In 2010, the first known commercial transaction with Bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John’s pizzas for 10,000 Bitcoin.
Two years later, Colorado and Washington became the first two states to legalize recreational cannabis use.
At the same time, the Bitcoin Foundation was founded in September 2012 to promote the development and adoption of Bitcoin.
In December 2017, Bitcoin reached a value of almost $ 20,000.
Just a few months later, Canada officially legalized recreational cannabis nationwide. It’s easy to see how the successful terms of cannabis and cryptocurrency run in parallel.
The type of people who operate in both spaces are usually the first to be able to adapt quickly to changes in regulatory environments.
Here’s a breakdown of what you need to know about cannabis and cryptocurrency, from cannabis coins to the use of cryptocurrency to buy and sell products.
A party made in financial paradise
At the time of publication, it is not yet clear when the SAFE Act will be passed, which would allow federal banks to work with cannabis companies safely.
Until then, the traditional banking system will continue to face massive hurdles for cannabis due to regulations. As a result, many dispensaries are forced to work only with cash.
Lorenzo Nourafchan, CEO of North Star Financial Consulting Group, an accounting firm specializing in the cannabis, technology and entertainment industries, said Gasoline that cannabis customers pay between 1 and 2% of their deposit and cash collection fees, which accrue when a company makes millions of dollars in transactions.
Not to mention the risk of theft when running a cash-only business. In a 2019 NPR article entitled “Cash Bags, Armed Guards, and Cautionary Banks: The Nervous Life of a CFO Cannabis Company,” Tom DiGiovanni talked about the security steps he must take to protect millions of dollars. cash that your company works with. , including unmarked armed guards and armored vehicles.
In essence, the use of cryptocurrencies can provide companies with benefits such as blockchain transparency and security, the ability to conduct online transactions and a formal banking alternative that is not subject to regulatory control.
For many companies, cryptocurrency has allowed them to make secure and convenient transactions. Cryptocurrency has been the solution to the banking problem.
Cannabis coins
Some believe that cryptocurrency and cannabis go so well together that they have developed cannabis-specific cryptocurrencies. One of the first cryptocurrencies dedicated to cannabis industry is PotCoin.
Launched in January 2014, it was designed to address the banking issues discussed. Its creators wanted to capitalize on the legalization of Colorado cannabis, and they even installed a PotCoin ATM at a state dispensary.
However, the coin didn’t stand out until June 2017, when a video of former NBA star Dennis Rodman wearing a “potcoin.com” T-shirt hit the Internet, putting PotCoin on the map.
Its value soared 76% in just one day. In May 2021, the value of PotCoin ranged from $ 0.01 to $ 0.02.
In the same year that PotCoin was launched, several other currencies came on the market, such as CannabisCoin, DopeCoin and HempCoin. However, until cryptocurrencies become less volatile and more regulated, it is unclear what role these currencies will play in the cannabis industry. However, it may be worth paying attention to an ATM the next time you go to your local dispensary.
Here comes the but …
However, cryptocurrency is not the knight of digital armor here to save the cannabis industry. With each seemingly easy solution, several problems arise. First of all, and most obviously, it’s no secret how volatile the cryptocurrency is. In the first half of 2021 alone, Bitcoin has dropped to $ 30,000 and risen to $ 60,000. Its price is so demanding that it can be significantly affected by a simple tweet from Elon Musk.
In addition, there are possible tax issues. One of the attractions of cryptocurrency is that it is an appreciable asset. For example, if someone pays for a $ 100 Bitcoin product, it could quickly appreciate (or depreciate). If it is appreciated and converted, for example, into $ 120, this could result in capital gains taxes.
It is not yet an infallible system. Because both industries are so new, many things are unknown. However, those who have been successful in cannabis are likely to be accustomed to navigating the unknown and need to pivot, two vital skills that also apply to cryptocurrency. ⁇
Editor’s note: with the ever-changing world of cryptocurrency and cannabis banking,
the information presented in this article may
have changed since publication. As always,
buyer account.
