Marijuana Business Magazine September 2018

well-documented financial troubles. By replacing conventional transactions with cryptocurrency transactions, companies would have an alternative to traditional banking. It might seem that blockchain and cryptocurrencies would no longer be needed if the federal government legal- izes marijuana or allows banks to serve state-legal MJ businesses. But some industry officials believe cryptocurrencies and blockchain will be the preferred payment method if and when marijuana is legalized or banks are permitted to serve cannabis businesses. According to Hoban’s Fortin: • Major data hacks will continue to anger consumers and compel busi- nesses to adopt the blockchain and cryptocurrency systems. • The world is heading toward more financial crises, which will undermine liquidity. But businesses that employ cryptocurrencies won’t have a problem accessing that digital currency. “The companies that have understood the advantages of these crypto tokens and blockchain finance will be the com- panies that survive the banking changes, which are coming by next year, I think,” Fortin said. Others, however, say cryptocurrency is better left out of cannabis payment and banking, given that some criminal elements are relying on the virtual cur- rency.The cannabis industry, by contrast, is trying to emerge from the legal shad- ows and become mainstream. “Cannabis has to be able to show that it’s always being transparent and able to follow the rules,” said Joshua Laterman, founder and CEO of the NACB. “The point of these cryptocurrencies is to take money and accounting off the grid.” Adding to the uncertainty of using blockchain and cryptocurrency for can- nabis payment and banking solutions: Federal agencies in charge of overseeing cryptocurrencies can’t agree on how to classify these virtual currencies. “The SEC, the U.S. Commodity Futures Trading Commission, the IRS, the Treasury Department, state bank- ing authorities, the Financial Action Task Force and foreign counterparts don’t agree on and can’t agree on what a bunch of code running on a com- puter server in a data center generat- ing cryptocurrency is,” Harvey Kesner, an attorney with the Sichenzia Ross Ference Kesner law firm in New York, wrote in a white paper this year. “For example, the Financial Action Task Force has classed bitcoin a ‘virtual currency;’ the IRS considers it an asset or property and not a security, and as far back as 2016, the American Insti- tute of Certified Public Accountants asked the IRS for additional guidance on whether, under existing tax prin- ciples, cryptocurrency was property, currency or a commodity.The account- ing industry does not take a position formally.” Moreover, leveraging these technolo- gies can be difficult. River Rock Cannabis, a business with two retail locations in Colorado, introduced a PotCoin ATM Some marijuana retailers are introducing cryptocurrency ATMs in their stores. Photo courtesy of PotCoin 84 • Marijuana Business Magazine • September 2018