Cryptocurrencies Can Protect Local Cannabis Businesses – Orange County Register

In late January, a federal judge refused to stop the Sherriff of San Bernardino County from seizing cash from state-licensed marijuana dispensaries. While conflicting federal and state laws and misleading incentives can cause this headache, new payment technologies can help alleviate some of the pain.

Since November 2021, the San Bernardino County Sheriff’s Department has seized nearly $1.1 million from marijuana dispensaries, targeting armored vehicles that deliver dispensary cash to medical locations. safer point. The sheriff let the vehicle pass on an allegation of a minor traffic violation, seized the cash, and then turned the money over to the Federal Bureau of Investigation. The FBI, in turn, claimed the money was related to drug trafficking or money laundering but made no arrests.

Like the recent raid on US Private Vaults Inc. in Beverly Hills, the story highlights an alarming trend in the misuse of civilian property. Local law enforcement is incentivized by a profit-sharing structure that allows them to keep up to 80% of seized cash.

While 36 states have legalized medical marijuana and 18 have legalized recreational marijuana, the federal government has resisted legalization. The U.S. Drug Enforcement Administration classifies marijuana as a “schedule I” controlled substance, making it illegal to possess, sell, or manufacture cannabis products under federal law. Since most banks and other financial institutions are regulated by the federal government, the majority refuse or are very hesitant to work with cannabis businesses.

This has forced a $17.5 billion industry to operate almost entirely on cash. As a result, bartenders became victims of violent armed robberies. In response, business owners hired private security to protect their storefronts and transport their profits.

However, the cannabis industry still needs a viable, cashless system to meaningfully improve efficiency, increase safety, and reduce government harassment. Fortunately, an option that does not require federal legalization is available.

Enter cryptocurrency. In some respects, they function like physical money issued by the government, since people can use them to buy goods or services. In other ways, cryptocurrencies are unique. The economic weight of government is behind government-issued coins. But with cryptocurrency, the limited supply or value that people place on the product determines its value.

Cryptocurrencies are based on a technology called blockchain. While oversimplifying, imagine a spreadsheet that records every transaction, even down to the minute, piecemeal. That spreadsheet doesn’t just appear on one computer, but is spread across hundreds of thousands, if not millions, of computers. And each computer is responsible for verifying the accuracy of the spreadsheet, including the most recent transactions.