A law proposed in the state of Washington intends to prevent marijuana businesses from using virtual currency — which, though the bill doesn’t mention the cryptocurrency by name, would mean no more bitcoin in weed shops.
The bill is sponsored by Steve Conway, a Democrat, and Ann Rivers, a Republican with a record of advocating for more restrictions on marijuana use. Both supported the legalization of pot for recreational use in Washington, which passed in 2012.
“One of the goals of my Cannabis Patient Protection Act, which became law in 2015, was to eliminate the black and gray markets for cannabis in our state. SB 5264 addresses another part of the regulatory challenge,” Rivers said in a statement. “After all the work we’ve done to get a handle on the cannabis industry and help move it out of the shadows, allowing the use of unregulated currency for cannabis purchases doesn’t promote the level of transparency we committed to develop.”
Though the bill would have to overcome many hurdles to become law in the liberal state, it speaks to a much larger problem. Even in states that have legalized recreational or medical marijuana, banks are unwilling to do business with marijuana companies since weed remains illegal under federal law. That means dispensaries and growers can end up handling large sums of cash, which can attract violent crime, sometimes with tragic consequences. Last year, for instance, a security guard at a dispensary in Aurora, Colorado, was killed during an attempted robbery.
“No industry can operate safely, transparently, or effectively without access to banks or other financial institutions,” said Paul Armentano, a spokesperson for the National Organization for the Reform of Marijuana Laws, though he said the advocacy group currently remains neutral on the proposed bitcoin ban.
As a result, some cannabis businesses have started using bitcoin, the open source digital currency that can be used to store large quantities of money without a bank.
Sam Méndez, the executive director for the University of Washington’s Cannabis Law and Policy Project, suggested using bitcoin might be more trouble than it's worth. Bitcoin requires some technical savvy to use, and the fluctuating market value means prices have to constantly be adjusted.
“Having bitcoin as a form of payment for the cannabis industry, which is beset by a lack of payment systems, is an interesting idea but ultimately impractical,” he said. “Your computer-savvy tech friend may disagree, but there just aren’t that many people who use it.”
The relationship between the cannabis industry and banks could soon thaw. Massachusetts senator Elizabeth Warren has recently called for laws that would legitimize legal pot growers and sellers in the eyes of financial institutions.
The proposed virtual currency ban is scheduled for a public hearing in Washington’s Commerce, Labor, & Sports committee on January 25.
Update: This story has been updated with a quote from Ann Rivers' office.