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A few years ago, at one of the many pre-legalization cannabis conferences, business expos or cannabis competitions that after a while all seem to blend into one very hazy and terpy glad-handing session, someone manning the table at one of the (boring) flower-less booths handed me a card. It was the size, shape and heft of a credit card\u2014which, as something very hard to use, then and now, in the almost-banking-less marijuana industry, was enough to strike interest. But this wasn\u2019t a credit card at all. Instead, the card said, \u201cPotCoin.\u201d<\/p>\n
\u201cSo, what\u2019s this?\u201d I asked. \u201cIt\u2019s PotCoin,\u201d said the fellow who handed it over. \u201cGreat,\u201d I said.\u201cSo, what is it?\u201d<\/p>\n
Had I heard of Bitcoin? he asked. This being 2015 or so\u2014around the time that online, crypto-powered drug marketplace Silk Road was busted, but Bitcoin was still mostly a thing for drug dealers and geeks, and not mainstream investors\u2014I replied that I had.<\/p>\n
\u201cGreat,\u201d he said. \u201cThis is like Bitcoin, but it\u2019s for pot.\u201d \u201cGreat,\u201d I said. \u201cWhat\u2019s it for\u2014and how can I use it?\u201d \u201cAh,\u201d the fellow said, before launching into a lengthy and well-practiced monologue about blockchain, the digital peer-to-peer ledger; and cryptocurrency, the decentralized, digital currency that uses blockchain.<\/p>\n
If you have heard any number of Bitcoin stump speeches, and if you\u2019ve wandered onto social media anytime in the past five years, you\u2019ve heard this spiel. A libertarian\u2019s dream. Forget banks, forget governments. Total freedom through technology! (Mind you, by this time, only a handful of states had legalized recreational cannabis.)<\/p>\n
\u201cGreat,\u201d I said. \u201cSo how is any of this going to help cannabis?\u201d<\/p>\n
It was around then that the conversation screeched to a halt, with a return to the stump speech before both parties lost interest. (I still have the card, which had an activation code that I could use to put some PotCoin in a crypto wallet, sitting around in a junk drawer somewhere.)<\/p>\n
Whether the man in question was Joel Yaffe or Nick Iverse, the two men who publicly claimed to have founded PotCoin, I couldn\u2019t tell you if my life depended on it. A message to Yaffe sent to his email and Instagram accounts wasn\u2019t returned. But in that time, not much has changed in the discourse around cannabis and crypto.<\/p>\n In 2022, Bitcoin, blockchain, cryptocurrency and other blockchain-reliant gizmos such as non-fungible tokens (NFTs) are near-household words whose adoption (or at least awareness) has been helped along by big-name billionaire endorsers including Twitter founder and former CEO Jack Dorsey and Tesla CEO Elon Musk, as well as a growing crew of extremely online investors. Cannabis is still bereft by a host of problems\u2014around banking, around cash flow, around product tracking and authenticity\u2014that a decentralized, peer-to-peer currency might be able to solve\u2014but hasn\u2019t.<\/p>\n And so, the question remains: What can cryptocurrency do for cannabis, exactly? Is cryptocurrency just the latest shiny new thing, or does blockchain truly offer something valuable for the marijuana industry? The answer largely depends on who you\u2019re asking, and on how bullish they are on cryptocurrency.<\/p>\n If you\u2019re a believer, then blockchain and crypto are pure magic, ready to revolutionize everything from regulatory requirements to payment solutions to basic user and customer data. But for most cannabis investors, entrepreneurs and customers, cryptocurrency and blockchain remain a solution in search of a problem: an interesting idea, an emerging technology, but nothing that seems immediately able to help with the questions of raising money, using banks, paying taxes, attracting customers and the simple art of consuming weed.<\/p>\n For businesses who are still shut out of banks because of federal law, and for companies who must pay state and federal taxes in hard US currency and who would have to pay transaction or conversion fees if they operated in a currency other than US dollars\u2014\u201ccrypto is solving no problems,\u201d says Brendan Hallinan, a San Francisco-based cannabis attorney who represents clients all over northern California.<\/p>\n \u201cPeople always talk about it like, this or that coin could do this or that for the cannabis industry,\u201d says Jessie Grundy, founder and CEO of Oakland, CA-based Peakz brand. \u201cBut from everything I experienced, it was horrible.\u201d<\/p>\n Young and tech-savvy, Grundy was a relatively early adopter, trying out Litecoin and a few other tokens in 2017-18. There was some utility in \u201ctrying to do black-market shit,\u201d such as shuffling money around, Silk Road-style, he says. However, for trap artists (and just about everyone else), cash is always preferable. For legal operators like Grundy, whose branded flower is now available in three states, US dollars were still needed. Crypto, then, had appeal as an investment vehicle\u2014but with its notorious volatility, it\u2019s just as easy to lose your shirt when dealing in crypto as it is to become the next Bitcoin millionaire. (Grundy admits that he lost interest after losing some money. Buy the dip, bro!)<\/p>\n But that\u2019s also why crypto may not be all that great for cannabis. Aside from conversion requirements, volatility is probably the chief reason why crypto isn\u2019t a solution for cannabis\u2019 woes. For a dispensary or a business that needs to raise $1 million or needs to pay the state franchise tax board $200,000 in taxes, a digital currency that investors don\u2019t deal in and that the state won\u2019t take\u2014and that might be worth $800,000 or $1.2 million tomorrow, depending on Elon Musk\u2019s tweets\u2014isn\u2019t the thing.<\/p>\n \u201cFor dispensaries, it\u2019s hard for them to even take credit card payments,\u201d Grundy says correctly. \u201cSo, for them adding crypto, that\u2019s almost a no-go.\u201d<\/p>\n In some instances, crypto makes things worse for cannabis. Steve Schain is a Philadelphia-based attorney. He and his firm represent cannabis clients all over the country. Schain\u2019s secured bank accounts for large, publicly traded cannabis companies\u2014and he\u2019s a strong believer in blockchain and crypto as cannabis solutions.