2014-02-10 Irony Alert: Major Bitcoin Processor Rejects Pot Shop [Forbes]

[hilariousandco]

Irony Alert: Major Bitcoin Processor Rejects Pot Shop As Too Legally Dubious

http://www.forbes.com/sites/kashmirhill/2014/02/10/irony-alert-major-bitcoin-processor-rejects-pot-shop-as-too-legally-dubious/

Companies dealing in Bitcoin and marijuana have something in common: rejection from banks. Bit-entrepreneurs scare banks due to the intense regulation around money transmitting and the perfume of illegality that hovers around the virtual currency. Pot shops can’t get green lit for bank accounts because of the disagreement between some states and the federal government as to marijuana’s legality. When the New York Times chronicled pot shop owners forced to carry hundreds of thousands of dollars in legal marijuana profits – obviously terrifying from a security perspective — it occurred to me that Bitcoin could be the answer to pot’s problems. Unable to take credit cards without a bank account and wary of accumulating cash, they could instead accept the secure cryptocurrency. Bitheads and potheads, unite…. But it turns out it’s not such a mellow union. A pot shop’s plans to accept the digital coin are going up in smoke as its Bitcoin payment processor isn’t comfortable with the business it’s in [....continued].

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[hostmaster]

Putting Bitcoin near illegal activities only hurts general good spirit on Bitcoin.

[hilariousandco]

Putting Bitcoin near illegal activities only hurts general good spirit on Bitcoin.

It's not illegal though, and please elaborate exactly how it hurts the spirit of Bitcoin?

[dserrano5]

They don't need no bitcoin processor. Let them be their own bank. That's the whole point of bitcoin, right?

[hilariousandco]

They don't need no bitcoin processor. Let them be their own bank. That's the whole point of bitcoin, right?

That's exactly my thinking. It's a shame payment processors are refusing to work with pot shops as Bitcoin could really flourish there, but maybe that'll open up the market for one that will specialise in this field, but my thought is always, do they even really need them? It's easy to be your own bank/payment processor with Bitcoin.

[guybrushthreepwood]

Are all banks prohibited by law from dealing with the dispensaries, or do they just not want to take the risk?

[Rannasha]

The point is that the marijuana-shops don't want to keep Bitcoin, they want to accept Bitcoin and have it exchanged for USD, like most merchants accepting Bitcoin.

And then you end up using a payment processor like BitPay or Coinbase. And these have banking relations to maintain. And if the banks don't like dealing with marijuana-shops, they won't like it if they do so indirectly anyway through a Bitcoin payment-processor.

[hilariousandco]

The point is that the marijuana-shops don't want to keep Bitcoin, they want to accept Bitcoin and have it exchanged for USD, like most merchants accepting Bitcoin.

And then you end up using a payment processor like BitPay or Coinbase. And these have banking relations to maintain. And if the banks don't like dealing with marijuana-shops, they won't like it if they do so indirectly anyway through a Bitcoin payment-processor.

I'm sure they could just sell them on exchanges themselves or even sell them back to customers.

[bryant.coleman]

Putting Bitcoin near illegal activities only hurts general good spirit on Bitcoin.

Selling pot is no longer illegal in many parts of the US. So I don't understand the problem here.

[dave111223]

Maybe good in the long run.

Pot shops will be more inclined to hold the bitcoins instead of auto-trading them with a processor.  I'm sure the markup on pot is very high (no pun intended) so they are in a position where volatility will not kill them.

This means they will be more inclined to push the bitcoins into the supplychain; try to get employees, growers etc.. taking their bitcoins...

[cr1776]

Maybe good in the long run.

Pot shops will be more inclined to hold the bitcoins instead of auto-trading them with a processor.  I'm sure the markup on pot is very high (no pun intended) so they are in a position where volatility will not kill them.

This means they will be more inclined to push the bitcoins into the supplychain; try to get employees, growers etc.. taking their bitcoins...

Exactly.  This should be looked at as a positive!   The banks are so gun-shy now that they don't want any hint of something illegal at the Federal level and anyone who deals with the banks is getting caught in the same net.

[hilariousandco]

Maybe good in the long run.

Pot shops will be more inclined to hold the bitcoins instead of auto-trading them with a processor.  I'm sure the markup on pot is very high (no pun intended) so they are in a position where volatility will not kill them.

This means they will be more inclined to push the bitcoins into the supplychain; try to get employees, growers etc.. taking their bitcoins...

If I owned a shop I'd like to keep some, but many won't be able to take the risk. A fully Bitcoin based operation would be cool though ie they buy their weed and pay their employees and suppliers in Bitcoin. Maybe it'll be a possibility in the future.

[odolvlobo]

Putting Bitcoin near illegal activities only hurts general good spirit on Bitcoin.

Selling pot is no longer illegal in many parts of the US. So I don't understand the problem here.

That is not true. Growing, selling, and possessing pot is still against federal law in the U.S. It is still illegal even in the states that have laws that regulate it.