Why the Marijuana Business Wants Crypto

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As organized mobs ransack all cannabis retail stores across the country in a wave of violent robbery, the US Senate leadership simply refused to do anything to stop it.

If Congress doesn’t help, it is time for the cannabis industry to help itself. Cryptocurrencies offer legal cannabis companies immediate alternatives to an exclusive banking system and pure cash-only business. We have to adopt her now.

The state cannabis industry has grown exponentially over the past 25 years, but banking the revenues from legal cannabis deals is still illegal under federal anti-money laundering (AML) laws. This effectively excludes the industry (and any companies that serve it) from access to banking and financial services.

Khurshid Khoja is a Principal at Greenbridge Corporate Counsel, a law firm that represents legal cannabis companies. This article is part of Culture Week, which examines how crypto is transforming media and entertainment.

The industry has struggled to cope with the growing public safety threat posed by forcing legal cannabis companies not to open bank accounts and to hold large amounts of cash on their own. With each new state legalizing cannabis, the problem has only grown in scope and geography, while Congress is largely burying its head in the sand.

While cannabis companies have always been very aware of the threat posed by armed robbery, the violence used in carrying out these robberies has also become more organized and bolder, often using heavily armed and organized crews, and too often ending in gunfire.

Myself and other industry advocates (including cannabis entrepreneurs, cannabis workers, medical cannabis patients, drug policy reformers, and others) have long focused our efforts to combat this threat on reforming banking laws and diligently calling on lawmakers to ensure safe and fair enforcement pass (SAFE) Banking Act. Along with other members of the National Cannabis Industry Association, I traveled annually to Washington, DC, on a pilgrimage to the Halls of Congress to educate lawmakers on why bank access is a public safety issue.

As we explained to our members of Congress on these visits year after year, most government-licensed cannabis companies have seen them be banned from banking services and / or abruptly and involuntarily lost banking information after receiving those services. As a result, these companies are in the unenviable position of primarily operating in cash, accepting payments only in cash, and harboring, securing, and moving large amounts of cash on a daily basis – leaving their staff exposed to armed robbery or worse .

But despite years of efforts to educate Congress, it has done little to alleviate this threat. It was especially frustrating to see government legalized companies (and their individual employees, customers, and owners) living year after year at constant threat to their physical and financial well-being due to an avoidable risk to public safety. And unfortunately, last week, Congress ironically relinquished its duty to counter this danger again through legislation to finance the defense of our country.

In particular, the Senate leadership refused to include the text of the SAFE Banking Act in the mandatory National Defense Authorization Act – despite requests from their colleagues in the House of Representatives (who have now passed the bipartisan SAFE Banking Act in one form or another.), Several times) . With the stroke of a pen, the law would have reduced the incentive to attack these vital stores and removed the cash-rich honeydew pots from those stores.

Calling this one deeply discouraging does not begin to capture the feelings of despair and disillusionment that are at play, especially among already ailing cannabis retailers. When Congress refuses to help, it is time to help ourselves. As an industry advocate, I think the time has come to accept the previously unthinkable – to be completely and voluntarily without a bank account, as an ideal to be achieved, not a circumstance to be avoided.

It is up to the industry (and especially small, minority-owned and women-owned cannabis companies) to look outside of traditional financial institutions for safe deposits, corporate loans, payment processing, and other basic financial services. Cryptocurrencies offer the only immediate alternative to running pure cash transactions and a practical replacement for the banks that are not yet able to service legal cannabis deals (and for those banks that may choose to do so, even after they have established SAFE Banking).

Cryptocurrencies are incredibly promising, and not just for access to financial services through decentralized finance (DeFi). They have the opportunity to level the playing field between large, well-capitalized Multistate Operators (MSOs) on the one hand and small businesses (including women and minority-owned companies and social justice licensees) on the other.

See also: A former beauty queen raised $ 12 million to “revolutionize” cannabis. They can’t find the dishes

The large MSOs can afford access to banking today according to the currently effective, very restrictive and openly discriminatory FinCEN guidelines and will pay the exorbitant fees of the banks to compensate for the costs of the increased monitoring required for AML compliance .

Small businesses cannot use these banking services on relatively comparable terms or at all. Put another way, while federal law remains unchanged, the largest banks and their MSO customers have the financial resources to get federal regulators to look the other way at their otherwise deliberate violations of AML laws – but everyone else is excluded.

While my industry colleagues and I have no intention of abandoning the SAFE Banking Act, it is sobering to see that the alleged cannabis champions of Congress keep failing to advocate public safety. It should come as no surprise, then, that cannabis companies become less and less concerned about the prospect of exemption from the banking system (and its associated financial oversight) and increasingly disaffected with securing future access to financial services through congressional action alone. Cryptocurrency is a viable alternative today, and it is time the cannabis industry helped launch it.

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