The president of the U.S. branch of leading crypto exchange FTX, Brett Harrison, has hinted at a potential partnership with Cresco Labs.
The Illinois-based company is one of the leaders in marijuana-related business in the United States. Founded in 2013, Cresco Labs is a major cannabis producer, accounting for 60% of the current U.S. cannabis and medical marijuana market.
Despite this, the company is facing financial issues, which the crypto market could help to resolve, says the President of FTX US.
Help Offered to the Underbanked
Though cannabis is legal in many states of the U.S, marijuana-related businesses (MRBs) are underbanked, as no major national banking system is prepared to take them on as customers.
The situation is likely to remain this way until cannabis is legalized by federal law, or legislation is passed allowing federal banks to accept MRBs, Brett Harrison claimed in his Twitter thread addressed to Cresco Labs.
According to him, traditional financial institutions treat cannabis-related businesses as high-risk clients. this category of companies often do not have access to the full range of banking services, or are required pay more to attain them, being thus forced to use and hold cash first. This consequently increases the risk of criminal activity and imposes major burdens on law enforcement, underlined Harrison.
He further urged Cresco Labs to consider digital assets as a way of solving these existing problems.
“Crypto exchanges can provide depositary services with lower-fee access to payment rails and a wider array of payment options on the consumer side. MRBs could accept payments and hold reserves in the form of stablecoins,” explained the FTX U.S. president, adding that FTX looks forward to continuing the discussion with Cresco Labs.
The Lucrative Cannabis Market
FTX’s appeal to Cresco Labs is probably not without reason.
The U.S. wholesale giant of branded cannabis products with a $2.3 billion market cap is present in almost every step of the U.S. cannabis supply chain, and actively trades in the majority of U.S. cannabis markets, especially in California, which legalized the usage of recreational cannabis.
Cresco Labs continuously expands into retail sales, which has become an increasingly integral part of its revenue stream. Cresco Labs reported that its revenue increased by 54.2% in Q3 2021, and has opened its 50th operating retail store in the US.
This should not come as a surprise, considering the massive growth of the global cannabis market. In the United States alone, cannabis sales are expected to surpass $28 billion in 2022, according to cannabis market intelligence and research company BDS Analytics.
Given the level of trade and growth for Cresco Labs and the cannabis market in general, the partnership could have a positive impact, not only for the marijuana company, but also on FTX, as the ambitious cryptocurrency exchange could potentially access a large pool of new users for cryptocurrency payments.