The future of the cannabis industry just might rest in the blockchain sector’s hands…
Last week, the 2018 Consensus cryptocurrency conference took place in New York City. It welcomed over 8,500 attendees and raked in at least $17 million in ticket sales.
Curiously enough, events like Consensus tend to bring in a lot of marijuana enthusiasts, too.
Plenty of cryptocurrency startups are trying to enter the cannabis space. And they’re billing themselves as a way to help the industry’s cash problem. Thanks to marijuana’s Schedule I status, banks are hesitant to work with state-regulated businesses.
Despite the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCen) guidance on working with marijuana-related businesses, most major financial institutions are unwilling to take on the risk and the regulatory burdens.
Cannabis companies are then left to scramble after the handful of credit unions and small institutions that are willing to serve the growing multibillion-dollar industry.
But blockchain payment platform Alt Thirty Six hopes to remedy this problem. And it plans to do it by providing marijuana and marijuana-related retailers with a means to accept electronic payments.
The company announced that it had hired Don Schroeder as its new chief architect in April. Schroeder’s work at First Data helped to bring cashless payments to fast-food giants like McDonald’s.
Tuesday, the company announced a new partnership with cannabis software company WebJoint. Together, the companies plan to make blockchain payments possible for the cannabis world.
In a statement that announced the partnership, Alt Thirty Six CEO Ken Ramirez said:
We’re thrilled to have the opportunity to partner with [WebJoint], providing more cannabis businesses with access to our platform and changing the way the industry as a whole handles payments.
WebJoint currently serves more than 200 retailers in California. And it plans to expand to the Arizona and Nevada markets within the near future.
Dispensaries that currently use WebJoint will be able to accept digital payments through Alt Thirty Six. And Alt Thirty Six uses Dash — a type of cryptocurrency — for its payments.
Dash is superior to its more famous counterparts, like Bitcoin and Litecoin. And it’s because of the competitions’ long confirmation times.
Bitcoin confirmation can sometimes take up to a few days. And that’s not exactly feasible for a point-of-sale environment. Dash has one of the fastest transaction times among all cryptocurrencies.
Low network transaction costs are also a bonus, too.
So, can blockchain technology, through Dash, actually make the desperate cannabis industry cashless?
One of the most frequent criticisms voiced by financial experts in the cannabis space is that the anonymity of cryptocurrencies is the opposite of what the growing cannabis industry needs.
It needs more transparency — not less of it.
And it doesn’t need to use the same tools that have enabled darknet marketplaces to flourish in the past.
But Ramirez thinks that’s a huge misunderstanding of how cryptocurrencies work.
The original intent of cryptocurrencies might have been their anonymity. But blockchain is now one of the most secure, transparent, and immutable technologies in existence.
Banks could benefit from being friendly toward cryptocurrency transactions in general — not only those associated with marijuana.
Cryptocurrency could help in providing faster domestic and international transactions. And they could also help in providing more secure and accurate record-keeping within the banking system.
Meanwhile, the payment platform can make electronic payments at similar speeds to Visa and Mastercard — at a fraction of the cost.
Even if the federal government were to pass marijuana reform that would allow cannabis businesses to access banks, Ramirez says the platform could provide “additional withdraw options for our clients.”
But a true solution to the marijuana businesses’ cash woes would still have to come from Congress. And that’s something Ramirez and his contemporaries are not too optimistic about.
Besides costs, there are just too many unknowns around regulation, compliance requirements, and security.
But cannabis will keep moving — with or without help from the banks.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today