries, the U.S. Cannabis industry sees cryptocurrency as its saving grace after being declined by the traditional banking sector. Being ignored by banks is just one of the many gnawing hurdles that the weed industry is facing today.
Even though cannabis use has been legalized for both recreational and medical or therapeutic use, it is still considered illegal under most laws. In fact, the pressing regulatory issues have caused many financial institutions to snub or leave out any transactions involving cannabis and the like.
Traditional Banks Say No To Weed
Cannabis dispensaries and companies have been snubbed by credit card networks and banks that forced them to keep their cash mostly on-site which make them a common prey for robbers.
With cryptocurrency use, marijuana traders can easily send and accept crypto payments as well as hold crypto securely on cold wallets. However, there are some notable downsides to using crypto instead of cash for this type of transaction.
For one, using crypto could be inconvenient, especially for those who are new to the crypto space and have no idea about paying with digital assets.
More so, for companies that decide to use crypto for pot transactions, they still are prone to risks of being shut down by the government in lieu of federal regulations.
This is exactly what happened in 2018, when Coinbase had to close down an account that belongs to a medical marijuana dispensary based in Washington.
Now, considering that crypto may be the key to solve the banking dilemma of marijuana companies, there are still many problems it won’t manage to remedy at this point including low profit margins and ridiculously high taxes.
While it may not be the perfect solution to pressing banking problems, this is seen to be better than nothing.
The crypto and cannabis industry had its first collaboration in the Silk Road founded by Ross Ulbricht before it has been chased and permanently closed down in 2013. Crypto was used for marijuana transaction, regarded as a criminal activity at that time.
Weed-Crypto Partnership Morphs Into Something Bigger, Better
It has been nine years since the closure of Silk Road by the FBI, and a lot has changed with the Web3 and cannabis sectors.
In 2018, the Farm Bill enabled the removal of hemp from being paired with marijuana as indicated in the Controlled Substances Act.
In the same way, many states have lobbied to legalize cannabis use. In 2021, Colorado was able to collect roughly $423 million in tax from the sales of marijuana which is higher when pitted with its tax revenue of $387 million in the previous year.
Cannabis and crypto have definitely morphed into something bigger and better just like in the case of the Crypto Cannabis Club, founded by CEO Ryan Hunter, which is a popular social club that allows pot users to use NFTs as a membership card.
Hunter’s vision for the Crypto Cannabis Club is to build a supportive community that is available for both real-life and virtual immersive experiences.
Cannabis and crypto share the same objectives – and miseries – and it doesn’t look like the banks will be changing its mind anytime soon with regards going easy on cannabis traders and lend them money to make their business grow.
And for crypto, yes – the regulators will always have it under their crosshair.
Crypto total market cap at $952 trillion on the daily chart | Source: TradingView.com Featured image from Funny Pin, chart from TradingView.com