How Blockchain Could Solve The Problems Of The Cannabis Industry With Banking And Credit Card Processing

June
5,2019

3 min reading

Opinions expressed by Contractor the contributors are theirs.

There are three main reasons why the cannabis industry has so much trouble getting bank and credit card processing common, but it's actually the same reason – fear. Card badociations, banks and regulators are afraid that they will not be able to prevent what they fear the most.

The card badociations fear illegal transactions. Banks fear money laundering and fraud. Regulators fear tax fraud. Alternatives that the cannabis industry might consider – such as offshore accounts, coding errors, ATMs, cryptocurrency, coupons and even mobile client applications – have all failed. . Many resulted in the closure of accounts, fines and penalties.

Related: Your cannabis company can get a bank account but not easily

All fears, however, are unfounded because there is now a blockchain banking technology that makes illegal transactions, money laundering, and tax and banking fraud impossible. The technology consists of three elements: a digital portfolio, a closed-loop ecosystem and a chain register.

A digital wallet works like an online bank account. It is insured by the FDIC, earns interest, you can write checks, etc. The main difference is that you can also make portfolio-to-portfolio transfers.

The closed-loop ecosystem simply means that digital portfolios are only delivered to organizations that have successfully completed a thorough audit of their customer knowledge history.

Related: US bank subsidiary stops processing CBD payment processing

The blockchain big book is the secret sauce. This register is a record of every penny from the moment it goes into the wallet to everything that is done inside the wallet or portfolios and ends with the deposit of the wallet into a bank account outside of l & # 39; ecosystem. The key is that this immutable registration is made available in real time of card brands, banks and regulatory bodies.

Because all transactions are completely transparent, everyone remains honest! Let me give you some examples of how technology can eliminate illegal transactions, bank fraud and tax evasion.

Suppose a Washington State dispensary with traditional credit card processing wants to run orders from Idaho, where cannabis is illegal. All the clinic needs is to have an emergency terminal and bring it to Idaho. Card brands and banks would have no way of knowing that these illegal transactions were going on. Compare that to blockchain technology, which captures a geolocation for each transaction. The geolocation would show that the transaction was underway in Idaho and would refuse it!

Let's use the same Washington / Idaho scenario to demonstrate how blockchain prevents bank fraud. As you know, cannabis transactions can not cross borders between states. If a dispensary in Washington tries to take money out of its digital wallet and deposit it in a bank in Idaho, the technology will see the routing numbers attached across the state's borders. and will refuse the transaction!

Tipping is a perfect example of how tax evasion is eliminated. Today, a clinic should show that he collected tips and paid them to his executioners in order to transfer the tax payable from the dispensary to the executioner. Blockchain technology provides this recording in real time, with every penny and every transaction!

The proper treatment of banking and credit card transactions is possible for the cannabis industry with the appropriate reporting, transparency and protections provided by the latest technology.