The cannabis industry in the United States has exploded over the last few decades. With legalization on a relentless march across the states, cannabis is now widely tolerated for both medical and recreational use. However, the federal government still regards weed as being illegal, despite strong support from voters. This creates a problem for legal marijuana businesses.
Why Can’t Marijuana Dispensaries Use Traditional Banks?
While cannabis is legal, either recreationally or medically, in more than half the states, it remains illegal federally. 11 states have legalized recreational use while a further 16 have made allowances for the medical use of cannabis with a prescription. While products like CBD, which is derived from marijuana, are perfectly legal, and e-commerce platforms promote the service to CBD businesses, most other cannabis-derived products are more complicated.
Cannabis itself remains illegal at the federal level, irrespective of state laws. This creates a dilemma for banks, who could theoretically be charged with money laundering if they knowingly handle the proceeds of federally-illegal trade.
With many marijuana dispensaries now holding large volumes of cash on their business premises, this, in turn, has also necessitated the hiring of armed guards. Of course, having men with assault rifles guarding huge piles of money is not something you expect a legitimate business to have to resort to. However, many marijuana dispensaries feel as if they have no choice. Without banks to turn to, this is the path that many businesses have taken.
Finding a bank willing to work with a legal marijuana business is often easier said than done. Even businesses that are operating totally legally are caught up in the Byzantine legal arrangements that are in place.
Can Crypto Help?
It has become much easier for businesses to accept cryptocurrency payments and for their customers to make them. However, despite cryptocurrencies being adopted more widely as an accepted payment method by businesses of all shapes and sizes, cryptocurrencies are still too unwieldy for most businesses. However, considering the obstacles involved in handling regular cash for legal weed businesses, the difficulties of using cryptocurrencies don’t seem so severe.
Of course, cryptocurrencies present their own challenges for businesses and it is important that you inform your accountant if some of your income and assets are going to be in the form of cryptocurrency. Buying weed with crypto is becoming increasingly common in the states where recreational cannabis is freely available. Customers often like the enhanced privacy that cryptocurrencies can offer, while businesses don’t have to worry about holding large volumes of physical cash.
Cryptocurrencies aren’t quite a silver bullet for the financial woes of marijuana dispensaries. However, they do offer some unique advantages for businesses in an industry that makes handling fiat currencies awkward. Many customers of these dispensaries appreciate the anonymous nature of crypto while others are hesitant to use their bank cards with businesses that are federally illegal. Meanwhile, businesses don’t have to worry about hiring armed guards to protect their crypto.