Cannabis, the first thing to ever be sold on the internet and as it is panning out it could be the first industry to adopt cryptocurrency as the default form of payment.
It isn’t unusual for industries that face unique challenges to be on the forefront when it comes to the adoption of new technologies. Paypal innovated to use of online payments to make buying things online more convenient and reliable. Companies like Spotify and Netflix have innovated streaming to combat content piracy.
And now it is looking like the banking problem in the cannabis industry might be the tipping
If you’ve been paying attention to the news this past week, you may have heard about the Berkeley City Councilmember, Ben Bartlett, purchasing cannabis with cryptocurrency at a city dispensary. Bartlett used Bitcoin cash and Cred’s LBA token for the transaction at the Ohio Cannabis dispensary in Emeryville.
This was set up as a publicity opportunity by the Blockchain Advocacy Coalition to bring awareness to Bill AB 953 which if passed would enable the state to accept cannabis tax remittance via stablecoins. However, it shines a light on the real solutions that a cryptocurrency ecosystem could provide the cannabis industry in the United States.
This is a great development for Parsl as this is exactly how we plan to implement our system through the use of our own stablecoin, PODs.
The coverage of this event detailed why crypto payments are the perfect solutions for cannabis businesses so we thought we’d list them here (as well as some of our own)
- Currently, cannabis businesses are unable to hold their money in banks because cannabis is still illegal at a federal level. In fact it is estimated that 70% of cannabis businesses are unbanked. This leaves businesses exposed to theft and is an obvious inconvenience in this day and age. But lo and behold, cryptocurrency can and will solve this if properly implemented
- Cryptocurrency can significantly lower transaction fees for dispensaries. For the cannabis businesses that do manage to arrange for credit card processing, transaction fees can be incredibly high as the industry is considered high-risk. With cryptocurrency fees are generally less than 1% making for a cheap alternative!
- Crypto payments can streamline tax collections as it no longer has to be done manually and in fiat. In some systems (like Parsl’s) the whole process can be automated which removes a lot of the stress cannabis businesses currently face.
- Cryptocurrency payments make the entire industry more transparent and accountable which is a huge boost for law enforcement processes and monitoring leakage into the parallel black market. The sale of cannabis requires a thorough record of the movement of the product from grower to end user. As cryptocurrencies use blockchain technology every transaction is kept on secure and incorruptible records.
- Cryptocurrency payments have the potential to make compliance a lot simpler as all the information required is activated by the transaction.
- It allows law enforcement to better detect money laundering as the blockchain transactions are permanent and transparent.
- All transactions are encrypted to withhold relevant personal information while still remaining compliant. For those worried about cannabis purchases being visible to prying eyes, cryptocurrency accounts and transactions are all anonymous so your transactions are for your eyes, and your eyes only!
- Cryptocurrency is available everywhere. No matter where you are in the world or what you’re buying, cryptocurrency (even ones developed specifically for cannabis purchases) can be used. Parsl’s PODs stablecoin will be redeemable using any Parsl run system meaning it becomes a universal currency for the global cannabis industry.
- Cryptocurrency payments protect people doing the right thing. When implemented the correct way, payments with cryptocurrency will be able to automate compliance measures. This will help to avoid situations like this.
You can probably see why we are so excited by the potential of cryptocurrencies and why we chose to use the technology within our own platform!
Cryptocurrency not only solves the problems faced by the cannabis industry, it also provides additional benefits that could change the way cannabis businesses do business. The rise of cryptocurrencies has only just begun, and we’re excited to be at the forefront of the new technology!