
Guns, Drugs and Money [video] - lkurtz
http://www.nytimes.com/video/business/100000003491301/in-colorado-marijuana-pot-industrys-banking-problem.html?action=click&pgtype=Homepage&version=timesvideo-heading&module=watch-in-times-video&region=video-player-region&WT.nav=video-player-region
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vijayboyapati
There was a great Planet Money (NPR) podcast on this a while ago:

[http://www.npr.org/blogs/money/2012/12/04/166514067/episode-...](http://www.npr.org/blogs/money/2012/12/04/166514067/episode-420-the-
legal-marijuana-business)

and I remember hearing another Planet Money podcast on bitcoin around the same
time:

[http://www.npr.org/blogs/money/2011/08/24/138673630/what-
is-...](http://www.npr.org/blogs/money/2011/08/24/138673630/what-is-bitcoin)

and thinking "why don't the marijuana growers just store their money in
bitcoin?" Of course volatility is a big issue, but that can go both ways.
Marijuana dealers saving profits in bitcoin in 2012 and before would have made
even more in appreciation. Dealers doing so from 2014 would have lost some of
their profits (in dollar terms)

~~~
joezydeco
Dealers need to transact with other legal vendors to their businesses.
Landlords, utilities, horticultural supplies, etc etc.

Don't think it's really about gambling the profits as much as making sure
there _is_ a profit after everyone else is paid.

~~~
vijayboyapati
Sure, but all those businesses will have to deal with large amounts of
incoming cash, so they too will have an incentive to take bitcoin. The
secondary businesses wouldn't even need to keep any bitcoin as they could use
something like BitPay or Coinbase to immediately convert bitcoins to dollars.

But for the primary growers/dealers, having a way of storing their profits
without the risk of robbery would be a huge benefit (and probably lower
storage costs substantially)

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protomyth
Instead of suggesting alternate ways to get money, perhaps some Congresspeople
can be persuaded to enact a law to shutdown the Justice Department's program
called Operation Choke Point and all similar programs that interfere with
state approved businesses.

~~~
hga
As a matter of law that's pretty hard. All the FDIC has to do, _has been
doing_ , is to threaten to put the bank under continuous colonoscopy.

Perhaps we would have been better off if the usual suspects hadn't turned a
blind eye to the Administration's criminal behavior when it was only going
after approved but entirely targets like payday loan companies and gun and
ammo dealers. Dispensing with the rule of law turns out not to be so keen,
yes?

~~~
protomyth
Well, the FDIC can be legislated by the Congress and putting penalties for
FDIC officers who fail to comply is just another line. The Administration is
not all powerful. Also, removing funding tends to work.

~~~
hga
" _putting penalties for FDIC officers who fail to comply is just another line
"_

If by that you mean penalties on named officers, or certain type for a
specific group, that's an unConstitutional bill of attainder.

At this point, given the multiple counterexamples in the implementation of
Obamacare, I have no faith that general legislation, or officially removing
funding would work. Or rather, it won't work until it's once again thinkable
to impeach the President. (I initially appended "or political appointees under
him", but Obama's is hardly the first where staffers who can't be touched by
the Congress are really running things.)

~~~
protomyth
I too have little faith, but I still believe this is the time for trying.

I don't mean "bill of attainder", I mean specific penalties for officials that
do not follow the law. I didn't think that fit under "bill of attainder". I'm
not talking about no trial, but no sovereign immunity from prosecution in
failure of duty. I could be wrong at how that works since it isn't my area.

~~~
hga
Ah, that's a more promising angle, but:

We're talking about essentially an abuse in "prosecutorial" discretion, who
the FDIC targets and who it doesn't, for what reasons.

Now, to make this work, the FDIC examiners have to make explicit threats, and
people at the banks need to be able to testify to this without the threat the
FDIC will destroy the for _that_....

To actually make it stick, the DoJ would have to prosecute, and this DoJ
certainly won't. But maybe the next would....

I think, it's going to have to come down to a non-Democratic Administration
that actually has serious cojones. Which is unlikely, but _possible_ , e.g.
[http://thefederalist.com/2014/11/11/the-nation-needs-
preside...](http://thefederalist.com/2014/11/11/the-nation-needs-president-
scott-walker-in-2016/) (jump down to the 2nd section, "The Throne Made of the
Skulls of His Enemies" :-).

And you're very right about trying this now. We don't want to wait until we're
only left with extralegal recourse, that will not end well.

~~~
protomyth
Yeah, I guess it does come down to prosecutorial discretion and the DoJ.

At this point, I really worry because the next President seeing what the long
line before him/her did, might just be worse in not following legislation. For
example, there is no authority to delay implementation of laws, but I guess it
will become the default.

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jack-r-abbit
I'm not sure how they do it but one of the dispensaries (in California) I use
actually takes credit cards. I still pay cash because I don't really want it
showing up on my statement. But they manage it somehow.

~~~
josephpmay
There are two ways they may be doing it:

1) they're mis-classifying their business as a flowershop (somewhat illegal
and definitely against the processor agreement, but it's not likely that
they'll get caught)

2) They're using a "cashless ATM" where you withdraw money from your debit
account or credit cash advance in the form of a deposit receipt that the
dispensary can then cash.

Neither of these are good solutions. It is not technically illegal (well,
kinda) for cc processors to accept mmj purchases (and Visa and MasterCard are
ok with it-but not Discover and Amex), however no cc processor wants to
because the amount of paperwork they'd have to file to be in anti-money
laundering compliance would loose them money.

I was working on a startup trying to find a solution to this, but we recently
gave up, at least for the time being.

------
edoceo
Not one of the 450 MJ business owners I've talked with would use bitcoin. Lack
of understanding is part, volatility is the big one.

Cashless ATM is popular but there are some other creative options too. Using a
crypto currency for transactions is great but the conversation to/from USD
needs to happen quickly

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lurchpop
I wonder also if they're at risk of getting their money stolen by police.
Would a carload of mercs be able to stand up to a single cop on the highway
claiming the money by asset forfeiture?

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nutschig
Bitcoin.

~~~
alloyed
Not an effective store of value, too volatile.

Plus, somebody has to trade the cash they get for bitcoin, and then they're
responsible for the stack of cash they can't do anything with.

~~~
brighton36
It's a bit too soon, but at some point, one of the large banks(probably
coinbase or circle) will be issueing USD on the Bitcoin chain. At that time,
the pot-shop will accept BTC, which will immediately convert into COINBASEUSD.
Problem solved. Junseth articulated this pretty well:
[http://junseth.com/post/109579766177/the-blockchain-isnt-
goi...](http://junseth.com/post/109579766177/the-blockchain-isnt-going-to-
enhance-remittance)

~~~
GrinningFool
I'm unclear how you got from someone's blog post to "one of the large banks
will be issuing..."?

~~~
brighton36
Bitcoin is an amazing Payment Mechanism. But it's not a good unit of account,
and possibly not a great store of value. As such, the solution to the problems
posted in the parent will likely involve transmission of USD over the Bitcoin
network. Banks will be the ones to do this.

~~~
narrowrail
When you say, "one of the large banks" I think of Chase, BofA, Wells Fargo,
etc. And, my experience with these entities is that it takes 3 days for them
to do ACH transfers (well, the originating account is debited ~immediately,
but the destination account doesn't see the $ for 3 days). YMMV.

------
infogulch
[video]

