A few states have recently legalised marijuana use in the United States. This is weird for everyone. Not only is it a complete reversal on drug policy, but it’s still actually illegal at the federal level. So while its legal in certain states, it’s still technically a federal no-no to be using it. This is confusing as hell, although it didn’t stop Colorado’s first day from being a huge event which raked in a cool $1 million.
A great example of the confusion popped up on the New York Times today, as they covered the fascinating story of how banks in these states are basically refusing to offer banking services for these (legal) providers of marijuana. US banks, of course, have an impeccable reputation when it comes to deciding what to do with money, so this of course comes as no surprise.
The first thing that I thought of when I read this article (a little sarcastically, because I’m so sick of hearing about it) was “well, I guess they could just use BitCoin, amirite?” But as I thought about it some more, I started thinking that it’s probably not a terrible idea for these guys.
Compared with the difficulty of dealing with putting cash into brown paper bags or Tupperware to move it around and the scary issues of security logistics entailed, the idea of using a freely available and accessible cryptocurrency seems compelling to say the least.
Sure, it’s still nowhere near as widespread as Visa or Mastercard. There’s the possibility of vulnerabilities. People don’t really know how to deal with keeping worthless digital assets secure, let alone a digital asset that contains real money. But it’s here, now, and it means that these legal(ish) vendors could go about their business with one less headache.
Well, at least until tax time when they have to pay the IRS – it seems likely that they’re one entity that is not going to be accepting payments in cryptocurrencies any time soon. I guess the drug vendors will have to deal with the problems of having a massive pile of super-secret untraceable anonymous digital cash!
Except, of course, this isn’t really how cryptocurrencies work (at least, those based on the BitCoin blockchain system). Intentionally trying to hide their income from the feds is probably just as dangerous as hauling around large amounts of small bills. The instability of most of the cryptocurrencies is probably the biggest concern; storing your tax payment in a currency that might halve in value by tax time would be risky to say the least. But if they wanted to make life more difficult for the IRS, switching to cryptocurrency would probably do that in the short term, while saving them all sorts of other hassles.
In short – talk about your disruptive technologies! Banking – for what are probably good reasons – is failing to keep up with the pace of legislative change here. Whether or not cryptocurrencies actually pose a threat to
By the time I finished writing this, the following articles appeared: Colorado Marijuana Dispensary Uses Bitcoin to Evade Federal Laws, and back home, businesses in Australia are starting to accept BitCoin.