Scott Rasmussen's Number of the Day for June 16, 2017

Scott Rasmussen's Number of the Day

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By Scott Rasmussen

The Number of the Day columns published on Ballotpedia reflect the views of the author.

June 16, 2017: In 2016, Americans spent $6 billion buying legalized marijuana and $25 billion buying the drug through illegal means. An industry analysis by Cowen and Company projects that total sales will grow to top $50 billion in a decade. At that time, more than 98 percent of the sales will likely be made legally.

Pot has been legalized for both recreational and medical use in California, Oregon, Washington, Nevada, Colorado, Massachusetts, Maine, Alaska, and the District of Columbia. Twenty other states allow use of the drug for medical purposes only.

In 1969, just 12 percent of Americans favored marijuana legalization. Today, that figure has jumped to 60 percent and is significantly higher among younger adults.

The legalization of marijuana is a great example of the culture leading and politicians lagging behind. In 1969, just 12 percent of Americans favored legalization. Today, that figure has jumped to 60 percent and is significantly higher among younger adults.

Changing attitudes have fueled state efforts to legalize the drug. However, the federal government is more resistant to public opinion and still considers marijuana to be illegal everywhere. Cowen’s industry analysis considers those federal regulations to be one of the industry’s biggest obstacles to growth.

Even in states that have legalized pot, the federal government prohibits banks from accepting deposits from companies that sell the drug. Additionally, credit cards cannot be used for the purchase of marijuana. As a result, “Businesses can’t get loans, customers have to pay in cash, and state tax collectors are processing bags of bills.”

When state governments have tried to create banks or co-ops to handle the financial needs of the industry, the federal government has used its regulatory procedures to stop them.

Even in states that have legalized pot, the federal government prohibits banks from accepting deposits from companies that sell it—and credit cards cannot be used for the purchase of it.

As you would expect, entirely cash businesses are ripe targets for crime. Since Colorado legalized marijuana in 2014, over 200 burglaries have been reported to police. Another challenge—one likely to catch the attention of state political leaders—is that an all-cash business makes it harder to ensure that the companies selling marijuana weed are reporting all their income and paying their taxes. Even when the taxes are paid, it’s unnerving for all involved when business owners deliver hundreds of thousands of dollars in cash to state tax collectors.

The resistance of federal regulators has provided an opening for Bitcoin and other alternative currencies. By using Bitcoin, owners don’t have to keep so much cash on hand, and customers can use their credit cards. Not surprisingly, entrepreneurs have been eagerly exploring ways to help an industry generating billions of dollars of cash each year.

“There’s no industry -- whether it’s the production and sale of cannabis or the production and sale of a cup of coffee -- that can operate safely, transparently or effectively without access to banks or other financial institutions and traditional services,” said Jon Baugher, co-founder of POSaBIT, whose technology is used by 30 dispensaries in Washington state. “That’s where we thought we could leverage the use of digital currency.”

Eventually, it is expected that the federal regulatory ban will be lifted and those selling marijuana will be able to use regular bank accounts and accept credit cards. Perhaps the entrepreneurial workarounds will no longer be needed at that time. If the changes don’t come soon, however, some of these alternative banking solutions may gain even more traction.

In the meantime, federal regulators will present an ongoing problem for the industry and entrepreneurs will provide the solutions.

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Each weekday, Scott Rasmussen’s Number of the Day explores interesting and newsworthy topics at the intersection of culture, politics, and technology.

• June 15, 2017   17.6 billion dollars of person-to-person payments handled by Venmo in 2016
• June 14, 2017   17 percent of voters not happy Trump is president—but happy Clinton isn't
• June 13, 2017   3.6 million tweets about Comey hearings
• June 12, 2017   100 percent of Democratic Statewide Officials and State Legislators in Virginia Have Endorsed Ralph Northam for Governor
• June 9, 2017   191 congressional Democrats who voted for Obamacare are no longer in office

• To see other recent numbers, check out the archive.

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Scott Rasmussen’s Number of the Day is published by Ballotpedia weekdays at 8:00 a.m. Eastern. Click here to check out the latest update.

The Number of the Day is broadcast on local stations across the country. An archive of these broadcasts can be found here.

Columns published on Ballotpedia reflect the views of the author.

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See also

• Scott Rasmussen's Number of the Day
• Marijuana on the ballot