A multibillion-dollar, “legal” industry like Medical Marijuana, whose network is spread across 23 US states and the District of Columbia, is still deprived of the very basic thing any industry would need — a banking system.
According to a report by Jeffrey Stinson of The Pew Charitable Trust, the cannabis centers all across the United States are finding it hard to obtain even a simple banking facility. “The abundance of cash makes the country’s 2,000 retail shops and medical dispensaries tantalizing targets for criminals,” the report reveals.
“Without bank accounts, legal marijuana businesses have a hard time paying their employees and vendors. Relying solely on cash leads to a lack of transparency in accounting and auditing, and it complicates paying the taxes that states impose on cannabis.”
The trouble for the cannabis industry doesn’t end here. There are reports of eleven more US states voting in favor of legalizing medical marijuana, thus adding more cash to the vendor’s drawer. The upcoming “lucrative” laws still remain risky for businessmen, who have been kept away from accessing even the basic checking and credit card service from their respective local banks.
There are some reports available on the internet that clearly explain how marijuana dispensaries have become a soft target for burglars. For instance, a crime statistics report last year concluded that marijuana-related incidents has contributed 2% to the overall crime scenario. Among these data are 317 burglaries during 2012 and 2013, and 74 in 2014. Don’t forget that these figures just represent Denver. A wider picture would be more shocking.
The cannabis industry revenue meanwhile is estimated to be rising $2-3 billion annually. Now we know there is definitely a problem. Let’s focus now on WHY there is a problem.
The Conflicting Medical Marijuana Laws
The one, and might be the only, reason why banks are sending cannabis businesses back is a Federal Law which refers to marijuana as a Schedule I drug. Seeing it from a legal perspective, even a drug like heroin looks equivalent to state-approved medical cannabis. Thus, the banks simply want to avoid associating with businesses that deal in Schedule I drugs — legally or illegally. Going into such a partnership simply makes them vulnerable to certain drug laundering laws, which could even lead to suspension under the Fed’s law.
The State and Federal laws are conflicting. The previously introduced bills to support medical marijuana businesses have died. What the industry now hopes for is modification in the current national bill, which puts marijuana in a non-narcotic list.
Is Cryptocurrency an Alternative?
I won’t rerun a show describing the benefits of using a cryptocurrency, as I expect you all to understand what I am trying to say. But to sum up, the cannabis industry could indeed be more open towards adopting cashless and secure methods. And from where I see, there could no better alternative than decentralized cryptocurrency like Bitcoin to act as a payment medium between cannabis users.
Other than Bitcoin, retailers could also opt for altcoins – Dopecoin, Potcoin, etc. – that are specifically designed and launched for cannabis industries. These cryptocurrencies are already being used at online drug stores, but are still lacking access to thousands of physical stores. As technology like NFC expands, we might even see this happening anytime soon– a state-regulated cryptocurrency network to buy/sell cannabis.
Though, let’s not forget BitPay has rejected offering services to marijuana businesses in the past as well. Just reminding!
Images from Flickr.