Could cannabis cryptocurrency be the solution? Quite possibly.
After the SAFE Banking Act recently burned out in Congress, there’s little chance of federal assistance in regard to cannabis banking. Fortunately, cannabis cryptocurrency presents a feasible option that could be here to stay.
Cryptocurrency and Cannabis: An Evolving Sector
Just like other new markets, cryptocurrencies experience high rates of volatility. This is not to say, however, that this type of digital currency cannot change the way that the world does business—particularly, in the cannabis industry.
When you consider the fact that the global population is rising—United Nations estimates from Worldometer indicate that 7.9 billion people inhabit the earth as of 2022—the need for technological convenience is crucial to serving the growing demand for thriving industries like cannabis.
Put side-by-side, cannabis and cryptocurrency share something important in common: From a federal point of view, they operate in a gray area. Nonetheless, the uncertainty that plagues each industry has not impacted their overall success.
Until the cannabis and cryptocurrency industries are governed by federal law, billions of tax dollars are being left unregulated. Since the cannabis industry and the cryptocurrency industry are gradually being more widely accepted, there really is no better opportunity to merge the two than right now.
The Benefits of Cannabis Cryptocurrencies
Digital assets like these have risen to prominence due to the fact that many cannabis business owners struggle to obtain banking or credit card services. Not only does this inconvenience the customers but also the businesses, which run the risk of being robbed when they deal with their transactions in cash.
As a direct effect, many cannabis businesses are forced to hire security guards and spend extra money employing couriers who can deliver their products in a safe and secure way. Cannabis companies are also faced with the burden of affording federal, state, and local taxes/fees.
Fortunately, cannabis cryptocurrencies present an opportunity to circumnavigate banking woes and, instead, harvest generous rewards. Here are some added perks of cannabis cryptocurrency:
Improved Access to Capital: Cryptocurrency is emerging as a problem-solver for the cannabis industry and is progressively replacing paper money as its medium of exchange. Additionally, cannabis businesses that use crypto can easily amplify access to capital—something that is difficult to access via traditional financial institutions.
New Customer Sales Channels: Research indicates that up to 40% of crypto-paying customers are new to the seller. Offering consumers the opportunity to purchase products with cryptocurrency can have a positive direct impact on sales revenue, as well as unlock new customer channels.
IRS Reporting: The requirements laid out by the Internal Revenue Service (IRS) can be better satisfied by cannabis companies that choose to utilize crypto. Based on existing financial regulations, cash transactions exceeding $10,000 are subject to IRS reporting requirements. The IRS has even published a new IRS.gov cannabis business webpage to help business owners understand this topic.
Better Security Aspect: Blockchain is a fixed ledger, which means that all activity and transaction data that occurs within a cryptocurrency-using business is fixed into place. Although past transactions cannot be undone, all activity can be audited with ease. With real-time transaction settlement, there is less chance of one party not paying.
Attractive Investment Option: It’s also worth thinking about things from an investor’s point of view. Pot stock investors can cash in on the up-and-coming sector and choose from today’s well-known cannabis cryptocurrencies, including PotCoin, CannabisCoin, DopeCoin, HempCoin, and CannaCoin.
Time-Saver: Running on secure blockchain technology, crypto monitors each step of the supply chain. As a result, dispensary owners can avoid compliance issues and save time.
The Potential Pitfalls of Cannabis Cryptocurrencies
Moving forward, the future of cannabis cryptocurrency depends on regulation. Let’s face it—the government could (at any moment) stiffen the existing rules and, consequently, destabilize not only the cannabis cryptocurrency market but also the cannabis market as a whole.
As the cannabis sector starts racking up more money—analysts from BofA Securities claim that the U.S. cannabis industry alone saw a 40% uptick in sales last year—it’s unlikely that the feds will choose to shut down such a lucrative industry.
With that being said, it’s unlikely that cannabis cryptocurrencies will “go to pot.” Let’s put it this way: The benefits of accepting cryptocurrencies far outweigh any negatives.
However, time will tell what is in store for the cannabis cryptocurrency segment of the market. Meanwhile, the best thing you can do is stay alert by reviewing updates posted on Benzinga, Investopedia, and Veriheal.
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