Does using Bitcoin help assist someone who has a debit card purchase marijuana? Bear in mind that this person is likely non-technical. They're also physically present at a marijuana distributor, and sufficiently difficult processes will cost them a 30 minute car drive to another marijuana distributor, who transacts via cash and an ATM or using the ATm->distributor's account loophole.
Does using Bitcoin help Totally Not A Marijuana Dispensary LLC avoid the scrutiny of its bank's compliance department such that they can maintain a business bank account, write checks to employees and vendors, demonstrate a credible revenue/expense history and thereby secure credit, and otherwise plug into the mainstream financial system? For example, will large wire transfers coming in from an identifiable company in Tokyo, or their cutouts, raise less flags than dealing in equivalent amounts of cash, like every pizzeria, car wash, laundromat, video arcade, etc in America?
The last one might not be obvious, so as someone who has extensive experience with American and Japanese banks doing routine wire transfers between each other: this reads as Very Effing Exotic to risk/compliance officers and even if you're utterly aboveboard you'll be asked to explain yourself a lot. I get to have a quick chat with the manager of my bank branch for every single wire, and let's just say it is a very good thing that I have a US passport, an accountant on speed dial, a stack of invoices and contracts, sterling credit, and the interconnected stack of social privileges which let me convince skeptical people that I'm an "international professional" rather than "drug dealer" in five minutes of conversation.
Sometimes, not even then: "One dispensary owner told me about taking seven thousand dollars in cash to the Washington Department of Revenue, to pay his monthly tax bill. He was turned away, because the teller refused to deposit his “drug money.”"
To think that your curated list of issues that Bitcoin does not solve is in any way a reason that there aren't many other issues it does solve is fallacious.
If your response is that they should keep all their bitcoins in a safe place then maybe we can think about what sorts of safe places you can keep items worth tens of thousands of dollars and then I think you basically end up back at banks.
Unlike with physical cash, you can easily put any arbitrary amount of physical separation between the place the transaction occurs and the place the money is "stored".
I think you're failing a bit in criminal imagination, which is probably not a bad thing altogether.
The other possibility is that this solution is obvious, but lobbying for bank accounts is part of making Mary-Jane a more acceptable trade.
If you are going into the marijuana business get good legal advice and have a competent defense lawyer on retainer.
There could quite easily be a crackdown if the next president wants to revert things or is too heavily beholden to the parts of federal law enforcement that benefit from the drug war.
Someone really just needs to set up a BTC ATM in these places, see what happens. Maybe convince the owners to take bitcoin, off chance it creates a thriving use case for both, and demonstrates the ability/limits of BTC as a banking substitute.
They can also start a separate company, say, an investment company, to take the gold and store it, or convert it to dollars or stocks.
There are lots of solutions made possible by Bitcoin, none of which are impacted in the slightest by the investment volatility of Bitcoin.
It could be that insurance companies would not cover armored car services for marijuana industry clients, but presumably it would be possible to raise rates to cover expected losses (FBI data shoes that only 7 armored cars were robbed in 2010).
edit: This sounds vaguely like a valid business plan. One could start a Colorado-only Colorado-regulated bond broker-dealer. This broker dealer could cooperate with armored car services to move cash from marijuana industry clients to the broker's bank (or to the State of Colorado as payment for bonds). Marijuana industry clients would be unburdened from carrying large physical cash positions and free from a great deal of counter party risk because the marijuana industry clients would own liquid bonds.
The state needs to pass laws creating or making possible the creation of a state approved depository. This could begin to undermine the power of the fed and start a. It states rights battle
Strictly speaking, they wouldn't be in the business of settling accounts at banks. They would be in the business of selling securities for cash. I could drive around in a car and provide the same service, only I'd want the security of an armored car to transport the cash. I would drive the cash to the bank and deposit it in my perfectly legitimate business account.
One thing I don't understand: what kind of securities would these be? They would have to be sold on the spot, yet somehow more secure than cash.
