There's a major problem in the U.S. cannabis industry: Businesses can't receive loans or open bank accounts, because marijuana is still illegal under federal law.
That's preventing companies from using money to buy buildings, expand their operations, and create new jobs. It also creates a security risk, as companies are forced to secure their cash.
But a growing number of entrepreneurs are creating solutions...
One of the creative solutions has been cryptocurrencies. Crypto allows cannabis companies to transition from being all-cash businesses, which comes with risks and limitations.
According to business development firm SIVA Enterprises, the odds of a cannabis dispensary being burglarized in 2015 were 50%. In comparison, banks only had a 34% chance of being burglarized in 2009.
As of January 2018, there have been five crypto coins created to make facilitating transactions easier.
Those coins include:
- PotCoin (POT)
- CannabisCoin (COIN)
- DopeCoin (DOPE)
- HempCoin (THC)
- CannaCoin (CCN)
Aside from cryptocurrencies, firms are also developing banking and merchant solutions for cannabis businesses through blockchain and other technology sources.
And one of those firms is MoneyTrac Technology Inc.
MoneyTrac specializes in providing alternative banking solutions to "high-risk" market spaces, like the cannabis industry. It's also using blockchain technology to "revolutionize the banking industry," according to its website.
On top of that, it also has a crypto token called "MTRAC-Token."
Did Jeff Sessions Just Admit He Can't Stop Marijuana Legalization?
Jason LeBlanc is the director of business development for MoneyTrac, and because he's at the forefront of the convergence of the marijuana, cryptocurrency, and blockchain industries, I knew I had to get his insider perspective on these industries.
I recently spoke with LeBlanc, and now I'm sharing his insights with Money Morning readers to help you get a leg up on Wall Street.
With the blockchain industry projected to be worth $2.3 billion by 2021 and legal marijuana sales in North America reaching $24.5 billion by 2021, there will be plenty of profit opportunities created for investors who know where to look.
And because you're receiving access to interviews like this, you're going to know about them before anyone else.
Here's what LeBlanc had to tell me about the current state of the cannabis and banking market, including the single most important thing he wants you to know...
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JD: How does banking in the cannabis industry work?
JL: There are a few banks here and there that will accept deposits on a very limited basis, but traditional banking solutions are currently virtually unavailable to the cannabis industry, which means they are a 100% cash business.
The problem this creates is twofold: It's a huge security issue for the amount of business they do. The cash flow is huge and it leaves them extremely vulnerable.
It also makes it extremely difficult to track, both for inventory and taxation purposes. This means the state is losing out on untold amounts of tax money from this industry.
JD: What are the biggest difficulties involved in banking in the cannabis industry?
JL: The federal schedule 1 status is currently the largest hurdle to banking. There are rules in place that allow banks to accept cannabis cash, but the ambiguity in federal position has made them very skittish about trying to participate.
What this also means is that no ACH providers will allow cannabis purchases, which means most dispensaries are cash-only.
JD: What have been the biggest developments in the cannabis/banking sector for 2018?
JL: Right now, the largest development is the integration of crypto and blockchain technology. Companies can begin to move away from cash using blockchain payment platforms, B2B and C2B, in which some solutions also provide a POS, ledger, and seed-to-sale tracking software.
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JD: When do you think all legal cannabis businesses will have reliable access to banking services?
JL: In California, there are some new banking organizations attempting to enter the arena, which we are vetting now. Over time, we've seen similar organizations and opportunities come and go, but I believe there is now a larger contingent of people, not only in the industry, but people in regulatory seats, who are wanting to see more reliable banking services provided to the industry.
The difficulties and the liabilities created by forcing these licensed businesses to use cash are really not serving a value to anyone. For starters, it makes paying (and tracking) taxes harder for the business owners and the IRS, respectively.
And energy companies don't accept cash payments, which I believe is a big reason you see some major energy companies in recreational states beginning to back cryptocurrencies.
I'm not sure what will happen first: Crypto and blockchain technologies fulfill banking needs successfully, avoiding the federally regulated banking model altogether, or the federal government begins to relax some of the restrictions currently in place for these banking institutions.
I think the latter could happen sooner than later if and when banks can convince the federal government that blockchain and cryptocurrencies are a big enough threat to their business models.
Some major banks have already openly admitted this.
JD: If you want people to know one thing about the legal cannabis/banking industry, what would you want it to be?
JL: Help is on the way. The days of licensed business owners having to bury mountains of cash in their backyard are soon to be a thing of the past.
Delivery drivers will soon not have to worry about being robbed at gunpoint, because they will be engaging in cashless transactions on the blockchain.
Large legal product companies can halt the design and eliminate the budget for developing armored cars to pick up loads of cash from their licensed customers, because MTRAC is now banking the unbankable.
The Bottom Line: Back in October 2017, Money Morning Director of Technology & Venture Capital Research Michael Robinson predicted we would see a major convergence of cryptocurrencies and legal cannabis. And today, he wants to share your next potential profit opportunity through cryptocurrencies...
Finding the Next Crypto 10-Bagger
We've spent the last few months developing a series of special, comprehensive videos and reports that we want to share with you.
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