<\/p>\n The firm also represented a dispensary in Washington state that briefly accepted 28 different types of cryptocurrency. Briefly, because as the dispensary discovered, what customers wanted was to exchange their cash quickly and easily\u2014their US dollars\u2014for cannabis. What they didn\u2019t want to do was deal with digital wallets or converting the cash to crypto and then into cannabis. That, in blockchain parlance, is \u201cfriction\u201d\u2014what you or I might call \u201ca pain in the ass\u201d\u2014and thus a legitimate barrier to adoption.<\/p>\n As far as Schain and other experts I spoke to, no dispensaries in the US currently accept Bitcoin\u2014or if they do, it was a very recent innovation. \u201cIt wasn\u2019t a great idea,\u201d Schain says. \u201cIt\u2019s just one more thing to deal with.\u201d<\/p>\n Initially, Schain points out, cryptocurrency held appeal for anyone with large amounts of cash they needed to either store safely or (ahem) clean. But \u201cthat didn\u2019t really work,\u201d he says. The problem was that every time cash was converted into Bitcoin for storage, safekeeping or transfer, taxes were owed. Then, whenever someone wanted to use the Bitcoin to actually do something, like, say, buy a house, converting Bitcoin back into cash was another taxable event.<\/p>\n \u201cPeople thought they could evade the IRS\u2014and they were flat wrong,\u201d Schain says. \u201cIt was a good idea, but aside from facilitating international money laundering or trying to assuage safety concerns, it just wasn\u2019t applicable.\u201d<\/p>\n There\u2019s a school of thought in cannabis that cryptocurrency\u2019s main benefit is to solve banking problems, and once Congress gets its act together and passes banking reform\u2014like the SAFE Banking Act that\u2019s cleared the House several times only to stall in the Senate\u2014crypto\u2019s appeal disappears. Schain rejects this argument outright. SAFE Banking merely formalizes the 2014 Financial Crimes Enforcement Network (FinCEN) guidelines. \u201cThat\u2019s better than nothing, but nothing great,\u201d he said.<\/p>\n Banks would still be required to monitor customers\u2019 accounts and file Suspicious Activity Reports for a host of reasons, and file Currency Transaction Reports for activity in amounts greater than $10,000. In Schain\u2019s view, cryptocurrency offers less value to cannabis than blockchain generally.<\/p>\n Shifting from a government-sponsored single tracking mechanism, such as MJ Freeway or Metrc, to blockchain for state-mandated \u201ctrack-and-trace\u201d networks would be a benefit for transparency as well as security. It might also require states like California, who refuse to share any track-and-trace data with the public, citing state law, to finally reveal how cannabis flows around the country\u2019s biggest individual market. Deals could be inked in smart contracts that automatically execute between two parties and the terms of which exist on blockchain. Growers could tag seed packs or strains with a blockchain-powered QR code as a stamp of authenticity. And dispensary owners could track their customers\u2019 buying habits.<\/p>\n \u201cAll that kind of stuff makes a lot of sense,\u201d Schain says. \u201cIt transcends alleviating security concerns. Your $20 bill cannot see what your covered medical condition is. Your $20 bill can\u2019t talk about a terpene profile. Your $20 can\u2019t do that, and your $20 bill doesn\u2019t integrate with a hard copy ledger. Cryptocurrency does.\u201d<\/p>\n That all makes sense\u2014too much sense. So why hasn\u2019t blockchain technology <\/a>been adopted by the cannabis industry yet? The simple answer is that the government won\u2019t let it. Track-and-trace has to be done via whatever system the state in question mandates. And taxes still need to be paid in dollars.<\/p>\n Robert Carp is a retired lawyer in Massachusetts who runs a compliance business. Many of his clients are cannabis companies\u2014all of whom asked him to find ways to reduce their costs, including debit and credit card transaction fees (which they shouldn\u2019t be processing, but whenever there\u2019s a will, there\u2019s always a way). He\u2019s working on a blockchain-powered platform that promises to do just that, as well as serve as an all-in-one enterprise management tool.<\/p>\n \u201cWe\u2019re still working on it,\u201d he says, before pivoting into the familiar pitch. \u201cIt\u2019s coming, and it\u2019s going to capture the [cannabis] industry, because who\u2019s gonna say no to saving money?\u201d Nobody, of course\u2014but when and how both remain to be seen.<\/p>\n This story was originally published in the\u00a0print edition<\/a>\u00a0of Cannabis Now.<\/em><\/p>\n The post Cannabis and Cryptocurrency: Frenemies<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
A few years ago, at one of the many pre-legalization cannabis conferences, business expos or cannabis competitions that after a while all seem to blend into one very hazy and terpy glad-handing session, someone manning the table at one of the (boring) flower-less booths handed me a card. It wasContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":9,"featured_media":54623,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[831,2323,50,833,85,16040,15407,837,7565],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/54622"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=54622"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/54622\/revisions"}],"predecessor-version":[{"id":54624,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/54622\/revisions\/54624"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/54623"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=54622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=54622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=54622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"cryptocurrency](\"https:\/\/cannabisnow.com\/wp-content\/uploads\/2022\/05\/cryptocurrency_cannabis_now.jpg\")
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\nRead More: Cannabis and Cryptocurrency: Frenemies<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"