Cryptocurrency offers the cannabis industry an alternative to banks

Cannabis businesses in the US are booming. It is projected that the US cannabis market has the potential to reach $45.8 billion by 2025.

Despite President Biden’s announcement of reaccessing the classification of marijuana in 2022, not much has changed for the cannabis industry. Even today, it is classified under Schedule I of the Controlled Substances Act, the classification meant for the most dangerous substances.

If you’re a cannabis business owner, the coming years are very promising and hold a lot of opportunities for expanding your empire. However, the roadblocks still remain, a major one being the current payment system for the cannabis industry.

Even today, cannabis businesses cannot accept credit card payments or use banks for their day-to-day transactions. Let’s understand why.

Why are cannabis businesses left out of our existing financial system?

While most states in the US have legalized the use of marijuana for medicinal and recreational purposes, Federal law still classifies it under Schedule I. Due to this, even legal cannabis businesses cannot use banks or credit card networks for processing transactions.

Inconsistencies in the state and federal laws have kept the cannabis industry out of the traditional financial system for years. Businesses are left with no other choice but to rely on cash for their daily transactions. 

Running a cash-only business is risky and imposes a lot of challenges for business owners. News stories about violent burglaries in cannabis stores are becoming an everyday thing. Businesses need an alternative to hoarding a large amount of cash. Let’s look at a few challenges associated with cash payments.

Challenges with cash payments & how crypto can help

Cash payments are not ideal as they are hard to manage and not always feasible. Here are a few challenges of cash transactions and how crypto can help:

• Tax reporting

Cannabis businesses are heavily taxed. For instance, Californians are required to pay $154.40 in taxes, a 5% excise tax, and an additional 7.25% sales tax for every pound of flower they sell. When you deal in cash, bookkeeping can get extremely difficult and time-consuming.

On the contrary, with crypto transactions, calculating taxes can be easy and efficient as all the transactions will reflect in your transaction history. Moreover, you can also automate your taxes by using taxation software. 

• Security threat for cannabis workers

In 2022 alone, cannabis retail stores in Washington reported over 100 armed robberies — the highest of the decade — according to Uncle Ike’s i502 robbery tracker. Hoarding a huge sum of cash in stores can put your workers at risk.

With crypto, all transactions are virtual, relatively secure, and irreversible. Furthermore, you can collect payments from anywhere in real time by sharing a payment link or QR code. Virtual payments are seamless and can minimize the risk of loss, thereby making the lives of your workers less risky.

• Cash is medically unsafe

With the COVID-19 pandemic, we already saw how cash can transmit viruses and infect millions around the world. Moreover, it’s almost impossible to determine which note is infected when you’re dealing with a lot of cash transactions.

On the flip side, crypto transactions are virtual and thus cannot transmit any viruses whatsoever. You can enable contactless payments at your offline outlets and even collect payments virtually through payment links/QR codes.

• Carrying and transferring cash is not convenient

Carrying around a lot of cash is not convenient and risky. Moreover, if you want to send the funds to another country or city, the process will be time-consuming, expensive, and inconvenient.

On the other hand, crypto can be transferred to any part of the world in minutes. Moreover, to use crypto, all you need is a smartphone and an internet connection. All you have to pay is a network fee, which is usually a small fraction of your total payment. 

Final words

Crypto holds immense potential for the cannabis industry and can help business owners solve their existing challenges. Crypto transactions are not only fast and safe but also private and anonymous — making them an ideal alternative to cash, banks, and credit cards.

If you are seeking to enable crypto payments across your offline outlets, sign up with a crypto payment processor today. Most decentralized crypto payment gateways offer you complete freedom to transact globally without any restrictions. Embrace cryptocurrency today and step into a decentralized world that’s safer, and more transparent.