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Senators and regulators explain why the $60 billion collapse of a major cryptocurrency is not the industry's Bear Stearns moment
Brett Harrison, the head of FTX's U.S. division, hinted to a relationship with Cresco Labs when speaking to CoinDesk. Cannabis-based goods are distributed, cultivated, and sold by the Chicago-based corporation Cresco Labs.
According to the company's official website, the goal is to "normalize, professionalize, and modernize" cannabis. It's still unclear whether FTX and Cresco Labs will work together in the future.
On the other hand, the President of FTX.US discussed the potential of crypto to benefit the cannabis business in this country via his official Twitter handle. Marijuana-related businesses (MRBs) have been "essentially underbanked" by the mainstream financial system, according to Harrison.
No major national financial institution will welcome MRBs onto its platform, according to the CEO. Once the U.S. federal rules on cannabis alter to allow MRBs to sell their products or lawmakers force banks to accept them, this status quo will likely continue.
"High-risk industries," like casinos, guns merchants, and others, are also applied to cannabis-based businesses," Harrison said. Due to local compliance requirements, financial institutions are prohibited from accepting MRBs as customers, therefore they have little to no incentive to do so.
A bank account isn't enough for MRBs to access point of sale banking, debit cards, credit cards and other financial services that are vital for any significant business to prosper, even if they manage to get one. Harrison retorted:
As a result of the above, MRBs primarily accept and hold cash. Cash stockpiles accumulate at dispensaries, which increases crime risk for local communities and imposes major burdens on law enforcement.
They have operations in 10 states, 21 facilities, 51 licenses, and 49 owned dispensaries according to their website. FTX is looking into Cresco Labs. What would happen if this business was compelled to keep 100% of its revenue in hard currency?
Can Crypto Aid The Marihuana Industry?
Harrison believes crypto and digital assets can play a relevant role in “solving these problems”. FTX and other platforms can offer MRBs bank-link products and services with lower fees. The core of this offer would be points of sales, a method to remove friction from the customer and the business. Harrison said:
MRBs could accept payments and hold reserves in the form of stablecoins, which would facilitate instant settlements and transition MRBs away from cash. And MRBs could leverage all the AML and cybersecurity services that centralized exchanges provide.
These items will adhere to anti-money laundering standards and regulations, according to the CEO, and will be protected by the exchange platform's security measures. By highlighting the potential revenue contribution of MRBs, Harrison appealed to state governments in the United States.
"New economic opportunities" could be created in the United States if crypto and cannabis-based enterprises work together. The executive sees a great opportunity for exchanges and digital asset companies that might help MRBs, states, and consumers.
9/ State legalization of cannabis is an effective tool for generating tax revenue, and when paired with pardon programs (such as in IL by @GovPritzker) can create new economic opportunities for those who have been disproportionately disadvantaged by drug sentencing laws.— Brett Harrison (@Brett_FTXUS) March 18, 2022
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