In recent years, the situation around cannabis has changed for the better. Marijuana is no longer the topic everyone tends to avoid. Additionally, the number of states where pot is legalized keeps increasing. At first glance, it may seem like there are no clouds over the industry, but is that really how it is?
The situation is better than a decade or more ago, but it is far from perfect. Pot is still illegal on the federal level. That creates many problems for this fast-growing industry, including the fact banks and other financial service institutions are not willing to take the risk and work with marijuana companies.
Until the Senate approves the cannabis banking bill, the industry requires something to solve the banking needs, and bitcoin offers an alternative to financial service institutions.
Cannabis businesses can’t access traditional financial services
The whole story around legalization goes in a good direction. But those who work in the industry keep facing many issues, and the biggest one is the inability to access traditional banking services. Banks are not prepared to work with marijuana businesses. It’s the same thing with the card companies that won’t cooperate with the cannabis section until it becomes legal on the federal level.
The result? Businesses cannot deposit their earnings as they are left without banking support. In addition, the dispensaries are very often the robbery targets. Many stores work on a cash-only basis, and criminals are aware of it. So, owners have to deal with many things alone, including the risk of robbery, even though the industry has outstanding potential and keeps climbing up the ladder of growth.
“A continuing struggle we’ve faced is safe banking. There has never been an efficient, safe way for us to bank because the appropriate laws have not been passed. This is something we are currently working on, and there are safe banking laws being discussed, but as of right now that is a major hurdle in our industry,“ John S Nemeth, the president and the owner of THC Alaska Cannabis & Concentrates told AskGrowers.
Bitcoin as the answer?
Being a cannabis entrepreneur is everything but easy, and all those who work in the industry keep trying to find alternatives to banks. In recent times, one of the options presented as the potential solution, at least until the cannabis banking bill sees the light of the day in terms of Senate approval, is bitcoin.
Many companies and dispensaries started looking into cryptocurrencies. The reason for that is quite apparent. Doing business without the ability to access the services every other industry can, including loans, is quite tricky. Furthermore, you can’t accept card payments either. The entire business is based on cash, and that’s far from perfect.
The advantages of using bitcoin in the cannabis sector
Bitcoin can offer a lot to the cannabis industry, so some dispensaries decided to implement it into their businesses, and many others are considering that option.
- Bitcoin allows businesses to extend their customers base – the moment a company implements the cryptocurrency, those using bitcoin will be able to purchase the products with it. Most stories around cryptocurrencies focus on them as investments. But, as many companies now use them as the official payment method, people can spend them, and buying pot products is one of the ways to do so.
- Fees are lower – some small banks and other financial service institutions are willing to provide their services to cannabis companies, but there is a major downside. Fees are often remarkably high. When it comes to bitcoin, the fees are rather small.
- Companies can go international – marijuana companies that are planning to obtain customers from around the world or work overseas can entirely rely on cryptocurrencies and count on quick, easy, and stress-free payments.
- Safe and secure method – the stigma around bitcoin faded, which allowed many to see all the good things about the payment method, including that it is safe and secure. An interesting fact is that blockchain tech has never been hacked. Transparency is ensured.
- Setting up bitcoin as the payment method is relatively simple.
Are there any drawbacks?
There are many advantages to using bitcoin, but it’s not a perfect solution. Cryptocurrencies, bitcoin included, are volatile. These currencies did not achieve stability on the market, so they are still considered tricky as they may fluctuate a lot.
That’s not the only major drawback because there is an issue with taxes. The taxing process is not the same as the one for the regular income. It is essential to track all the transactions, but not just that. It is necessary to follow the bitcoin’s value against the US dollar when the transaction is made. The entire process increases the costs, and it takes a lot of time.
Bitcoin is a great option, but safe banking is required as well
Bitcoin comes with its own set of perks and several drawbacks. It's a great option, but it is far from ideal. Using it as a payment option can work, but businesses cannot expect their customers to switch to bitcoin to purchase their products. The purchases with bitcoin are just a tiny part of the income companies make.
With that said, it's clear that safe banking must find its way to the cannabis industry. After all, it is the industry that keeps on growing, and it deserves to have access to banking services the same as all the other businesses and industries do. Relying on the cash only and running the business that way requires more effort, time, and patience. In the absence of loans, the owners have to fund their businesses themselves. They are left with cash they can't deposit, constantly being the target of robbers.
Everything would change with cannabis federal legality. The banks and other financial service institutions would start cooperating with the cannabis industry. The card companies would offer their services as well. Everyone in the pot market is impatiently waiting for the cannabis banking bill to pass the Senate so they can feel some relief after years of struggle to run the business without safe banking.
Even with the cannabis banking bill or marijuana federal legality, bitcoin would remain one of many great payment methods customers can use. The popularity of these currencies will rise in the future, so we can expect more people to use them to buy all kinds of services and things, including pot products.
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