Nevada hopes to be the first state to create its own banking system for the booming marijuana industry, which has generated more than $150 million in tax revenue since 2017, according to Nevada Treasurer Zach Conine’s office.
Since the drug is still illegal under federal law, most banks won’t accept cannabis businesses as clients. As a result, the multimillion-dollar industry is mainly a cash business — at least for now.
Under a three-year pilot program, Nevada will allow marijuana businesses and consumers to deal in electronic tokens. The system will work much the same way as in in casinos, where players buy and bet with chips. “You exchange cash for casino chips and those chips transfer around the casino,” says Conine. “At the end, you convert them back into cash.”
The initial idea is for consumers and businesses to use an app to buy tokens, which could then be used at any marijuana business or for paying state and local government. Consumers could use them at dispensaries. Dispensaries could use those tokens to pay growers, who in turn could use tokens to pay a tax bill to the state. At that point, the state would convert the tokens back into dollars.
The treasurer’s office is spending the summer consulting with both financial and tech companies. While Nevada will create the parameters, it plans to largely let the market dictate the details.
For example, the financial companies selected to run the pilot will make their money by charging fees for their service. Conine says that means the fees will have to strike a balance between being cheaper than what marijuana businesses pay now in security costs to safely manage massive loads of cash, but high enough so that finance and tech companies can make money and create a good product.