So a new company can offer the service, but the aren't an armored car company they are a banking company and are required to get a banking charter.
You can try create services that somehow skate the line (which is what all of the check cashing, payday advance, and title loan companies do, but they are classified as MSBs), but an AG (Attorney General) in any state where you are operating can come after you. The feds will also come after you if they think you are illegally taking deposits which can involve criminal charges.
- There is an important difference between MSBs and banks: banks can take deposits.
- Loan companies (e.g. payday advance, as you mention) are different: they need a Consumer Credit Licence and are regulated by the OFT/FCA.
To your main point: I don't understand how (even in the US) my accepting cash in exchange for 'not a product/service' would mean I'm acting as a bank. Would I be breaking the law if I were to sell you a single share of, e.g. Google stock, in exchange for cash?
It sounds like there's a need for a "safety deposit box delivery" service. They'll deliver a safety box to you, which you fill with whatever makes you happy. You close it, and they pick up the filled and locked box. It then gets stored in a secure vault.
That would avoid a lot of fear surrounding the personal transport of money.
It sounds to me like a business ready for disruption.
The problem you'll run into with the black box scenario is that the customer has no access to the funds unless you bring them the box which makes it a poor place to keep working capital funds that businesses use. Even if you start giving loans based on the box you start hitting legal restrictions, and compliance issues.
I worked for years in the financial industry focusing on services for the under/unbanked which relies on a lot of cash handling.
Every way you can think about how to get around the law has been used in the past to launder money and/or evade taxes.
That's not a good thing to admit to a newspaper. Even if the federal rules allow legal marijuana sales, he could still be in trouble for structuring: http://en.wikipedia.org/wiki/Structuring
Just like with Visa blocking Wikileaks months ago and banks presently blocking Bitcoin (the Rabobank in the Netherlands leaked memo a few weeks ago that they should not facilitate Bitcoin traders), I'm not sure I like these practices. Not to mention PayPal's draconian policy.
Controlling people's money is a nice power to have... (So, Bitcoin anyone?)
Apparently domestic pot growers don't murder and rape enough to warrant service.
Remember when wikileaks couldn't get donations because "pressure" was put on paypal, mastercard & visa not to process those payments? Bitcoin.
Wanna donate to the piratebay? Anonymous? ...bitcoin.
Megacorps wanna donate to a political campaign without being found out later on? ....bitcoin.
If governments were really devious they would replace their cash with a non-anonymous cryptocurrency like BitCoins. That would make it hate for the underground economy to avoid the police or taxation.
It's true that without using a mixer (aka "money launderer") Big Government could seize the service to get your name... but what about https://localbitcoins.com/ ?
There's risk in the movement of a day's cash flow by BTC, but probably not much higher than the risk of transferring cash in your personal car.
Asking their customers to do it for them is unrealistic. Their target audience is not "HN techies", but rather "general population". Maybe in the future having the customers do it will be a realistic solution, but maybe in the future it will be fully legalized anyway...
Check page 4/36
> Though 20 states and the District of Columbia allow either medical or recreational marijuana use — with more likely to follow suit — the drug remains illegal under federal law.
> As a result, banks, including state-chartered ones, are reluctant to provide traditional services to marijuana businesses. They fear that federal regulators and law enforcement authorities might punish them, with measures like large fines, for violating prohibitions on money-laundering, among other federal laws and regulations.
I will always be willing to accept gifts.
Hey if there is a topic about drugs on a tech forum, I don't think the established ethics apply.
I can see smaller credit unions being genuinely concerned, but big banks? Really?
It allows them to claim they follow the rules without actually hurting their bottom lines.
There are currently four living people that receive medical marijuana from the federal government. They were grandfathered in after the Compassionate Investigational New Drug program was closed to new applicants in 1992.
I wonder what people who underwrote it are doing now.
(Most of them are dead for good, sure)
nearly every medical marijuana dispensary i have been to have been accepting DEBIT/INTERAC/MASTERCARD/VISA etc without any issue for about 2 years now