Banks Zig, Hawaii and Uruguay Zag

Of all the consequences of cannabis being on Schedule I of the US Drug Enforcement Agency's Schedule of Controlled Substances, one of the most far-reaching for the nascent legal industry is lack of access to normal banking. Without banking, the day-to-day existence of any business gets much more complicated.

Readers of the American Cannabis Report will know that (especially plant-touching) cannabis companies have trouble finding banks that will take their business, and so have to operate on an all-cash basis. That means no debit card or credit card purchases, holding cash in safes, paying employees and taxes in cash, and providing extra security for the whole mess. And that's not including getting credit (loans) to buy their real estate or get advances for product, or investor issues.

Banks, for their part, are largely "handcuffed" by being part of the Federal Deposit Insurance Corporation, operating in multiple states, etc., all of which prohibits them from participating in a federally prohibited activities. This issue even transcends the US system into foreign countries because US banks are omnipresent globally.

Two political entities, the State of Hawaii and the Country of Uruguay, have chosen to defend their cannabis industries, including business owners, investors, workers, and patients from the banking problems.

The State of Hawaii announced on Tuesday that it will REQUIRE ALL MEDICINAL CANNABIS TRANSACTIONS TO BE HANDLED WITHOUT CASH. Instead, buyers must use a debit app called CanPay, which uses a Colorado-based credit union to process transactions. CanPay accounts function on a smartphone, or with special personal information at dispensaries.

The very next day, Uruguay went the opposite direction and NOW REQUIRES ALL SHOPS TO OPERATE ONLY IN CASH, to negate the need for bank involvement.

We do not understand the on-the-ground realities in Uruguay that forced this alternative strategy (which seems likely to create the cash-only problems experienced by US dispensaries) but we will keep an eye out for further information.