As of July 2021, 35 US states have legalised medical cannabis, and 17 US states have legalised recreational cannabis. While this is cause for celebration by cannabis entrepreneurs and users, there’s still one huge problem facing the cannabis industry: banking.
As cannabis is still criminalised at a federal level, banks cannot work with cannabis businesses without handling laundered money (that is, money earned from crime and processed into a legitimate source). This means that many cannabis businesses have to operate without credit cards, bank accounts and bank loans – a problem that has held back growing businesses and excluded new brands with limited starting cash from entering the cannabis industry. The problem even extends to payment processors, who are nervous they could be held liable if someone sues.
Without access to banking services, cannabis businesses are forced to pay taxes, rent, staff and suppliers in cash. However, keeping so much cash on hand is very risky, as it makes dispensaries a target for robbery.
Naturally, many businesses have turned to cryptocurrencies for help. Cryptocurrencies offer businesses transparency, a way to operate cash-free and a solution for international payments. There are even special cryptocurrencies designed for cannabis businesses, including PotCoin (POT), CannabisCoin (CANN), HempCoin (THC) and Tokes (TKS).
However, cryptocurrency isn’t a perfect solution. For example, the value of cryptocurrencies changes daily, meaning that businesses risk losing money if their coin of choice tanks. Cryptocurrencies are also taxed differently than business income, which makes banking with cryptocurrency headache-inducing.
Ideally, cannabis businesses need a way to access banking services so they can run like regular businesses. There is one bill that could grant them this right, the MORE Act. The MORE Act is currently waiting on a vote in the US Senate (fun fact: the bill is also backed by Amazon).
However, the MORE bill won’t fix the cannabis banking problem alone. Due to the sensitive and stigmatised nature of the cannabis business, banks that do work with cannabis companies charge inflated fees and interest rates for their services.
Ultimately, three things will help cannabis-based businesses in America: federal cannabis legalisation, restrictions on banking fees for small cannabis businesses, and the de-stigmatisation of cannabis worldwide.