The following short article outlines recent moves by cryptocurrency processors whom are proposing strategies to tackle the North American marijuana industry payment conundrum. While a dichotomy of State versus Federal legality raises numerous considerations in and of itself
we explore tangible or practical use and socioeconomic effects of cryptocurrency
Social ramifications are more broadly applicable to what may be labelled as 'fringe' or non-mainstream industries. The one market detailed below serves as a thought catalyst of this new payment method's capacity for extension
"As the cryptocurrency conference Consensus heads into its second day, it’s clear that the buzz around blockchain will only continue to grow. The New York City event is welcoming 8,500 attendees and has raked in at least $17 million in ticket sales. These events tend to attract a lot of marijuana enthusiasts too, a friend in the cryptocurrency space recently told me. Plenty of cryptocurrency startups are trying to enter the cannabis space, billing themselves as a way to help the industry’s cash problem:
Thanks to marijuana’s Schedule I status, banks are wary of working with state-regulated businesses. Despite the U.S. Treasury Department’s FINCEN guidance to working with marijuana-related businesses, most major financial institutions are unwilling to take on the risk or the regulatory burdens. This leaves cannabis companies scrambling for the handful of credit unions and smaller institutions that are willing to serve the growing, multi-billion-dollar industry.
Blockchain payments platform Alt Thirty Six hopes to remedy this state of affairs by providing marijuana retailers a means to accept electronic payments. The company announced the hiring of Don Schroeder in April, whose work at First Data helped bring cashless payments to fast-food giants like McDonald’s. On Tuesday, the company is announcing a partnership with cannabis software company WebJoint. “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,” Alt Thirty Six CEO Ken Ramirez said in a statement announcing the news. WebJoint says it currently serves more than 200 retailers in California and is planning to expand to the Arizona and Nevada markets. The dispensaries that currently use WebJoint will be able to accept digital payments through Alt Thirty Six, which uses Dash, a type of cryptocurrency.
Dash is superior to alternatives like Bitcoin and Litecoin due to their long confirmation times. Bitcoin confirmation can take up to a few days, “which is not feasible for a point-of-sale environment,” said Ramirez in an email. Dash has one of the faster transaction times among cryptocurrencies and also has low network transaction costs. So, can cryptocurrency truly take the cannabis industry cashless? One of the most frequent criticisms I hear from financial experts in the cannabis space is that the anonymity of cryptocurrencies is exactly the opposite of what it needs. The marijuana industry needs more transparency–not less of it–and it certainly doesn’t need to use the same tools that have enabled dark-web drug marketplaces to flourish.
But Ramirez thinks that’s a misunderstanding of how cryptocurrencies work. While the original intent of cryptocurrency may have been anonymity, blockchain is “one of the most secure, transparent and immutable technologies in existence,” he said. “Banks could benefit from being friendly towards cryptocurrency transactions… Cryptocurrency could help provide faster domestic and international transactions, as well as more secure and accurate record keeping within the banking system.”
Meanwhile, the payment platform can make electronic payments at similar speeds to Visa or Mastercard “but 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 marijuana businesses’ cash troubles would still have to come from Congress, something that Ramirez is not optimistic about. “There are too many unknowns around regulation, compliance requirements, security, in addition to costs,” he said. “Cannabis will keep moving with or without the banks | May 15th 2018, Mona Zhang on Forbes”
Existence of cryptocurrency offers truly as yet untapped potential for market disruption. Its use and implementation however, in the face of staggered trusted adoption and bureaucratic attempts of control, relegates these currencies to the financial outfield
As said before an underlying reality of any payment methods is collective valuation. Whether this be digital keys or watermarks on paper, ascribed value is due to joint (pun intended), or multi-party worth attribution
Cryptocurrency has risen to fame on incitements of anonymity combined with border-less, instantly secured transmission. The diversification from one to thousands of coin types is a statement of such popular decentralized appeal, regardless of any initial currency effect dilution and or following market fracturing
Superiority in transmission speed or any differentiating factor between the types of cryptocurrency available largely overlooks primary practicalities
As evidenced with say Bitcoin, movements are publicly recorded and likewise possibly personally linked. It is then traceable for those with the resources and software. Cryptocurrency here equates to immutably displayed evidence of private accounting
Obfuscation such as that integrated with Monero addresses this but in the current climate could be said to psychologically relegate ownership to those wishing to hide activities. Neither promotes mainstream adoption and the difficulties of restrictions in converting cryptocurrency to fiat further complicates the entire enterprise
Transmission of cryptocurrency may already be done between individual's wallets with no third party authorization or oversight. As rightly noted, cryptocurrency sustains the Dark Web's often illegal market sites. From a purchaser's perspective currently in North America the Federally imposed risk of marijuana's legal acquisition may already equate to a Dark Web purchase. Why would he or she now advertise this on blockchain?
In light of mainstream sentiment, attempting to tax a presently fringe payment method for a regionally illegal activity offers no tangible benefit to participants. A better question to address, as through the Biosphere, remains firstly enabling near universal functional acceptance of cryptocurrency as a form of value exchange. From this viewpoint following industry applicability becomes irrelevant