With state after state legalizing cannabis in some form or another, Big Marijuana is just around the corner. But what happens to an industry composed of a patchwork of legislation across the states, and outright hostility from the federal level? The answer is cash—tons and tons of cash.
Regulations for banks that provide services to the legal cannabis industry are onerous to the point of being nearly impossible to comply with. This causes legitimate businesses to have to handle massive amounts of cash, creating a security and logistics nightmare
In 2016 legal cannabis grossed $6.7 billion. For ease of this thought experiment, let’s assume that’s all 100 dollar bills. At about one gram per $100 bill, that $6.7 billion turns into 134,000 pounds, or just over 67 tons, of paper bills. And that’s just weight—stack all of these bills on top of one another and you’d have a pile reaching over four miles high. And, as we all know, carrying around large amounts of cash through the world is an inherent security risk.
So what’s the legal cannabis industry to do? One answer comes from the booming field of cryptocurrencies, which includes payment systems such as Bitcoin or Ethereum. These types of currencies aren’t government-backed, but rather are secured by a distributed ledger system called blockchain. This type of ledger allows companies to take advantage of a secure digital payment system, without the need to use cash or traditional banks. So instead of carting around tons of cash, cannabis retailers can use a blockchain based system to go beyond the limitations of the current monetary system.
Think about a delivery driver for a cannabis retailer. That driver might make 10 deliveries in a day and be carrying around thousands of dollars in cold hard cash by the end of her shift. Savvy criminals might know this and be on the lookout for delivery drivers at the end of their routes.
Enter a blockchain based payment system, and you have all the ease and security (and then some) of credit card payments without needing to use traditional banking systems. A customer simply sends a few digital coins to the driver through an app and that’s it. It’s like pre-paying for food delivery through GrubHub, but instead of a credit card, you’re using digital tokens.
While this sort of payment system is a perfect solution for the cannabis industry of today, there’s no limit to the impact blockchain coins will have on the way we do business in the future.