Washington State legislation is determining whether or not to prohibit local marijuana retailers from using and accepting Bitcoin and other cryptocurrencies after an amendment bill was put forward by Democratic State Senator Conway and Republican State Senator Rivers in January.
Senate Bill 5264 was handed to the Commerce, Labor and Sports Senate Committee, which held a public hearing on January 25th on the matter.
It’s just over four years since the state legalized the use of recreational marijuana, and Bitcoin has been a common means of payment for online buyers.
In what comes as a surprise to many is that the state is considering imposing a ban on Bitcoin, citing hardship in tracking transactions carried out using an unregulated form of currency.
The bill states that a marijuana “producer, processor or retailer must not accept or pay with virtual currency for the sale or purchase of marijuana or any product of marijuana.” Virtual currency has been defined in the bill as a digital representation of value employed as a medium of exchange, store of value, or unit of account.
In an interview with CoinDesk, Senator Rivers strongly defended her proposal saying that letting dishonest transactions take place in such a young market with contrasting goals wouldn’t be doing it justice.
“One of the objectives of the Cannabis Patient Protection Act, which was made law in 2015, was to do away with gray and black markets for marijuana in the State of Washington,” Rivers said.
She went on clarify her stance as having nothing to do with the legalization of the marijuana use itself, but rather the facet of it that binds how it is bought and sold.
“After all we have done to get a handle on this industry and pull it out of the shadows, accepting unregulated currency as a means of transaction does not promote the transparency we had initially committed to develop.”
In the public hearing, two representatives from PayQwick, a notable money service business, supported the bill expressing their skepticism in the transparency of Bitcoin transactions. This was par for the course, however, as Bitcoin poses a direct threat to PayQwick.
Kenneth Burke, one of the representatives, proceeded to admit that Bitcoin had an advantage over physical currency in reducing the number of money-filled armored vehicles moving around in Washington State.
Heavy opposition came from Joseph Cutler, who requested the legislature to better understand how Bitcoin works prior pushing on with the bill. He explained how Bitcoin is in fact a more transparent means of transaction, since a record of all monetary movements with Bitcoin is recorded in blockchain.
He pulled out his phone and showed how one could trace Bitcoin transactions in a retail shop in the neighborhood – something that he argued wasn’t possible with cash transactions.
Jon Baugher and Ryan Hamlin of POSaBIT also went up against the bill, pointing out the perils of cash-only transactions and referencing a few major corporations that accept Bitcoin.
As one of the earliest states to legalize medical marijuana, the State of Washington understandably lacks a standard or precedent to base its regulations on, and so do individuals opposing the proposed amendments against Bitcoin.
In regards to this bill, however, there seems to be more reason to reject the bill than pass it. Firstly, the use of Bitcoin is arguably bound to annex the bulk of online transactions soon; secondly, because credit unions and banks can’t accept money from cannabis retailers due to federal regulations preventing marijuana sales made with debit and credit cards.
For now, there is no companion bill proposing Bitcoin proscription in the House of Representatives; Senate Bill 5264 remains only with the aforesaid senate committee. If the bill is passed, it is likely to be challenged in state court.