The problem is not the banking system, it's that businesses can be legal in states while being illegal under federal law. Any company with business across states is at risk dealing with those companies. Banking is heavily regulated for a reason (terrorist financing, money laundering, fraud) and I doubt many would appreciate if you stop banking regulation altogether. The only solution I see here is to change federal law.

> businesses can be legal in states while being illegal under federal law

It still sounds a way ridiculous for a thing to be legal and illegal at the same time. There ought to be a non-ambiguous mechanism to decide whether a business is legal or not. As long as the feds let the states decide on their own they shouldn't consider something to be a crime as long as it is done in a state where it is legal. E.g. pot money from Colorado should be considered perfectly clean while pot money from Idaho can be treated as criminal. Doesn't this make sense?

> Banking is heavily regulated for a reason (terrorist financing

Doesn't seem to help much, terrorists still get everything they need.

> It still sounds a way ridiculous for a thing to be legal and illegal at the same time.

It's not legal and illegal at the same time. It is not prohibited by state law, and prohibited by federal law. It is, therefore, illegal, plain and simple.

Much like California's prison policies few years back: they were exactly what state law specified, but violated federal law. They weren't in some weird legal-illegal contradictory state, they were illegal.

> As long as the feds let the states decide on their own

Federal law does not allow states to decide on their own, in fact, it prohibits them from doing so (OTOH, on state authorized medical marijuana, there is also federal law tied to spending bills for the last several years prohibiting federal enforcement that interferes with the state implementation, but an enforcement moratorium isn't legalization.)

In a unitary state (i.e. one without a federal system) you don't have this particular source of ambiguity - the central government passes laws, and they define what's legal [1]. The USA, however, has a federal system; the essence of that system is a separate of powers between Federal and state governments, which means you also have conflicts of power between Federal and state governments over whose law applies. Drug policy is a classic example; so was segregation, for example.

In this case, the act in question is the Controlled Substances Act, which makes a whole host of drug offenses federal crimes. It was ruled constitutional [2] in the early 2000s, in response to a challenge from California pot growers obeying the local medical marijuana laws who were raided by the DEA.

That is supposed to be the mechanism by which to decide these questions; go to the Supreme Court. However, it turns out that even if states don't actively prevent the feds from enforcing drug laws, most of drug enforcement is in fact done by local police. If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do? Put DEA agents on patrol on street corners in SF? Which leaves the federal government in the situation of having declared something illegal, but without having anywhere near the resources to enforce those laws - and the states passively encouraging disobedience of those laws.

Welcome, young folk, to the USA's first real-life (if small) constitutional crisis since Watergate!

[1] Leaving aside the conflict between constitutional law and regular law.

[2] Under the Commerce Clause, which I think is a bit of a stretch, but hey, that's the Commerce Clause for ya

> Under the Commerce Clause, which I think is a bit of a stretch, but hey, that's the Commerce Clause for ya

My favorite bit of the federal drug policy: magic mushrooms grew wild on my college campus since...forever. There was in no way, by any stretch of the imagination, 'interstate commerce' involved in any part of their life cycle yet it was a federal crime to pick them.

How's that work?

Because you picking said mushrooms affects interstate commerce, which after dude's new deal would fall under the control of the commerce clause. Prior to fdr only people and things in interstate commerce could be controlled

Bingo! In fact, the specific precedent cited by the Supreme Court for convicting marijuana growers in CA was the price controls on agricultural produce during the New Deal era.

> If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do?

Target the successful state-authorized businesses (and key individuals in those businesses) selling pot (and those businesses, and key individuals in them, knowingly providing key services to those pot businesses) using, among other tools, RICO, the Continuing Criminal Enterprise law (popularly known as the “drug kingpin” law, with mandatory 20-year or, for.more successful businesses, life sentences), and the regular drug trafficking laws and the full panoply of civil and criminal forfeiture provisions associated with all of those laws.

A state-licensed industry isn't going to survive when most of the evidence that the feds need to secure major felony convictions—and seize all the assets of the businesses—against operators is available in state licensing and tax records, and a tiny bit more work lets them do the similar things to supporting businesses.

State-legal marijuana regulatory schemes—and businesses participating in them, even at one step removed from.the direct marijuana trade—exist through federal prosecutorial forbearance, and one of the reasons that state-legal marijuana businesses have had so much problem with access to banking and other support services is that there is wide knowledge of this fact and the lack of guarantee that that forbearance will continue indefinitely, with potentially devastating consequence for anyone who participated in that market even while the forbearance was the executive policy.

Which is exactly what they're threatening to do. But they can't stamp out more underground growers without local support, which leaves the feds in a policy bind - accept state defiance, or produce a hard-to-track and harder-to-constrain underground market.

> Welcome, young folk, to the USA's first real-life (if small) constitutional crisis since Watergate!

Not even close. For one thing, it's no more of a Constitutional crisis than the structurally similar sanctuary city movement, which is considerably older.

I think the scale of this is in practice substantially larger than the sanctuary city movement, as is the centrality of local cooperation to enforcement.

>> If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do?

I would guess they would target the growers/large suppliers.

Are local, state-chartered banks with no branches outside of their home state just as squeamish when it comes to marijuana businesses?

Banks will be blacklisted if they finance drugdealers. The US war on drugs is no joke and it is international. If your bank participates in the global financial system it can't ignore the US.

Feds don't care, all they have to do is find a single dollar bill printed outside the state and they have jurisdiction.

Until the interstate banking act of 1994, all banks had branches only in their own state.

