Cryptocurrency and The Cannabis Industry
Legislation legalizing cannabis continues to flourish throughout the United States. Medicinal marijuana is legal in more than 30 states, while recreational cannabis is legal in 11 states plus Washington, D.C. The problem that legal cannabis companies have run into again and again is finding a bank that will work with their businesses.
The Cannabis Industry - A Legal Gray Area
You see, while states have begun the process of decriminalizing marijuana, it’s still on the federal controlled substances schedule, and the U.S. government regulates banks. So, while it’s not illegal for banks to accept cannabis customers, they are required to file costly reports to the government detailing any suspicious or criminal activity. The cannabis industry falls into this category, and the money generated is considered to be laundered. Along with this, the fees associated with the reports banks must file are costly, both in dollars and time. Because of this, only about one in 30 banks or credit unions are willing to work with cannabis companies. And even when banks do accept this type of business, they charge astronomical fees to cover their expenses.
So, if cannabis companies can’t use banks, how can they operate? Many deal strictly with cash, but this can make them the target of criminals. That’s where cryptocurrency comes in to solve the problem, and it makes a lot of sense. Both industries have a lot in common, like operating in industries that are technically legal but are still in legally gray areas. They are both facing increasing government regulations, are used as political talking points, and are budding industries.
Crypto Options For The Unbankable
By turning to cryptocurrency, the cannabis industry can appease federal regulators and keep their funds safer than if they keep bundles of cash on-hand. And with altcoins that are specializing in the legal marijuana industry, like PotCoin or CannabisCoin, cannabis companies can use blockchain technology specifically made for their industry. Crypto gives cannabis operators the transparency and accountability they need to satisfy government regulators and pay their taxes. On the other hand, cryptocurrency exchanges gain credibility by handing day-to-day transactions. Following this model, cryptocurrencies can easily make the case that they could be used across any industry. The entire situation is a win-win for both crypto and cannabis.
As the government takes steps to decriminalize cannabis, more banks will likely begin to accept the business of cannabis operators. In the meantime, cryptocurrency provides an attractive alternative for companies that cannot find a bank to handle their funds securely. It also provides the cannabis industry with a clear way to manage their finances, pay their taxes, and maintain their businesses.
Interested in learning more about cryptocurrency or cannabis taxation? You’re in luck! Crypto Tax Academy, a subsidiary of Happy Tax, has just launched Cannabis Tax Academy. Now, the leaders in cryptocurrency tax education can help you learn all about cannabis tax prep and give you the opportunity to add yet another service to your tax business. Get started today!
Register for a free webinar today!
Speak with an expert in crytocurrency taxation, and discover what you can do as a crypto tax professional.