You may be thinking Crypto and Cannabis are completely different and should not be spoken of together. The thing is they have several things in common and can help each other out.

The biggest thing they have in common is banking issues. Because Cannabis is still considered illegal under federal law most banks won’t allow them to have a bank account – surprisingly banks also do not like working with cryptocurrency businesses especially those in crypto mining. This means that both must find alternative banking options which is normally credit unions.

However, cryptocurrency can be a banking solution for those in the cannabis industry. If the other party accepts crypto most expenses can by paid through a crypto exchange such as Coinbase. This even includes payroll and paying independent contractors. Even if you go this route you will still have to have a bank account in order to pay things like payroll taxes because the federal government will not accept crypto as payment. You also need a bank account to deposit the cash then move that cash to a crypto exchange.

The opposite is true of a crypto business. They are usually paid in crypto currency where they can pay most expenses. But in order to get cash or pay other expenses that the vender does not accept crypto such as your taxes you have to move the crypto from the exchange into a bank.

Another thing they have in common is that they are both very new and therefor the regulations for taxes is still fluctuating. Cryptocurrency is regulated by IRS notice 2014-21 whereas Cannabis is affected by 280E compliance. Both mean that they have special regulations governing the way they are taxed.

Notice 2014-21 defines virtual currency (another name for crypto) as property meaning you must treat it similar to a stock transaction with several exceptions. 280E means that the business can not take ordinary expenses such as office supplies or even accounting fees.

There are also several cryptocurrencies that are specific to the cannabis industry such as PotCoin and CannaCoin which were both designed to alleviate problems in the cannabis industry such as not having access to a bank. If you need information on either, please schedule a time we can talk – we love working with new industries and we have other ideas for you to solve banking issues.