In what was viewed as an extraordinary move, High Times magazine was welcoming cryptocurrency payments for its initial public offering on the Nasdaq exchange, showing a new way that cannabis entrepreneurs can get around restrictions from traditional banks that refuse to cooperate with the all-cash business.
Adam Levin, new owner and CEO of High Times, announced on Aug. 2, 2018, that High Times Holding Corp. was was accepting investments in bitcoin and ethereum for shares in its upcoming initial public offering (IPO), “making it easy for everyone, from retail investors to our long-time fans, to own a piece of High Times.”
Excitement and speculation caused by the unique prospect, however, was short-lived.
Though cryptocurrency and cannabis seem to be heading into a mutually beneficial partnership, there are bumps in the road — and High Times had hit one. In an Aug. 13, 2018, filing, High Times indicated that the company is not accepting bitcoin for stock purchases.
The only response Levin offered Marijuana.com was, “There is a little issue with bitcoin.”
That a cannabis company was about to introduce cryptocurrencies into the world of Nasdaq IPOs created a buzz among analysts, cryptocurrency experts, and economists — some of whom wondered what would happen when, not if, digital cash made its way into traditional banking?
Despite the reversal, the initial High Times announcement fueled speculation: Could cryptocurrencies fill the vacuum created by the fact that cannabis companies are still denied access to the banking system so long as marijuana remains a Schedule I drug under the Controlled Substances Act?
Some banks are vigorously enforcing their interpretations of what constitutes cannabis-related funding. Wells Fargo shut down the campaign account of Florida Democrat Nikki Fried, who is running for agriculture commissioner, because she accepted donations from lobbyists in the medical cannabis industry, according to records provided to the press on Aug. 20, 2018.
High Times’ Levin told Marijuana.com that bankers are starting to come around: “With federal regulatory policy starting to shift a little, banks are realizing that there are ways. If they follow strict protocol, some banks are dipping their toes into the water.”
Some cryptocurrency proponents believe that looser restrictions on cannabis in the US and other countries will be matched by greater acceptance of blockchain-based payment methods.
Writers in trade publications such as Crypto Gazette see the future growth of cannabis and cryptocurrencies as inextricably linked, with both growing exponentially.
Michael Taggart, president of blockchain development company Cryptonomex opined in a Forbes CommunityVoice article, “With cryptocurrencies gaining traction, it should come as no surprise that the gatekeepers of the traditional financial markets are starting to take notice.”
Dean Baker, senior economist at the left-leaning Washington, DC-based Center for Economic and Policy Research (CEPR), is skeptical given the current regulatory environment.
“Bitcoin or other cryptocurrencies may be very useful for the marijuana trade, at least as long as the banking system is closed to sellers, but I can’t see it getting much beyond that,” Baker told Marijuana.com.
Comptroller of the Currency Joseph Otting told reporters on Dec. 20, 2017, that he didn’t believe cryptocurrency posed a threat to the country’s banking system. He was quoted by Reuters saying, “Mostly the banks have stayed away from the currency … it doesn’t seem to have come into the banking system, but everybody’s watching it very closely.”
Several months later, the US Department of the Treasury went even further.
On July 31, 2018, the Treasury released a report stating that the department will “embrace financial technology, and foster innovation” by accepting applications for bank charters from so-called Fintech companies — financial technology firms, including cryptocurrencies and digital cash.
CEPR economist Baker says it’s still not clear why anyone would use bitcoin as a currency, except for legal reasons.
“I don’t see that changing, and assuming that a future president allows marijuana sellers to have normal access to the banking system, this use will disappear,” Baker said.
Meanwhile, High Times’ stock sale will end when the company reaches its hard market capitalization of $50 million, or on Sept. 12, 2018, the planned closing date of the IPO.
If successful, High Times will become the first cannabis-related brand to be listed on Nasdaq, perhaps opening the door for others to follow.