As adult-use cannabis continues to get legalized in more states, the question of payment becomes an issue. Many obstacles remain when it comes to buying weed. The SAFE Banking Act recently fizzled in Congress—federal help is out of the question. Dispensaries encounter major complications when it comes to processing payments, and they don't always want to handle cash. Enter crypto for weed, which had a huge year in 2021 and will ultimately become widely accepted in the cannabis industry.
Cannabis is still highly regulated, and it's illegal federally, despite growing legalization and acceptance of adult-use weed across the country. In many legal states, the number of dispensaries is multiplying, but the feds still won't legalize it.
Since banking falls under federal laws and guidelines, payment processing in dispensaries is a major hassle. You can't go into one and buy a pack of edibles with your debit or credit card. You need to come up with cash, and you'll most likely withdraw it from the ATM your favorite dispensary has installed in the corner.
This is a problem waiting to happen, and in a lot of cases, it's already happened. Dispensaries run security risks by keeping a lot of cash on hand. There was a considerable uptick in dispensary robberies last year, largely because criminals know there's a ton of cash onsite for the taking.
Crypto is an attractive security alternative for dispensaries. Even though this development is brand new, some dispensary chains are already ahead of the curve and accepting crypto payments. You can now use it at People's Remedy in California and Helping Hands in Colorado, developments which happened within the last year. D8 Holdings, a Delta 8 THC company, began accepting crypto payments online in April.
Some dispensaries may not be ready to accept crypto directly. If that's the case, a middleman space has emerged, and tech companies are jumping on it. Take the payment processing startup POSaBIT. Here's how their product works: A cannabis dispensary customer buys crypto from POSaBIT via USD debit or credit. The customer can either keep the crypto or use it to buy cannabis products from the dispensary. If they opt to buy weed, they pay with the crypto they just bought, through the POSaBIT system directly. POSaBIT then keeps the customer's crypto and pays an equal value in USD credit or debit to the dispensary.
Nice workaround, right? Well, because of this middleman scenario, the dispensary can indirectly accept credit and debit transactions. They can also avoid the security risks that come with keeping a lot of cash on hand. Plus, the customer gets to buy and pay with crypto, indirectly use credit or debit and avoid cash withdrawal fees that are usually required at ATMs.
Accepting crypto at dispensaries is more time consuming than accepting cash, as crypto is taxed differently than standard cash business income. Crypto needs to be tracked against the dollar for every transaction, in addition to the actual transaction.
Despite that, the benefits of accepting crypto far outweigh any drawbacks, and not just because of the federal banking loophole and security issues. Crypto's blockchain technology provides a secure ledger that tracks all steps in the supply chain, which can be a time saver for dispensary owners due to compliance issues.
This fledgling relationship between weed and crypto will continue to develop. Crypto solutions for the cannabis industry will expand and normalize over the next few years, and more dispensary chains will begin to accept crypto directly.
Helaine Krysik is a freelance writer based in Chicago and a frequent contributor to national publications. She writes about the cannabis industry, business and women in entrepreneurship.
The views expressed in this article are the writer's own.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