This is a perfect use case of a peer-to-peer digital currency, as outlined in the Bitcoin whitepaper. Cases like this is why cryptocurrencies even exist.

Technically Monero is indeed the closest as it's the only fungible coin, which is an essential property.

Monero, like most cryptos, is very volatile[1]. If I owned a small business and was looking to accept crypto payments, this price uncertainty would mean I'd only use it if I could quickly cash it out to something stable, most likely using something like BitPay, which then negates the p2p aspect. The prices on the shelves wouldn't be denominated in units of XMR either - they'd be in the local fiat.

For crypto payments to be accepted in businesses in the above scenario (and therefore become as mainstream as Visa or Mastercard), a robust stablecoin would be required, like what MakerDAO[2] is trying to achieve. Even though I've invested in them, I'd ultimately give them perhaps 10-20% chance of succeeding. Their product is incredibly hard to wrap your head around.

However, if Sai or some other stablecoin can achieve quick, cheap transactions, then it's possible that consumers will use it for everyday spending. Big "if" though.

[1] https://coinmarketcap.com/currencies/monero/

[2] https://makerdao.com/

Cryptocurrencies are very volatile because they are very new not because anything fundamentally worse compared to fiat.

If they some day will be accepted as a regular currency and you can buy everything you need with them then there is no reason to go back to local fiat. Then the prices on the shelves would indeed be denominated in units of XMR for example.

That is indeed a big if though.

The future is being downvoted on HN of all places.

I actually think having the state involved with banking is a good thing, overall. I think it represents that the economic part of that country is backed by the force of that country (meaning it's people are willing to fight to back up the value, if need be as well as their economic force). I think that aspect alone helps stabilize out the current economy where it could be so much more volatile.

However, when I think of the weed industry and banking, that's where I think a cryptocurrency has its best value, and will either find a foothold to dominate the financial industry, or at the very least provide the path of dynamic changes/experiments for those areas like this one where we don't want to risk the stability of all markets by "testing things out", but need to discover a path of progress to match the speed of innovation and technology.

I tend to think the latter (the former doesn't seem plausible as the inconveniences outweigh the benefits currently), but I would hope that the government realizes, all else being equal, their views on cannabis as a schedule 1 drug is costing them a ton of money they could be reliably tracking and that business would be happy to pay in taxes to avoid the current nightmare.

While this is true, they have to be weary of setting taxes too high. There is already a lot of infrastructure set up for the black market and you have to makes sure the taxes aren't so high that the legal market can't compete with the black market.

I don't see too much problem with state controlling money creation - sovereign currency gives the latitude for deficit spending which provides opportunity to invest in future economic growth. (I have no idea why many "fiscal conservatives" have a problem with debt-fuelled capital investment by government whilst embracing it as normal and indeed good practice in the private sphere.)

But separation of finance _industry_ from state - the incredible amount of policy influence that the industry has, to its own benefit and the detriment of just about everyone else except the very rich, to the extent that many politics-industry players, on all sides, are basically representatives of banks - yes, that would be some kind of holy grail.

> I have no idea why many "fiscal conservatives" have a problem with debt-fuelled capital investment by government whilst embracing it as normal and indeed good practice in the private sphere

I'm going to go out on a limb and say financial conservatives would agree there should be a reasonable risk of failure for businesses leveraging debt. That's the risk they take to reap the benefits of future growth. Governments should not be allowed to (can't?) fail in the same way businesses can, so shouldn't be able to take on the same risk.

Government checks can't bounce.

http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

Unless they give up sovereignty over their own currency of course. A mistake made by European countries - several of which have paid and are continuing to pay the price.

I absolutely agree that too much public debt is a bad thing, but not for the normally given reasons. It can lead to inflation, devaluation of the currency in relation to either goods or investment asset prices - indeed we see the latter at the moment in stock and property markets around the world, although that is driven by money creation through private lending. This is more worrying, as private checks can and do bounce, debts default, and we get another financial crisis.

Govt debt should be used for capital investment - roads, communications, health, education and security facilities - and if so used can be a true investment with an expectation of future returns. Debt that blows out on operational expenditure, transfer payments, public sector bureaucracy bloat, is not sustainable.

> I have no idea why many "fiscal conservatives" have a problem with debt-fuelled capital investment by government whilst embracing it as normal and indeed good practice in the private sphere.

Because microsoft doesn't show up at your door at 3am with guns drawn and steal all your stuff if you don't agree to finance their newest OS?

More seriously though, businesses carrying too much debt also get in trouble with the 'conservative' investor types.

Radix aims to be quick and cheap enough to be a viable option for this https://www.radix.global/ They can even support off the shelf POS terminals https://www.youtube.com/watch?v=pMw7hQ6x2f0

Disclaimer: I have just joined their team, because I think what they're doing is awesome

> That's a pity BitCoin has failed to do this. Hopefully Monero or something new will succeed once and set the people free...

I guess the first step on the path to success for a new currency would be to acknowledge and understand the relationship between credit and modern efficient money (the relationship here being equality). Fractional reserve banking was disruption of money much before SV started to use the term. Unfortunately it looks like the cryptocurrencyfolks seem quite stubborn in sticking with the monetary concepts of stone ages, so I am not holding my breath waiting any cryptocurrency to succeed as real world money any time soon.

I'm not sure cryptocurrencies can help legal cannabis sellers all that much. Unless they can conduct their whole business in cryptos, they still need to have a bank somewhere. And since these sellers are legit, laundering money via crypto to hide the source of their income from the banks isn't really an option.