Cryptocurrency Offers the Cannabis Industry An Alternative to Banks

With the increase in the number of violent robberies in recent years, US-based cannabis businesses are forced to rethink their financial system. There are claims that police are encouraging organized break-ins by not responding to reports, arriving hours later, and appearing to stand by and watch a robbery unfold at a legal marijuana store.

While a majority of states across the US consider cannabis legal for medical or recreational use — it is still illegal according to Federal laws. This means even legal cannabis businesses and dispensaries are forbidden from using federal banks or credit card networks.

The inconsistency in the regulations has left the cannabis industry out of the traditional financial system for years. Businesses are forced to hoard a large sum of money on-site — making them vulnerable to burglaries.

Many industry advocates, cannabis business owners, and workers have been tirelessly working to reform the banking laws and pass the Secure and Fair Enforcement (SAFE) banking act. However, not much has changed yet.

• Tax reporting

The government levies heavy taxes on cannabis businesses. For instance, in the state of California, for every pound of flower you sell, you will be required to pay a $154.40 tax, 15% excise tax, and an additional 7.25% sales tax. If you deal in cash only, bookkeeping may get extremely difficult and time-consuming. However, with crypto — calculating taxes can be easy and efficient as all the payments will be recorded on your wallet. You can also automate your taxes through tax automation software. (Here’s a list of top crypto tax filing software)

• Security threats for employees delivering cannabis

Depositing cash from your store to somewhere safe can be very risky. Despite a lot of precautions, violent robberies are unavoidable. Additionally, carrying around a lot of cash also makes your delivery partners vulnerable to attacks.

• Medically unsafe

Over 51% of consumers prefer contactless payments — according to a Mastercard poll. Cash may carry germs and pass on contagious deceases from person to person. On the contrary, contactless crypto payments are generally safe and can be made from your own device.

Cash payments carry a lot of risks and are not ideal for the cannabis industry. The government and financial institutions are not coming to rescue business owners. It’s time the cannabis industry should help itself.

• Minimal Risk

Due to the lack of a payment system, most dispensaries rely on cash payments, which makes them vulnerable to thefts and robberies. When it comes to crypto payments, transactions are virtual, relatively secure, and irreversible. This minimizes the risk of loss, thereby making the lives of cannabis workers less dangerous.

• Transparent Transactions

In states where marijuana is legal only for medical purposes — the government needs all the records of where it came from and who bought it. In such scenarios, Blockchain can not only serve as a mode of payment but also can help in tracking transactions as it shows a clear trail of the money.

• No Intermediaries

Crypto transactions are direct and immediate. There are no external intermediaries involved in your transactions. All the payments you collect will be transferred directly to your wallet by your crypto payment processor.

• Secure, Private & Anonymous

If you’re worried about your privacy, again, crypto has got you covered. All the transactions happening over the blockchain are identified by an alpha-numeric string known as a public key. Thus, while tracking your transactions and holdings is possible, no one can verify your real-world identity associated with the public key.

• Lower Fees & Faster Processing

Crypto payment processors charge lesser fees when compared to traditional payment gateways. Additionally, payments made through blockchain are instant and irrevocable. This makes crypto a compelling alternative to traditional banking solutions.

• No Chargebacks

Chargebacks are very common when collecting payments online. For chargebacks filed against you an additional fee between $20 to $100 may be levied depending on your payment processor. On the other hand, crypto payments are permanent and cannot be altered. This means none of your buyers can file fraudulent chargebacks.