The legalization of cannabis is a great thing for entrepreneurs who are looking to get into business, but as many of us know already, it can still be an uphill battle, especially when it comes to banking and finances.
This is especially true for countries like the USA where cannabis remains illegal on a federal level. Banks are still controlled by the federal government and therefore are often resilient about granting you and your cannabis business an account.
Unfortunately, this is not just the case in the USA. For example, people in the UK are often scared to invest in the cannabis business due to legality issues, and due to the countries’ money laundering laws. To cut it short, banking is a problem in the cannabis business, so what is the solution? Are there alternatives to banking that can help cannabis businesses with their money? How about cryptocurrency? Isn’t that the exact sort of situation it was created for? Without further to do, let’s take a look at the world of cannabis cryptocurrencies, and how they can help your business banking.
What are cannabis cryptocurrencies, and why not use traditional crypto coins?
Cryptocurrencies like Bitcoin have been established and accepted by many businesses over time, leading to the creation of many other alternative coins. Amongst those new coins are some popular marijuana cryptocurrencies created specifically for the cannabis and marijuana industries. Here are a few names: CannabisCoin (CANN), PotCoin (POT) and HempCoin (THC) to name but a few.
The question is: why not use traditional coins like bitcoin that are already established across many businesses in the world? It is simple: in the same way that certain industries accept to deal with certain specific coins, cannabis crypto are accepted across the cannabis industry.
A lack of banking support doesn’t just mean the inability to bank money, it also stops businesses to take traditional card payments. Cannabis coins allows businesses to bank their earnings but also allows customers to make payments in shop using those coins rather than relying on the ATM down the road.
Free from bank regulations and untraceable?
Businesses still need to be accountable for tax purposes, and using cannabis crypto certainly doesn’t hinder honest companies from declaring all their ins and outs. It allows cannabis enterprises to keep doing business and hold books in a traditional sense, rather than being ‘cash-only’ operations.
Working without banks can bring more flexibility to businesses. After all, all the regulations and scrutiny from federal or governmental organizations can often bring complications and even sometimes hinder business growth. The idea of using decentralized cryptocurrencies can bring in some breathing room in an otherwise over-regulated space.
Furthermore, cannabis cryptocurrencies give clients and customers more anonymity in the sense that the federal government and banks don’t know that they are buying marijuana. This brings in more discretion but also less fear of getting into trouble. After all, not everyone in the USA wants the federal government to know about their cannabis purchases.
The risks involved in cannabis cryptocurrencies and how to stay safe.
Cryptocurrencies have a lot going for them, especially from a theoretical point of view. However their real-life implications do make them a risk to invest in, and cannabis coins are no exception to that. To start with, the crypto market can show itself to be quite volatile, which requires businesses and individuals to regularly keep a closer eye on the market. As long as you keep informed about the current and latest cannabis coins, you should be fine, but it does take that extra homework.
One of the other most feared aspects of cryptocurrencies is the idea of cyber theft. Coins and exchanges can be hacked, leading to potentially huge losses of money. A lot of people tend to keep an offline crypto wallet or an online crypto wallet such as Coinbase. Both have their advantages and inconveniences.
Online wallets are easier to access and less work to manage your stored cannabis currencies, but you should make sure to use two-factor authentication to prevent your online wallet from being hacked. Furthermore, it is best practice to use an alternate email than your main one, as this will make that email less prone to hacking.
As far as offline wallets, they require some know-how to set up and to maintain, but they do make you more independent from wallet companies that are still at risk of being hacked. The main advantage of offline wallets is that you retain full ownership and control over your private encryption key. This is good as long as you don’t lose the key, as losing it means you might not be able to access your well-earned cannabis coins
Sometimes in life and business, you have to opt for the lesser of two evils. This is not to say that banks or decentralized currencies are evil, but it is more the case that you are going to be stuck with one or the other.
Going the normal banking route (if permitted) is simpler and safer, but it does come to the price of a lot of scrutiny and regulations. On the other end, using cannabis crypto for your business means more freedom and potential flexibility, but it does come at the risk of safety and requires work and due diligence to keep on top of it all.
The reality is that short of just having an ATM close-by or inside their premises, a lot of cannabis businesses can only use the alternative of cannabis coins as a way to deal with their finances without having to just be a ‘cash-only’ business.
As a summary, it can be said that cannabis cryptocurrencies are the most concrete alternative for dealing with the banking needs of your cannabis business, at least until banks fully and legally accept payments from the cannabis industry.