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Getting High Goes High Tech

Digital Currency Solution May Legitimize Fringe Cannabis Industry

The evolving cannabis industry is pretty much a cash-only business which provides cannabis users and thus the industry as a whole with the mask of anonymity necessary to drive retail sales. And while some two-thirds of states have legalized the use of cannabis for medicinal or recreational purposes, the federal government which charters banks still considers cannabis an illegal drug. The specter of getting sideways with the federal government can limit the number of banks willing to take on cannabis customers.

Another drawback to this cash-driven business model is that businesses that throw off that much cash without the electronic audit trails provided by the banking system quickly will be subject to suspicions of money-laundering. This is another factor which can make it difficult for cannabis retailers or suppliers to find banks willing to provide banking services to them.

Because of such perceptions banks which are heavily regulated by the federal government may be reluctant to do business with the cannabis industry. The banking industry is itself driven by the Know Thy Customer policy which becomes the way banks view their customers. If a bank can’t know its customers and the customer’s business it may be reluctant to do business with that customer.

Such perceptions can make it more difficult for an industry that revolves around something many people did recreational in college to go mainstream and set up shop on Main Street.

The cannabis industry has a large footprint. Currently, 37 states and the District of Columbia  have legalized some form of marijuana use or possession. Nevertheless, marijuana remains illegal under federal law, hence the reluctance of federally regulated banks to get involved with the industry.

One enterprising company has stepped forward using modern banking technology, the electronic payment wallet, to step in where the banks have faltered. That company is Amercanex which bills itself as the first fully electronic cannabis marketplace.

Its CEO explains that Amercanex is is a real payment system with a regulatory framework that allows the government to regulate and collect taxes.

The Amercanex wallet, dubbed ACE Pay, provides an account and allows money to change hands electronically similar to PayPal.