The multi-million dollar cannabis industry is still dealing in cash as no bank is willing to provide services to even legal marijuana businesses. Since cannabis is illegal at the federal level, banks are always at the risk of being prosecuted for money-laundering; therefore, they play safe and stay away from the drug-related businesses in all scenarios.
Since both the general public and the government do not approve of carrying out businesses in only cash, many state governments are now coming up with innovative solutions that could help reduce this cash burden.
Nevada, for instance, is looking to launch a 3-year pilot program which will allow both marijuana businesses and consumers to transact in electronic tokens. The system will reportedly work much the same way as you have been accustomed to in casinos. “You exchange cash for casino chips and those chips transfer around the casino,” said Nevada Treasurer Zach Conine in a press conference. “At the end, you convert them back into cash.”
The current idea is for businesses and consumers to use an app to buy tokens. These tokens could then be used at dispensaries, which in turn can use them to pay growers, who would then use the same to pay a tax bill to the state. At this point, the state will convert the tokens back into dollars.
However, in order to be fully sure about every aspect involved in such transactions, the treasurer’s office is spending the summer consulting with both financial and technology companies.
The financial companies that are selected to run the pilot project will charge a fee for their service, but the fee will have to make a balance between being cheaper than what marijuana businesses pay now in security costs to safely manage massive loads of cash, but high enough so that tech and finance companies can earn money and create a decent product, Conine told the local media.
The Silver State is expecting its pilot banking system to be operational by July 2020.
Other states too are looking to fix this excess cash issue on their own. Only recently a few states proposed opening and running their own cannabis banks that would be more-or-less free from federal intervention. A report from the California government, however, deemed this measure highly risky.
Once the proposed Safe Banking Act is passed, banks will no longer have to fear any punishment from federal banking regulators. Although the present version of the bill seems better than the previous ones, only time can tell if it will come into effect any time soon.