Friday, March 30, 2018
While medical and recreational forms of marijuana are legal in thirty states and the District of Columbia, cannabis merchants face continuing regulatory uncertainties and blatant hostilities from the U.S. Department of Justice. Recent remarks by U.S. Attorney General Jeff Sessions linked cannabis sales with criminal gangs, violence and a national drug crisis, despite growing public support and reported socio-economic benefits of cannabis usage.
A study published March 12, 2018, by Colorado State University-Pueblo's Institute of Cannabis Research, and funded by local and state cannabis taxes, found the Pueblo area netted $35 million in cannabis revenue in 2016. Researchers further noted the region's demographics have remained largely unchanged since the passage of Amendment 64, which legalized marijuana in the state.
"Legal cannabis has not yet had an observable impact on Pueblo's household incomes," researchers wrote. "It is possible that the enduring federal prohibition shrouds the true impact of legal cannabis on Pueblo's household incomes. This is a phenomenon that requires more investigation."
Risk-averse banks and payment processors classify cannabis merchants as high risk, making it difficult for those merchants to open bank and processing accounts to safely manage funds from their cash-only businesses. A number of third-party service providers are actively working with cannabis industry stakeholders to address these problems.
San Diego, Calif.-based MoneyTrac Technology Inc. (MTRAC) disclosed March 29, 2018, that it plans to launch MTRAC, a new banking solution, eponymously dubbed MTRAC, designed specifically for cannabis merchants. The system will use blockchain technology to track and record cannabis dispensary transactions. Participating merchants can use the solution to process payments for their consumers and remit payments to vendors, employees and business affiliates.
Vanessa Luna, chief executive officer at MTRAC, said the company's goal is to leverage available technologies to remove cash as the cannabis industry's primary payment method. "While other companies have struggled to find supportive financial solutions, MTRAC opted to take a different approach, and one that has relied heavily on the use of blockchain technology to address this problem for a massive and growing industry," she said. "I am confident that every dispensary desiring legitimacy and transparency will jump on board and provide us with a number of new clients to serve."
Seattle, Wash.-based SinglePoint Inc. is also exploring the use of cryptocurrencies through its SingleSeed subsidiary. In a partnership with First BitCoin Capital, the company is designing a POS system for the cannabis vertical that accepts cryptocurrency. Plans are underway for a SinglePoint initial coin offering (ICO) to support blockchain transactions in the cannabis industry and other high-risk sectors.
Wil Ralston, vice president of sales and marketing at SinglePoint, believes bitcoin and other forms of digital payments can solve underwriting challenges and unpredictable costs associated with cash-only businesses, for example, theft, counterfeit bills and human error. Noting the recent explosion of bitcoin acceptance, the solutions deployed through SinglePoint's partnership with First BitCoin Capital will enable cannabis merchants to confidently address their current payment processing challenges, he stated, adding that next-generation blockchain-enabled POS systems represent a viable alternative to traditional banking and processing solutions.
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