The Cannabis Pragmatist — Bitcoin: It’s Time for the Cannabis Balance Sheet | Volume 2, Edition 1
In cannabis, lean operations and excellent capital management are critical for success. Michael Saylor at MicroStrategy (MSTR) is writing the playbook in real time for companies to manage capital by operating on the Bitcoin Standard. It’s a guide to effectively store capital in Bitcoin (BTC) so companies don’t succumb to decreased purchasing power through inflation and debasement of the dollar.
The most important development to facilitate BTC acquisition for companies is a rule change by the Financial Account Standards Board (FASB) allowing companies to account for Bitcoin on the balance sheet at fair value instead of marking the asset as an indefinite intangible. The rule change allows public and private companies abiding by GAAP standards to mark the value of their BTC at the fair market value at the end of their quarterly accounting cycle resulting in an unaffected P&L and increased transparency to shareholders. But why keep BTC instead of USD on the balance sheet? Simply put, to increase purchasing power for the company.
There is an argument that BTC is the apex asset of our generation. It goes like this: BTC is digital property. It is a scarce, desirable, and virtually incorruptible asset with a finite supply of 21M bitcoins. This makes BTC deflationary. It is backed by the most powerful and incorruptible computer network that has ever existed in human history. BTC absorbs electric energy, stores it as digital property, and people can transfer that energy frictionlessly through cyberspace to be utilized as value anywhere in the world without a 3rd party intermediary.
As it pertains to a cannabis company’s capital preservation: if a company’s store of value is in USD, all goods and services required to operate are getting more expensive. If a company’s store of value is in BTC, the relative value of everything else decreases, thus increasing the purchasing power of the company.
Cannabis companies with investors have a fiduciary duty to their shareholders and MicroStrategy is making a compelling argument that the best way to return shareholder value is to keep enough USD to cover operations for a period of time and hold the rest of the liquid value as BTC on the balance sheet. If companies and investors take heed of Blackrock’s 84.9% BTC portfolio allocation, the world will change. May MicroStrategy, Tesla, and Blackrock show the cannabis industry the way to capital preservation and shareholder returns.
The Cannabis Pragmatist: Think long term. Think shareholder value. Stack sats.
