Despite its growing popularity and legitimacy, the cannabis industry continues to struggle with banking relationships.
Because federal law prohibits the sale and distribution of marijuana, cannabis cash could be considered laundered money. Additionally, credit card companies and payment processors don’t want to be liable for potential lawsuits. When a company can’t accept credit or debit cards, and doesn’t have access to business loans, it forces them to rely on cash.
A cash-only business is inconvenient and a desirable target for thieves. Filing an insurance claim for stolen cash is difficult if not impossible. Cash-only businesses also find it hard to secure cannabis supplies for marijuana packaging. Everything from managing payroll to paying rent is more complicated — more akin to running a business in 1821 than 2021.
Until federal legislation is passed to solve this dilemma, cryptocurrencies could be the solution. Cryptocurrency exchanges are not regulated in the same way as banks. It’s a lot easier for companies to open accounts with them. It also gives companies a tool to send large sums of money in an instant. Cryptocurrency allows for cash-free transactions, lower fees, transparency, and international transactions.
Crypto banking isn’t without its hurdles. The volatility of cyrptocurrencies makes it difficult to accurately track the value of the cryptocurrency against the dollar at the time of each transaction. Additionally, because the prices can fluctuate wildly, you may discover your assets are suddenly worth a lot less. Obviously, this could wreak havoc on your company’s finances and quarterly budgeting.
However, the two burgeoning industries could prop each other up. As we’ve seen, cryptocurrency can help launch and sustain cannabis, and if cannabis embraces digital currency it could open the door for other (possibly more traditional) businesses to do the same.