The booming cannabis industry has a serious cash problem — and cryptocurrency isn’t the solution

The cannabis industry doesn't have widespread access to banks, and conducting business with only cash has its risks.
Many dispensary owners are excited about using cryptocurrencies like Bitcoin to solve this problem, but it's not a miracle solution for a number of reasons.
That hasn't stopped cryptocurrencies from trying to elbow their way into the industry.

The rapidly-growing cannabis industry has a cash problem, but dispensary owners around the country say cryptocurrency isn't a miracle solution.

Most banks won't take cannabis cash, so dispensaries in states where the sale of cannabis is legal have been forced to explore alternative payment solutions as they are locked out of even the most basic tools of doing business, like opening a checking account and accepting credit cards as payment.

That's a huge problem for an industry that's expected to hit $10 billion in sales this year and

Cannabis dispensaries pay extremely high taxes

Dispensaries often pay penalties for submitting taxes in cash, even though they are barred from opening lines of credit. And a section of the tax code prevents businesses that deal directly with cannabis, like dispensaries, from deducting legitimate business expenses.

It all adds up to cannabis companies paying an effective tax rate of 65 to 75%, according to the New Federalism Fund, a nonprofit organization advocating for the cannabis industry.

And there are obvious security risks — including theft and accounting fraud — that come with handling and storing large amounts of cash.

Potcoin, which advertises itself as a secure solution for the cannabis industry's banking problem, has resorted to publicity stunts — like sending Dennis Rodman to North Korea — to drum up enthusiasm for the currency, though it's worth noting that the coin gained 11.99% since Tuesday to hit $0.33.

And Paragon Coin, whose CEO is former Miss Iowa Jessica Versteeg, has attracted some negative attention on blogs and social platforms like Reddit.

Still, some dispensaries and cannabis companies are starting to experiment with cryptocurrency.

One startup,

While both cryptocurrency and the legal cannabis industry are still relatively new, it's not yet clear whether the two are a match.

"We're actively monitoring it," Whitley, of Altitude, said. "We're hoping the issues with cryptocurrency will get worked out by the end of 2018."

The booming cannabis industry has a serious cash problem — and cryptocurrency isn’t the solution

Cannabis dispensaries pay extremely high taxes

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