Banks still don’t want to work with legally operating marijuana businesses because marijuana is still federally illegal. But cryptocurrencies, such as bitcoin, can solve transaction issues for marijuana businesses. The digital currency helps prevent these businesses from having large amounts of cash on-hand.
In 2016, the legal marijuana industry was valued at $6 billion, according to Bloomberg. By 2026, the industry could be worth around $50 billion. Bitcoin services like POSaBIT and SinglePoint Inc. are helping marijuana users use this digital currency to purchase recreational and medical marijuana.
John Baugher, co-founder of POSaBIT, said, “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. That’s where we thought we could leverage the use of digital currency.”
POSaBIT is in use by 30 differentacross Washington State. One of POSaBIT’s customers, Trove Cannabis, recorded $3 million in marijuana sales last year, all done in cash. That averages to about 3,000 individual transactions weekly. Trove Cannabis was on a wait-list to use POSaBIT for six months.
In February, POSaBIT services were made available and since then, 13-percent of the business’ customers have chosen to use bitcoin.
When customers make a purchase, they’re asked if they’d like to pay with cash or digital currency. If digital currency is preferred, the customer is referred to the POSaBIT kiosk (which charges a $2 transaction fee), to purchase bitcoin to complete their purchase. Once transactions are completed, POSaBIT sends the funds in U.S. currency to the’s bank account.
To maintain compliance, POSaBIT follows these guidelines:
- Limit of $150 of bitcoin purchased per transaction
- 9-point fraud detection program
- Bank account is required for the business
Neil Demers, a marijuana business owner in Denver, said, “I’m sure education could enlighten me and a lot of this industry on bitcoin being a feasible payment option, but we just don’t see it.”
Some industry experts, like Jeffrey Zucker of Green Lion Partners, believe that traditional banking options should be available before bitcoin really gets its footing in the industry.
Zucker said, “The banking issues are going to be solved in such time that the people in this industry are going to gravitate toward traditional banking.”
Greg Lambrecht of SinglePoint said, “It’s not foreign to them now, like some sort of weird scam that they don’t know about. More and more establishments are accepting it, but it’s kind of like the wild, wild west.”