Cannabis Producers Could Use Some Crypto After Snub From Banks
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Cannabis and crypto go a long way. They have the same “height” and misery.
Still taboo in many countries, the US cannabis industry is seeing cryptocurrency as its salvation after being abandoned by the traditional banking sector. Ignoring the banks is just one of the many gnawing obstacles facing the weed industry today.
Although the use of cannabis has been legalized for both recreational and medical or therapeutic use, it is still considered illegal under most laws. In fact, pressing regulatory issues have led many financial institutions to suppress or eliminate all transactions involving cannabis and the like.
Traditional banks say no to weed
Credit card networks and banks have clamped down on cannabis dispensaries and businesses, forcing them to keep cash mostly on-site, making them common prey for robberies.
Using cryptocurrencies, marijuana dealers can easily send and accept crypto payments and keep crypto securely in a cold wallet. However, there are some significant drawbacks to using crypto instead of cash for these types of transactions.
First of all, using crypto can be tricky, especially for those who are new to the crypto space and have no idea about paying for digital assets.
Additionally, companies that choose to use crypto for pot transactions are still exposed to the risks of being shut down by the government rather than federal regulations.
That’s exactly what happened in 2018 when Coinbase was forced to close an account belonging to a Washington-based medical marijuana treatment facility.
Now, while crypto may be the key to solving marijuana companies’ banking problems, there are still many problems it can’t solve at this point, including low profit margins and ridiculously high taxes.
Although it may not be a perfect solution to urgent banking problems, it is considered to be better than nothing.
The crypto and cannabis industry first collaborated on Silk Road, founded by Ross Ulbricht, before it was chased down and shut down permanently in 2013. Crypto was used to trade marijuana, which was considered a criminal activity at the time.
The Weed-Crypto partnership is turning into something bigger, better
It’s been nine years since the FBI shut down Silk Road, and a lot has changed with the Web3 and cannabis sectors.
In 2018, the Farm Bill allowed hemp to be delisted under the Marijuana Compounding Controlled Substances Act.
Similarly, many states have lobbied to legalize the use of cannabis. In 2021, Colorado could collect about $423 million in taxes from marijuana sales, up from $387 million in tax revenue the year before.
Cannabis and crypto have definitely evolved into something bigger and better, just like the Crypto Cannabis Club founded by CEO Ryan Hunter, a popular social club that allows pot users to use NFTs as a membership card.
Hunter’s vision for the Crypto Cannabis Club is to build a supportive community that is available for both real-life and virtual immersive experiences.
Cannabis and crypto share the same goals – and miseries – and banks don’t seem to be changing their minds anytime soon when it comes to making it easier for cannabis traders to lend them money to grow their business.
And for crypto, yes – regulators always have it in their crosshairs.
Crypto total market cap at $952 trillion on the daily chart | Source: TradingView.com Featured image from Pinterest, chart from TradingView.com