The conflict between state and federal laws has caused issues in the cannabis industry for decades—especially for companies needing to secure their cash.
When will federal law catch up to the states?
In February, United States Senate leader Chuck Schumer vowed to reform federal law and end prohibition of cannabis on the federal level. This announcement provided hope for many in the cannabis industry who are hindered by the inability to bank safely. Working with senators Cory Booker and Ron Wyden, advocates are anticipating that the comprehensive reform bill will be introduced soon.
Because federally, cannabis remains a Schedule I controlled substance, banking institutions cannot insure—and will not accept funds—from the multibillion-dollar industry, forcing cannabis companies to operate outside of insured banking systems. As an increasing number of states legalize both medical and recreational marijuana, the problems associated with this legal discrepancy continue to grow, and the cannabis industry is seeking financial solutions.
One being experimented with is cryptocurrency. There are several marijuana-specific token exchanges that offer dispensaries, cultivators and consumers an alternative to cash transactions.
Cryptocurrency is a buzzy option in tech circles, but the legality of crypto exchanges and the technology used remains murky for many consumers—including potential users within the cannabis industry. Fortunately for those in Nevada, the state has partnered with a crypto company to provide a cashless payment system for licensed marijuana businesses using tokenized credits.
In January, Multichain Ventures Inc., a blockchain cryptocurrency company, announced its contract with the state to fulfill the requirements of Assembly Bill 466. The bill requires the State Treasurer to create a pilot program establishing a closed-loop payment processing system that safely and efficiently enables financial transactions for marijuana companies. Aimed to provide a secure and convenient method to pay state and local taxes, the bill also offers an alternative to banking for eligible cannabis providers. Once implemented, it could deliver a significant boon to the industry by offering a first-of-its-kind option.
Beyond the state-endorsed program being built, there are other blockchain cryptocurrencies centered on marijuana business. As with many coin exchanges, they are considered volatile investments.
PotCoin. One of the first cryptocurrencies created for the marijuana industry, PotCoin was launched in 2014. It reports that it has more than 408,000 network participants with more than 224 million coins in circulation.
CannabisCoin: Launched a few months after PotCoin, CannabisCoin is a peer-to-peer cryptocurrency that has experienced many dips in value over the years. There are 77 million coins in circulation.
HempCoin: HempCoin was designed to be used specifically by farmers and is one of the first 30 coins created in 2014. There are 253 million coins in circulation.