Three years ago, the Bitcoin boom was in full effect. It was a hot topic everywhere. Bitcoin, blockchain and crypto were going to solve everything in every industry. Then, in 2018, the bubble burst. A year later, the cannabis industry experienced a similar crash as the crypto industry, with most cannabis stocks ending 2019 on a sharp downturn.
Despite the overexuberance of investors and believers, both industries are still here. Money continues to be invested, cryptocurrencies are evolving and people across Europe and North America are using legal CBD and marijuana.
Bitcoin and cannabis share much more than a boom/bust market cycle. They both have counterculture roots. Cannabis has been illegal since the early 20th century, was an enemy of the Nixon administration and simultaneously represents the hippie ideals of peace, love and freedom.
Bitcoin is a cypherpunk movement launched in response to the legal crimes committed by large banks in the 2008 banking crisis. Making unethical banks irrelevant by becoming your own bank; true financial freedom.
A famous strain of cannabis, Acapulco Gold, gained notoriety in the 1960s as part of the counterculture movement. It was grown in the vicinity of Acapulco, Mexico.
Today, one of the most famous cryptocurrency conferences, Anarchapulco, occurs every February in an iconic beachfront hotel of Acapulco.
Many in both the crypto and cannabis camps see bright days ahead for their respective industries.
Cannabis and Bitcoin working together
‘Banking the unbanked’ is a popular slogan used by crypto fanatics to describe the power of Bitcoin and other cryptocurrencies. While some cannabis companies find ways to have bank accounts, it sure isn’t stable, it’s not easy and it’s always expensive.
In a recent NPR piece about the legal cannabis industry in California, the life of Tom DiGiovanni of Canndescent, a marijuana grower in California, sounds a lot like an episode of Narcos:
‘Normally, a chief financial officer’s job involves poring over balance sheets and bank statements. But in the pot business, the job still bears a lot of similarities to the illicit trade — transporting loads of cash under the watchful eye of big guys carrying lots of guns.’
Cannabis is considered a high-risk banking industry. Pressure from ‘up top’ makes it risky for banks to take legal cannabis companies as clients, and it makes it even riskier for companies themselves.
When banks and credit card processors deal with said risk, the companies pay high merchant processing fees. Ultimately the end-user has to pay a part of the bill.
In England, Elliot Blackler of Evopure noted that the lack of payment processing options leads to high payment-processing fees: ‘Being just one of the two main providers in the U.K., the rates are still very high for a startup business’, he said.
Banks have to be compensated for the risks they take, making it more difficult for small startups with little to no revenue history to get banking than it is for established CBD/cannabis companies.
If Bitcoin and cryptocurrencies allow for anyone to be their own bank and have minimal transaction fees, you would think that they would be an ideal payment option for the cannabis industry. Despite the promise, it is still only a niche payment method.
Cannabis companies should consider testing crypto
I launched a CBD coffee company last month in the U.S. after three years in the crazy and amazing world of Bitcoin. With a deeper understanding than most, I knew cryptocurrencies would be a payment option from day one.
As a small startup, we are encouraged by over 20 cryptocurrency orders so far, led by the cryptocurrency Bitcoin Cash, a cryptocurrency designed for cheap, fast payments. Transactions cost the buyer a fraction of a penny and the seller pays nothing. This is an improvement from the close to 5 percent fee we pay to process a credit card payment.
Photo taken at a recent BitcoinCash meetup in Toronto.
Some of these orders came from die-hard crypto evangelists, but a few came from the masses that purchased Bitcoin in 2017 and forgot about it.
Now you could say I’m pro-crypto and am, thus, biased. And you’d be right. You could also argue that a lack of education is an obstacle to widespread use. How to spend it, accept it, store it and convert it to euros or dollars takes some time to learn.
There is also regulatory uncertainty. Paying taxes can be a headache.
If you’ve read this far, I’d counter that being able to offer your customers an additional payment method, save on transaction fees and be part of the (potential) future of money are all reasons to consider accepting Bitcoin.
Both in Europe and the U.S., banks, payment processors and regulations remain uncertain and unpredictable. Cryptocurrency, albeit imperfect, is certain and predictable in one aspect: by design, it will never censor any company from accepting it or a person from spending it.