Apart from cryptocurrencies, there is no other industry that changes as quickly or as unevenly as the cannabis industry.
Cryptocurrencies are making it easy for people in the marijuana business or simply those who are looking to buy some to carry out transactions. The transactions pose as a variety of challenges for anyone attempting to conduct financial transactions even in states that have legalized pot.
The cannabis industry, projected to grow to $50 billion from $6 billion by 2026, has long been in need of a financial solution. Product sales are likely to skyrocket due to the spread of legalization throughout the United States. Marijuana remains illegal at the federal level, but 29 states and Washington DC have legalized some form of drug for medical or recreational use. As a result, most major banks shun the marijuana business, making many in the industry, hang their hopes on cryptocurrencies.
The biggest change in the legal landscape of the herb started in California, whose medical marijuana industry is already as big as the recreational markets in Colorado, Oregon and Washington. Los Angeles has become the largest city in the entire country to allow recreational use. The cannabis industry of Los Angeles has a projected value of 7,000 million dollars.
While the number of banks that will work with medical marijuana companies is growing — estimated to be around 500 today — the majority still don’t. Another complication for most dispensaries is that they can’t access typical merchant services, which companies need to accept credit or debit cards. There is no “cannabis” store identification, as there is with a flower shop or restaurant, and so most dispensaries remain cash only.
In 2014, SinglePoint, a mobile app payment company, placed terminals in medical marijuana dispensaries, in which people could use debit cards to make their purchases. Then overnight the banks shut them all down. There were no guidelines about how banks were supposed to interact with the cannabis industry. 14 percent of the population is locked out of the banking system because they don’t have credit or are involved in high-risk businesses.
Now, Cryptocurrencies provide these people an alternative that will allow dispensaries to accept bitcoin and consumers to pay with it. Ultimately, the cannabis industry, with all its idiosyncrasies, could end up being the first to fully embrace cryptocurrencies.
From a consumer standpoint, the advantages of using cryptocurrency versus cash appear marginal. One benefit, cryptocurrency proponents point out, is low fees—or none at all. But why bother buying cryptocurrency and fussing an app on your phone if you can find an ATM and throw down green? Perhaps that’s why consumers haven’t taken to it. Though cryptocurrency is reportedly accepted at some dispensaries, few people are actually using it.