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Authored By: Tony Coombes
The legal cannabis industry and the cryptocurrency industry, if you'll excuse the pun.
The two share a lot of common ground. Both operate in legally gray areas, particularly in the United States. They face many challenges from financial, political, and regulatory standpoints. They are both legal and can be said to be popular with younger demographics.
Their shared traits aside, cannabis and cryptocurrency have complementary business models that are likely to bolster one another as adoption – in both – becomes more widespread. Some companies on both sides of the world are already taking advantage of this natural synergy. We are going to present a brief survey of the separate cannabis and crypto business landscapes.
Crypto's Challenges
The challenges facing cryptocurrency are all too familiar. Cryptocurrencies are still viewed as a fringe financial tool by the mainstream media, public, and financial institutions. Part of this is practical. Cryptocurrencies are relatively new, if viewed from the thousand-year history of the currency, and they do not yet enjoy day-to-day use anywhere outside a few tech enclaves in Malta, Puerto Rico, and some major cities in the U.S. and Asia. They are, in a word, unfamiliar.
Few government regulatory agencies know how to approach them, and even fewer businesses trust them as a secure store of value. Due to their low current rate. It ends up being a bit of a vicious cycle. It is difficult to get merchandise to accept crypto because few individuals or financial institutions are willing to handle them. As a result, fewer merchants are willing to accept them.
Then there are some very real legal issues. Cryptocurrencies qualify as securities. They are not traditional currencies, as they are not treated or taxed in the same way. And they possess a technological component that sets them apart. They are stored and traded on blockchains, which offer fast, distributed, and transparent transaction chains. These are a bit of a double-edged sword when it comes to regulation, however, as blockchains can transcend financial institutions, businesses, and even national borders.
The Cannabis Hurdle
Let's just assume, for the moment, that we're talking about portions of the world where cannabis is entirely legal. That lets us dispense, with all the areas where cannabis enjoys not-quite-official status – no-enforcement zones, decriminalized areas, and so on. So, we're really talking about states, in particular, where marijuana dispensaries are all above board, legal, and recognized by the U.S. government.
Official backing, cannabis dispensaries and farms Few banks want to offer loans to the marijuana-based enterprise two to the newness of the market and the sticky legal issues that arise when states' rights come into play. Marijuana is still not legal on the federal level.
This is important. It means that the dollar-dollar is legal, and that it is a cash-only basis, much like its black-market cousin. This puts it into the same "unbanked" boat as much of the third world.
The Synergies
It's this "unbanked" situation that really creates the potential for crypto and cannabis to come together. Cryptocurrencies have demonstrated, via their blockchain technology, that they present to viable alternative for folks unwilling or unable to secure traditional banking accounts. Creator spelled out by Bitcoin creator Satoshi Nakamoto in his landmark white paper, cryptocurrencies contain in their blockchains all the trust and information needed to bypass third-party intermediaries, like banks, entirely. Value can be stored in a distributed and open way across the blockchain, and it can be transferred without the involvement of a financial or government entity.
It's been done before, but the comparison is likely to raise eyebrows. The first widespread adoption case for Bitcoin was actually the Silk Road black market, where drugs, guns, and other unsavory items could be bought anonymously and in an untraceable fashion with Bitcoin.
This association between cryptocurrencies and drugs might feel uncomfortable at the same time, but they both are both an air of respectability in the long run. Marijuana may be federally proscribed, but it is legal at the state level. Cryptocurrencies might get sideways glances from U.S. tax and regulatory officials, but there's nothing inherently illegal about owning or using a Bitcoin.
Blockchain tech and cannabis seem to go hand in hand in this regard. Cannabis operators can rely on a blockchain tailored for their use as both a store of value and a transaction medium that is more secure and easier to handle than cash. At the same time, the blockchain gets a ready-made group of use as a real-world test case. After all, if the blockchain works well for securely tracking and handling cannabis transactions, why would not it work just as seamlessly in auto, flight, or grocery transactions?
Both industries have a lot of evidence, both to the public and to regulators. The blockchain is practically designed for the transparent, easily accountable transactions. This gives a good reputation for a certain amount of money.
Early Adopters
There are several major projects currently working on the crypto and cannabis industries. The five most prominent are PotCoin, CannabisCoin, DopeCoin, HempCoin, and CannaCoin. As of May 2018, none has yet achieved widespread adoption. At the moment, a new cannabis coin is being rolled out called the VapeCoin which will be accepted on one of the biggest cannabis and vape marketplaces. However, they all share the same basic use case – giving marijuana growers, distributors, and associated industries to the common medium of exchange and verifiable store of value.
Tellingly, all but CannaCoin boast market capsules in the millions of U.S. dollars. PotCoin, the oldest of the bunch, has a market cap of $ 31 million.
Growing Up Together
Both crypto and cannabis are brand-new industries. The infrastructure for both is almost nonexistent from every possible angle. In fact, neither enjoy completely legal status across the entire United States. Cannabis is currently only legal on a state-by-state basis, while the U.S. Securities and Exchange Commission has a hands-off policy with regards to cryptocurrency exchanges.
Grow up together, so to speak. Their shared challenges create opportunities for complementary growth, particularly in the legal and regulatory arenas. Cryptocurrencies give transparency and accountability to marijuana operators. Marijuana operators created a valuable and stable customer base for cryptocurrencies, in addition to injected capital. Both are poised for growth as U.S. demographics lean increasingly left in terms of regulation. Overall, cannabis and crypto present a unique view of the future financial world.
References
https://www.investopedia.com/news/top-marijuana-cryptocurrencies/
https://www.entrepreneur.com/article/307979
https://vapertunity.com
https://vapertunitycoin.com/
https://theeliquidboutique.co.uk/
If you'd like to contact the author Tony is available at tony.coombes85 (at) gmail.com
