Cryptocurrency caught mainstream attention when the industry’s total market cap hit $600 billion at the end of last year. The highly anticipated cannabis industry in the United States is similarly being pushed into the spotlight by a “green rush” of investors flooding Wall Street, who expect the industry to be worth $75 billion by 2030.
Aside from attracting high volumes of bold new investors, the cannabis and cryptocurrency industries in the U.S. also share some major issues: Both are high-risk, legally uncertain and have government regulators breathing down their neck. The potential uses of cryptocurrency and blockchain align with the demands of the developing cannabis market, and through a coordinated effort, the unexpected pair can propel themselves to legitimacy in the dynamic modern economy.
Cannabis businesses in the U.S. operate on a cash-only basis because banks, which all operate under federal regulation, are prohibited to service an industry that is still deemed illegal under federal law. Cannabis dispensaries can hold up to $100,000 in cash at any given time, and if a business's finances are not carefully reported to state regulators, their cash is extremely vulnerable to seizure by police using broad asset-forfeiture laws.
On the flipside, state treasuries don’t collect their fair share of taxes on marijuana sales. The inconvenient and unsecure tax collection processes, whereby dispensary owners may have to cross the state with armed guards to deliver hundred of thousands of dollars in cash to the state's IRS offices, leads many businesses to cut corners while reporting sales.
PotCoin, one of the most popular cannabis cryptocurrencies, was first created in 2014 to address the financial limits placed on cannabis dispensaries. PotCoin targeted the Colorado recreational marijuana market and installed a PotCoin ATM at a dispensary in the state, but failed to be integrated into dispensaries early on in its tenure. In a turn of events, the currency’s value shot up 76 percent in just one day, after famed NBA star Dennis Rodman wore a PotCoin.com t-shirt while traveling to North Korea under intense media spotlight. It’s current market cap hovers around $10 million at press time.
Although PotCoin struggles to establish itself as a mainstay in the industry, it announced a promotional agreement with WeedMD last December in what appears to be the first-ever partnership between a cryptocurrency and a federally licensed producer and distributor of medical cannabis. Community members eligible to shop on WeedMD will be rewarded for using PotCoin. The announcement was made in anticipation of the legalization of recreational pot in Canada this summer.
As part of a global initiative for mass adoption, Potcoin worked with development teams at PotWallet and General Bytes PotCoin to offer their currency in over 800 crypto ATMs around the world in order to make funds more readily available for customers and to ease the transaction process for cannabis vendors.
Similar to PotCoin, CannabisCoin is described as a marijuana-based cryptocurrency for medical marijuana point-of-sale. The developers created a ‘CAANdy system,’ whereby one gram of marijuana costs 1 CANN. The creators of CannabisCoin sought to create a simplified and accountable system for dispensaries to record medical sales in order to comply with strict regulations in the U.S. that ensure medical marijuana doesn’t end up in the wrong hands.
HempCoin is also among one of the first 30 cryptocurrencies created in 2014, but focuses on the exchange between marijuana farmers and dispensaries. The coin first addressed the need of financial infrastructure for cannabis farmers but has broadened its mission to service the agricultural industry more generally.
In August, HempCoin announced a partnership with Evolution Host, a VPS hosting provider, which will accept HempCoin as payment in an effort to promote widespread adoption of its use. Likewise, HempCoin is accepted on Stembis.com, a major Canadian online cannabis marketplace.
Marijuana altcoins have seen some success; however, most are struggling to find mainstream acceptance and have failed to provide a big return to investors. The most popular coins PotCoin and HempCoin, both stand at market caps below the $10 million mark, numbers that can hardly be called impressive.