Washington Senator Submits Bitcoin Ban Bill to Completely Eliminate Bitcoin from the State's Cannabis Industry

A new bill introduced in the Washington Senate is seeking to ban local marijuana businesses from using Bitcoin.

The bill, SB 5264, sponsored by Senators Steve Conway and Ann Rivers, seeks to amend state regulations governing the sale and distribution of marijuana products, more than four years after Washington voters legalized marijuana in November 2012.

Under the new bill, local cannabis businesses will not be allowed to use digital currencies for payment or receive digital currencies from customers. The bill also includes a definition of "virtual currency," which is specifically "a digital representation of value used as a medium of exchange, a unit of account, or a store of value," but the definition does not include "software or protocols for managing the transfer of virtual currency."

Companies that grow marijuana or sell marijuana products would fall under the legal provisions of the proposal.

The bill states:

Marijuana producers, marijuana processors or retailers would be prohibited from using or receiving virtual currency to buy or sell marijuana or any marijuana-related products.

Notably, Kouchlock Manufacturing of Spokane, Washington, was one of the early adopters of Bitcoin. Kouchlock has been accepting digital currency payments since 2014 and will also be affected by the new law (representatives of the company did not immediately respond to requests for comment).

Steve Conway and Ann Rivers said in a statement that the measure is intended to promote transparency in Washington state's marijuana industry and help marijuana "come out of the shadows."

Rivers said:

“One of the goals of my Marijuana Patient Protection Act, which became law in 2015, was to eliminate the black and gray markets in our state. SB 5264 addresses another part of the regulatory challenge. We’ve done a lot to help the cannabis industry move away from the black market, so if unregulated currencies are being used to purchase marijuana, that doesn’t promote the transparency we’re working for.”

Impact of the Act on Businesses

If the bill passes, it could be a blow to those who support the use of digital currencies in the cannabis industry, who see them as a way to circumvent a key problem facing the industry: a lack of banking access.

Simply put, due to the federal ban on marijuana, most US banks do not allow marijuana businesses to open accounts. Although some states in the United States have approved medical or recreational use of marijuana through ballot initiatives in recent years, the federal ban still keeps most banks on the sidelines.

As a result, some advocates believe that Bitcoin and other digital currencies can alleviate these pain points and provide a payment mechanism that allows these businesses to work.

Rob Fess, head of sales at wholesale cannabis platform Tradiv, told CoinDesk that the bill would further highlight the impact that banks have had on the cannabis industry by effectively blocking it.

“It’s like singling out a particular industry and excluding it from a particular type of payment — and we think lawyers will take advantage of this to get aggressive on this issue.”