There is little debate about how difficult circumnavigating the strict regulation of the cannabis industry is. Regardless of the undue burden, canna-businesses continue to grow and rake in millions. The cannabis industry is a total anomaly when analyzing retail trends. While brick and mortar struggles and most transactions take place digitally, cannabis remains unwavering. Nearly all transactions in cannabis are cash and, with the exception of local delivery services, require a visit to a dispensary. This regulatory conundrum is exactly the solution cryptocurrency seeks to provide.
20+ Year Issue
Starting in 1996 with Compassionate Use Act, regulatory relief on taxation, classification, and banking for cannabis operations is still utterly constricting. Most dispensaries are forced to set up as a 501C3 non-profits. They accept donations instead of selling products. The “thank you gift,” in exchange, is the cannabis products the patron desires. It’s ridiculous. Over 20 years, cannabis sales (or donations) are in the tens of billions. This figure will expectedly grow as more and more states roll out recreational use for adults. These “donations” really have no place to go besides a safe. Since the is FDIC insuring banks, they can’t touch “weed money.” This fuels Congress to push for policy reform. Case in point: 2018 already welcomes a new House Bill on the matter. Cannamerica waits to see what happens.
Nonetheless, the retail cannabis industry rolls on. Of those high rollers, some seek innovation and take advantage of new technology and consumer trends. Cryptocurrency fits this bill. The decentralized structure allows for unrestricted digital transactions. Payment solutions predate cryptocurrency, however blockchain technology brings a level of security previously unheard of. The nature of the UI for cryptocurrency exchange is similar to commonly used mobile payments. By simply downloading an app, patrons can purchase coins and use the coins to exchange for goods. Since purchasing cryptocoins, a taxable commodity, consumers may use their credit or debit cards to complete the purchases. While technically any cryptocoin works in this situation, specific coins now exist specifically for cannabis industry transactions.
Since the 2008 introduction of Bitcoin, 1384 cryptocurrencies were debuted via Initial Coin Offering, or ICO. Just like the IPO of any public company, initial coins are available for purchase to early supporters. The hopes are the price eventually appreciates as the company grows and the investment base broadens. Of these almost 1400 coins, a few are specifically labeled for cannabis currency. These coins combined worth makes up around $200Million market cap. Some of which are being lauded as the solution, others are making waves with large scale investment.This figure is only expected to expand. Especially as celebrity media steps in, it’s only a matter of time before the masses, and dispensaries, jump on board.