Today is 4/20/19 when people around the world celebrated Cannabis, Hemp and Marijuana.
For a long time, the question of mass adoption has made the rounds in the Cryptocurrency community. Hopes that corporations and investment institutions would see the value of getting involved with crypto has yet to pan out. But other avenues have emerged that just might drive that adoption.
The Cannabis Industry.
Several states across the United States have legalized recreational marijuana use, those states include Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon & Vermont. But while states have begun to legalize recreational marijuana use, it still remains federally illegal which puts both the states and the Cannabis Industry in a precarious position.
If the federal government should enforce its laws against marijuana use, what could that mean for the states who have legalized it and more importantly what would that mean for the industry and those who have come to enjoy its product.
Because of its current legal status, the Cannabis Industry is a cash only industry, which not only is dangerous for business owners who would have to have large sums of cash on hand at all time but has potential to allow money laundering from illegal producers.
California is proposing allowing Cannabis businesses to use Stablecoins to pay taxes instead of transacting in cash. There are two aspects to this that the crypto community should find of interest:
1. Government accepting Stablecoins will help legitimize Cryptocurrency for financial uses as well as make Cryptocurrency more mainstream.
2. It will put Cryptocurrency front and center in the minds of the general populace as a means of doing business. Not only would companies be able to pay taxes in Stablecoins, but the customer could also buy their products with Stablecoins, removing the need to cash.
A quick note on Stablecoins: A Stablecoin is not a coin in and of itself. A Stablecoin is a term used to describe Cryptocurrencies pegged to real-world asserts, usually the local currency. For example, True USD (TUSD) is pegged to the US dollar meaning one TUSD would equal one USD and be more stable than cryptos like Bitcoin and Ethereum, hence the term Stablecoin.
So in accepting Stablescoins, the state would need to identify which Stablecoin it would accept, TUSD, USDT, etc. and more importantly plainly state that these Stablecoins are currency and not securities, they are funds to be used for commerce and not investment products. Despite these hurdles, it does appear to be a step in the right direction.
Some on Crypto Twitter (the name given to the various Cryptocurrency supports, investors and advocates that call Twitter their home) appears to be in favor of using cryptocurrency for the Cannabis Industry. Kenn Bosak @KennETHbosak of the Kenn Bosak Podcast said via Twitter when asked:
Jason Nelson @dragonwolftech “There is a proposed law in CA that would allow a cannabis biz to pay their taxes in Stablecoins, they haven’t said which coin but do you think this will help with adoption of crypto and do you think dispensaries will accept crypto as payment?”
Kenn Bosak @KennETHbosak “Dispensaries don’t like being cash Honeypots. Plus paying taxes in cash has added fees. They would use visa if they let them, they would use banks if they let them, and if they let them, they will use crypto”.
We will have to see if the law, dubbed AB-953, passes and if the Cannabis Industry turns to crypto for their tax needs.
AB-953 Text. (n.d.). Retrieved February 21, 2019, from https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB953
“Guide to Stablecoin: Types of Stablecoins & Its Importance.” Master The Crypto, 29 Dec. 2018, masterthecrypto.com/guide-to-stablecoin-types-of-stablecoins/
Alexandre, A. (2019, March 02). California Bill Would Legalize Crypto for Tax Payments From Cannabis-Related Businesses. Retrieved from https://cointelegraph.com/news/california-bill-would-legalize-crypto-for-tax-payments-from-cannabis-related-businesses