Pot, weed, hash, grass, herb, or dope – whatever name you know cannabis or marijuana by, odds are you’re aware that it’s a smoking hot topic in 2018. Whether it be the legalization of cannabis in several American states or the recent special ruling in the UK that has seen it be permitted as a medical treatment – cannabis is creating headlines. Given the ever-evolving nature of the cannabis industry, it was only a matter of time before we saw a cryptocurrency crossover.
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What we’re currently seeing is the emergence of the “potcoin” market. This term categorizes an entire group of cryptos that are dedicated to the cannabis industry – check out our post on the top potcoins if you want a heads up on what’s out there. Journey back a few years and this market would be redundant. Yet, now there is a seismic shift occurring, as the world appears to be moving towards cannabis legalization. Potcoins have the potential to lend legitimacy to the cannabis market – even though it may not seem like that on paper.
When you think about it, both the cannabis and cryptocurrency sectors share huge similarities. Each is emerging, millennial driven, legal but not without controversy, and has growing technological links. Taking that into consideration, it’s not hard to see why the two would combine well. Addressing the technical matters at hand, crypto and Blockchain have the power to solve the two major issues facing the cannabis industry.
Supply and Demand
Within the US at least, few banks are willing to accept profit from a marijuana business. Many banks think marijuana businesses are to high risk, thus have blacklisted them. Dispensaries are unequipped to handle debit and credit cards, as the banking sector seems to be maintaining a strict anti-marijuana stance. Many of these businesses are left depending on the highly risky cash-only model. If you’re a distributor, dispensary, or grower, you can forget about making use of the traditional banking sector. Even payment processors such as PayPal, Stripe, or Square refusing to do business.
Cryptocurrency and Blockchain has stepped in to fill the void. Digital currency platforms are able to offer banking services to marijuana-based companies, these businesses also are in a very good position to pass on the benefits of crypto tech to customers. It’s able to provide a permission-free system that allows the pot industry to generate legitimate capital and liquid funds. What cryptocurrency can do is serve as a cashless purchasing intermediary. This lets cannabis dispensaries function in a similar way to other stores within the retail sector. Whether it be via direct transactions or even through the dispensary based crypto ATMs (such as a Bitcoin ATM), customers will be able to utilize seamless payment options. Cutting the cash and keeping it digital, cryptocurrency brings a more efficient transaction process to the cannabis retail space.
Cleaning up the Chain
Following the increased American legalization of cannabis, the entire supply process was supposed to become “cleaner” and more manageable. Yet, this isn’t the reality. Transparency in particular has become a major issue that state governments have struggled to grasp. Through Blockchain, the entire process can be made more efficient. Introducing a level of transparency that makes each step of the supply chain process more applicable to state regulations and federal tolerance.
When Colorado and Washington legalized marijuana back in 2012, the “Guidance Regarding Marijuana Enforcement” memorandum was implemented. This memorandum outlined eight guideless that all cannabis companies must follow to remain within the law. One of the points outlined was the prevention of cross-state sales of legal marijuana to states where it’s still illegal.
By connecting seller, shippers, and growers through the Blockchain, the fear of cross-state sales is neutralized. Orders – from supply to sale – can be tracked via Blockchain, removing any doubt of where the final product ends up. It can also be used to track stock, thus helping the dispensary run a smoother business operation. Blockchain has obvious benefits when it comes to supply chain management and the regulation of product supply.
The Power of Pot!
Cannabis from both a medicinal and recreational standpoint is emerging as a product that carries huge benefits. In a similar fashion to the cryptocurrency market, its global influence as a legal product is only set to strengthen in the years to come. Cryptocurrency and Blockchain have the power to super-charge the growing cannabis business sector, eliminating the issues that are currently holding it back from reaching its full potential.
Make no mistake about it, cannabis and cryptocurrency are the perfect match. Through the potcoin market and Blockchain adoption, there is an exciting future ahead.