Legal cannabis is a rapidly growing industry raking in billions of dollars per year, but the growth of this industry continues to be hampered by federal laws preventing banks from handling accounts for canna-businesses. Most businesses dealing in cannabis are unable to make use of bank accounts, credit or debit card sales, or institutional business loans, all thanks to the classification of marijuana as a Schedule I drug.
Faced with a struggle to handle their businesses without traditional financial support, some canna-businesses are turning to bitcoin as a solution. Two financial startups have found a way to use the cryptocurrency as a workaround to allow canna-businesses to accept credit card payments. “There’s no industry — whether it’s the production and sale of cannabis or the production and sale of a cup of coffee — that can operate safely, transparently or effectively without access to banks or other financial institutions and traditional services,” said Jon Baugher, co-founder of POSaBIT, one of the companies exploring a bitcoin-based solution. “That’s where we thought we could leverage the use of digital currency.”
POSaBIT has installed kiosks in 30 Washington dispensaries that allow customers to purchase bitcoin with a credit card for a $2 fee. The customer can then redeem the bitcoin for the cannabis product that they want, or use it in any other way they choose. POSaBIT will then transfer the cash value of the bitcoin back to the retail store. However, this method of transaction does require that a canna-business using the service have a bank account.
Mobile tech firm SinglePoint, which currently specializes in dealing with payments sent via text message, are also taking an interest in bitcoin and canna-business. The company has just signed an agreement with First Bitcoin Capital Corp. to develop a solution for cannabis entrepreneurs and other high-risk businesses.
The company had attempted to implement a bitcoin strategy for Washington dispensaries two years ago, but founder and CEO Greg Lambrecht said that few businesses were interested because the technology wasn’t well understood at the time. Lambrecht believes that the time is right for bitcoin because “it’s not foreign to [canna-businesses] now, like some sort of weird scam that they don’t know about.”
“More and more establishments are accepting it,” he added. “But it’s kind of like the wild, wild west.”
