In Illinois, where marijuana is legal for medical purposes, some banks are pulling completely out of the industry after maintaining accounts with cannabis companies for over two years.
The Bank of Springfield, which is the primary bank that is used by medical cannabis companies in Illinois, is closing all cannabis-related accounts by May 21st, a decision that the Chicago Tribune stated is, “tied to the reversal of an Obama-era policy that discouraged prosecution of those operating under state marijuana laws.”
The fact that the federal government is prevented from spending money on operations that disrupt legal cannabis industries doesn’t “provide ‘enough comfort’ for Bank of Springfield to continue working with the industry,” a bank spokesman told the Chicago Tribune.
The feeling of discomfort that is shared by most U.S. banks when it comes to working with the marijuana industry makes them unreliable to work with. Until the federal government decides to make a statement clarifying its stance on state-legalized cannabis, this “fear” trend that banks follow will continue to persist, and there is no telling when the federal government will decide to clear things up.
Meanwhile, many legal cannabis companies are forced to operate with cash-only transactions, which “eliminates some of the legitimacy and traceability of transactions that banking added to the industry.”
Being able to trace marijuana from the moment the seed is planted to the moment the flower is sold to a patient or customer is according to the Marijuana Business Daily, “a common requirement in legal marijuana markets in the United States.” Seed-to-sale tracking was a major step that the Justice Department required of banks and marijuana businesses before the policy was reversed.
This created a level of transparency and ensured that there was no participation in any black market transactions. Losing their relationship with banks and being forced to use cash-only transactions creates a precarious situation for cannabis industries across the U.S. as seed-to-sale tracking becomes extremely difficult, risking a breach of compliance with state laws for many businesses.
Luckily, there is a reliable alternative to banks for seed-to-sale tracking and it is found in cryptocurrencies and blockchain technology.
In fact, these technologies are so reliable that in November 2017, IBM recommended using blockchain to the British Columbia government in response to a public consultation it held on cannabis regulation, saying it “could help the government limit or eliminate black market sales by tracking where and how cannabis is sourced, sold and priced, from seed to sale.”
The blockchain is an ideal and reliable replacement for banks CTV News stated it, “creates a shared digital ledger where records or transactions can be tracked and shared in real time, and in a secure and transparent manner.”
This means that marijuana businesses can utilize a seed-to-sale tracking system and a cashless transaction system simultaneously with the same service without any banks or intermediaries.
The promise of the blockchain has attracted many investors to the technology to either create their own unique, industry-specific blockchains or create currencies that use an already existing blockchain made from other established cryptocurrencies such as Bitcoin or Ethereum.
In order to help acquaint the cannabis industry with the blockchain, a short list of cannabis-specific cryptocurrencies that are either available or in-development has been compiled for reference. They are listed below in no particular order.
PotCoin was released in 2014 as “the first digital currency created to facilitate transactions within the legalized cannabis industry.” It has the highest market cap of all currencies in this list at $20,203,224. (4)
CannabisCoin made a proclamation to equate one CannabisCoin with one gram of weed. (5) The CannabisCoin Wallet can currently be downloaded to Mac, Windows, and Android.
HempCoin aims to provide services not just for dispensaries but also “hemp, agricultural and tobacco industries through decentralized, convenient and safe payments.”
CannaCoin uses Peer2Peer technology, eliminating the need for a 3rd-party, and is open-source with “projects including CannaPay, CannaSight, and the Green Wallet.”
DopeCoin is “is working to establish itself as a long-term brand” and offers incentives for buying its coin, stating “you are rewarded for owning DopeCoin’s by receiving a stacking bonus of 5%.”
CRYPTOSLATE stated, “Paragon seeks to pull the cannabis community from marginalized to mainstream by building blockchain into every step of the cannabis industry and by working toward full legalization.”
Developed by First Bitcoin Capital Corp, $Weed was purchased by SinglePoint and will be incorporated into its “in-house solution that would allow cannabis consumers to… complete transactions using either BitCoin or $Weed.”
This is one of the more recently-released cannabis coins on the market, having launched in April of 2017. Its website states, “BlazerCoin is a cryptocurrency designed for "us blazers" that uses Scrypt as its proof-of-work algorithm to secure the decentralized network it hosts.”
1.Ally Marotti Main bank for Illinois' medical marijuana industry is pulling out, leaving some operators to deal in cash. Retrieved April 13, 2018 from http://www.chicagotribune.com/business/ct-biz-medical-marijuana-bank-illinois-20180402-story.html
2.Omar Sacirbey Marijuana businesses experimenting with blockchain technology, but skeptics persist. Retrieved April 13, 2018 from https://mjbizdaily.com/marijuana-businesses-experimenting-blockchain-technology-skeptics-persist/
3.Armina Ligaya IBM urges B.C. government to use blockchain to track marijuana sales. Retrieved April 13, 2018 from https://www.ctvnews.ca/business/ibm-urges-b-c-government-to-use-blockchain-to-track-marijuana-sales-1.3666931
4. Banking for the Cannabis Industry Grow With Us. Retrieved April 13, 2018 from https://www.potcoin.com
5. CannabisCoin Wallet. Retrieved April 13, 2018 from http://cannabiscoin.net
6. HempCoin (THC). Retrieved April 13, 2018 from http://hempcoin.org
7. CannaCoin. Retrieved April 13, 2018 from http://www.cannacoin.tech
8. Dopecoin Gold. Retrieved April 13, 2018 from https://dopecoin.com
9. Paragon. Retrieved April 13, 2018 from https://paragoncoin.com
10. Paragon PRG. Retrieved April 13, 2018 from https://cryptoslate.com/coins/paragon/
11. Weed Currency. Retrieved April 13, 2018 from http://weedcurrency.com
Feature Image Credit:http://bitcoin.xyz/bitcoin-blockchain-attracts-weed-growers-register-strain-origins/