Bitcoin and cannabis have a lot in common. Both gray market commodities, regulated state by state, neither one necessarily has the full blessing of the federal government. With over half of US states having some form of cannabis legalization, and most having decriminalization at the least, the industry has grown significantly.
The Gray Market
Cannabis represents over $8 billion in annual revenue, with experts projecting that number to more than double in the next five years.
However, without federal approval, it’s impossible for cannabis businesses to get bank accounts. Without a bank account, there’s no debit or credit transactions. While the obvious solution is an ATM, the storage of the cash remains a problem.
And that’s where cryptocurrency, and Bitcoin ATMs, can come in. In a previous time, LocalBitcoins provided a convenient way for dispensary owners to meet up with Bitcoin owners in order to cash in some of their holdings for BTC. That’s still possible via other websites. LocalBitcoins stopped allowing in-person trades some time ago.
For a regular fiat business, though, investing some or all of your proceeds in cryptocurrency can seem like a risky endeavor. Here in Maine, in Bangor, there’s but one Bitcoin ATM. I don’t believe it even allows you to sell your crypto, so that would put the dispensary operators at a disadvantage.
Today, there are stablecoins. A precursor to eventual central bank-issued digital currencies, stablecoins would be great if they were more liquid. If there were a large network of ATMs that allowed you to go in and out of stablecoins via cash, that would certainly help the cannabis industry. Then instead of storing their funds in volatile cryptocurrencies, they would essentially just be digitizing them.
A Vision Denied
But a lack of infrastructure means such a movement is unlikely. It’s more likely that the federal government will allow cannabis businesses to have a pass and do banking regularly. This is a shame, as it’s been a wasted opportunity for cryptocurrency.
Of course, stablecoins have evolved significantly in the time that the cannabis industry has been looking for a better way to store its cash. There’s no need to spell out why it’s bad to have many thousands of dollars in cash on hand: you become a target.
Indeed, numerous dispensaries across the country have been the subject of robberies, violent and otherwise. While the federal government has sat back and done nothing, so too, it seems, have the proprietors of the new wave of stablecoins, who could have reached out and created a network of some kind.
But it’s no better anywhere else you look. I once interviewed a medical dispensary in California that was going to do delivery, with payments strictly in Bitcoin or Potcoin. They were out of business within a year, despite having better prices.
What has Potcoin really done for the marijuana industry, or any of the other cannabis-related coins for that matter? The answer seems obvious: not much. The proof-of-stake coin has such inflation that it’s worth a fraction of a penny today. A small fraction, at that.
So, where does the blame lie for the lack of penetration by Bitcoin into cannabis businesses? Some might say the dispensaries, growers, and others should be looking for ways to store their money on their own. But I would argue that someone should have shown them the light before they went looking.