Millions celebrated as more and more states legalized it, thousands and thousand shook their head in outrage. As with all divisive topics, the pros and cons are piling up on both sides but the truth is this: marijuana is here to stay and strive and so does the multi-billion dollar business that’s built around it. But the cannabis business has its own problems that can’t be ignored - namely the lack of banking services available to such entrepreneurs.
But the solution might already be here, hidden in a technology and innovation we all love. One divisive topic paired with another.
Cryptocurrency and blockchain might just be the exact thing that marijuana businesses are looking for. And here’s why.
Why can’t cannabis businesses get banking services?
Although marijuana usage is still deeply rooted in disapproval (everybody can judge for themselves whether they agree with that or not), using weed for medical and recreational purposes in many states across the country is completely and fully legal.
But unfortunately selling legal merchandise is not the only requirement of running a successful business. Unless you only want to deal with cash-based purchases (which is actually an issue in the sector that we’ll touch upon later), the need for banking services to carry out digital payments is crucial.
There’s only one small problem here: selling and buying marijuana is still illegal on a federal level. And as the federal government oversees all US banks and credit unions, the banks are, to somewhat level rightfully, squeamish to provide services to marijuana businesses - even if purchasing weed is perfectly legal in that given state and under that specific legislation.
According to a CNN report, only 1 in about 30 banks accept a marijuana business as a potential client - and even that one charges premium for that. That also leaves the other 29 in a vulnerable position - the position of the unbanked.
Selling and buying marijuana is traditionally cash-based. Illegal merchandise is usually like that for all the obvious reasons, and traditions like that are hard to erase. But an industry that is estimated to be worth several billion dollars is not something that can be carried out solely in cash - entrepreneurs and business people in the sector need a solution for conducting digital payments.
The banks are not willing to provide that solution. Lucky for us: banks are not the only option here.
Stablecoins and blockchain might just be the saviour for the marijuana business
Stablecoins are a great alternative for these businesses - and not simply because, due to cryptocurrencies being anti-discriminatory, they are truly available to everyone no matter the product they are selling.
The problem of not having access or being denied access to banking services is one of the original issues that bitcoin and other cryptos set out to solve, so it fits perfectly into the banking problem of the marijuana businesses across the US and even Canada.
Stablecoins - those coins whose value is tied to a traditional currency or commodity like the US dollar - are again a little divisive in the crypto community. While they definitely have advantages - no one can deny that - they are, in a way, against the whole ‘to the moon’ ideology that is deeply rooted in the crypto community. As they are tied to a traditional currency, their value will never double or triple and they will always be partly influenced by governmental and centralized financial decisions. But because of the very same reason, they are also protected from the volatile nature of the ‘true’ cryptos - which might make them just the perfect solution for marijuana businesses that need a trustworthy currency to conduct their business with.
And misfits have always liked each other - the cannabis business and stablecoins could truly be a match made in heaven.
Stablecoins like USDC and Tether are available, they are legal and they are also way cheaper and easier to handle than cash. As they are cryptocurrencies, they also have the additional benefit of anonymous transactions which is something that a lot of customers in the cannabis business still prefer to have.
Using blockchain system is also beneficial as transactions are almost instantaneously verified - so there’s no worrying about a declined credit or other traditional banking related problems.
Bitcoin can also be a good solution as it is widely accepted and considered to be the most trustworthy out of all the cryptocurrencies. It can be a great way of turning revenue from cannabis businesses into an investment. The only problem is the volatility of bitcoin which might not make is the most suitable for the cash flow of a business.
Using Coin.Space for digital payments as a business
So maybe now you are convinced that stablecoins and cryptos in general could be a great solution for the banking problem of the marijuana business. But how would that work exactly?
If you are not familiar at all with how blockchain works and how exactly a cryptocurrency transaction is carried out, you might want to dedicate a bit of your time to research those topics in depth. But once you are familiar with the basic principles and concepts, a really user friendly solution can be Coin.Space.
The Coin Wallet offers an integrated and unified crypto wallet service where customers can buy and sell more than 20 thousand tokens including the most popular ones like bitcoin, litecoin, bitcoin cash, ethereum and ripple and several stablecoins. It also places huge emphasis on security and anonymity which is a big advantage for a lot of customers in the sector.
Sending and receiving crypto payments are also made very easy with the wallet - you only need to know the other party’s crypto address to carry out a transaction. After the transaction is completed, you can also easily exchange the different cryptocurrencies which means that your customers do not have to pay in one specific coin but they can choose from a variety of different currencies.
Dealing with your finances or generating cash flow directly in cryptocurrencies solves the issues of digital payments - without having to deal with banks that do no want to associate with cannabis businesses due to federal regulations. This can be the perfect method for businesses who are looking to switch from a heavily cash-based system to a digital one with easy, affordable and available digital payment systems using cryptocurrencies. The added benefits of traceability and security of using blockchain technology is really just the cherry on top.
While banks can always refuse service to any customer, cryptocurrencies are available to everyone - no matter where they live, no matter what legislation they are under and no matter what they sell.
Federally chartered banks cannot and will not accept money made from selling cannabis (even it is completely legal for recreational or medicinal purposes). Crypto wallets can and will.
Crypto has long been the solution for the unbanked - now it’s time the unbanked knows about it too.