Crypto, Cannabis and other Financial OpportunitiesCryptocurrency, Blockchains, Tokens, NFT’s are common buzzwords flying around these days. How is crypto helping move cannabis further into the digital age, and what does it mean for the industry?
What are blockchains and cryptocurrencies?
A blockchain is a method of recording information in a manner that makes it difficult to hack, change or cheat the system. By definition, a blockchain is an immutable digital ledger of transactions which is duplicated and distributed across a network of computer systems residing on the blockchain. Each block in the chain contains multiple transactions. When a new transaction occurs, a record is added to each participant's ledger. The decentralized database is managed by multiple participants, known as Distributed Ledger Technology (DLT’s), or also known as peers.
In layman's terms, it’s a programmable system based on transparency, security, anonymity, time stamping, and validation. No one person is in charge, making decisions or changes to the system. If one block is changed, it is instantly clear to everyone in the system that the record has been manipulated. Systems like this create growth in cryptocurrencies like Bitcoin and Ethereum, as blocks are always being added while increasing their security.
Cryptocurrencies are digital currencies (tokens) that are transacted, verified, and maintained using these decentralized blockchain systems, rather than a traditional centralized authority such as a bank. This makes it a form of payment that can be exchanged online for services or goods. Think of them as casino chips or gift cards.
Real currency is exchanged to obtain the tokens; you then store them in a crypto “wallet” with a unique password, similar to storing your dollars in a bank. Then use the tokens to access goods or services later. Using blockchains, these cryptocurrencies are being utilized by businesses and consumers worldwide for faster, transparent, and more affordable transactions, simplifying B2B and B2C relationships.
Cannabis and Cryptocurrency
Considering the well-known financial woes of the cannabis industry, due to lack of federal legalization, rendering it untouchable by institutions associated with the FDIC, it’s not surprising that some are looking at blockchain cryptos as the answer. In fact, there are several cannabis cryptos in existence already, and more on the horizon as cannabis and crypto have a very similar audience and consumer base.
That base is built with businesses and individuals who either lack access or trust in traditional banking. Removing centralized banking from the picture provides for faster transaction times, less money paid in transaction fees, and often, much greater security and transparency.
Here are just a few of the cannabis cryptocurrencies available now:
PotCoin (POT) $POT
Launched in 2014, PotCoin is one of the old-timers of cannabis crypto. It was designed to empower, secure and facilitate transactions in the legal cannabis community, removing the need for cash transactions and encouraging buying through consumer incentives. Supply is limited to 420 million tokens with over 224 million in circulation. It is currently trading on three markets and has transitioned to proof-of-stake, allowing individuals to validate or mine block transactions according to the number of coins they hold.
CannabisCoin (CANN) $CANN
Also developed in 2014, CannabisCoin was developed as a payment solution to ease transactions at medical marijuana dispensaries.CannabisCoin was designed to convert the currency right into marijuana. Each coin represents real strains grown under the name CANNdy for the specific purpose of exchanging one coin for one gram. The total supply was set at 91.8 million coins with over 77 million in circulation.
HempCoin (THC) $THC
HempCoin aims to facilitate transactional relationships between farmers, distributors, and growers, aiding and streamline agriculture and technology even further. In addition to the $THC platform and engineering, they offer elegant data science and predictive analytics series of algorithms to provide greater insight to your data, such as soil conditions, nutrient levels, and waste management. Note also that HempCoin is used in all areas of agriculture; it’s not limited to cannabis and hemp.
Tokes (TKS) $TKS
Tokes is a transactional protocol that runs on the Waves Blockchain, using merchant gateways and ERP software solutions to facilitate online payments, transportation, security, genetic testing, and taxation of goods (Cannabis) with a blockchain on the backend. An ICO from November ‘16 to January ‘17 distributed Tokes coins to investors and has a total supply of 50 million coins.
GROW X $GROW
Grow is a green medical startup powered by blockchain. Its purpose is to drive decentralized cannabis cultivation while also serving as a payment and distribution verification method for the entire medical cannabis industry. Known as the Grow House, this cutting-edge platform offers a DeFi solution to yield farming. Users can adopt the role of cannabis farmers, harvest virtual plants, earning $GROW tokens and Non-Fungible Tokens (NFT’s - think digital art) that can later be sold on a secondary market. Combining gaming and tokenization, GROW is merging crypto tech with medical cannabis; it will decentralize the old medical cannabis stock and sharing process.
What is next for Marijuana-Backed Crypto?
While many cannabis-related cryptocurrencies have been around for years already, it's taken some time for public perception of both cannabis and crypto to begin shedding its apprehension. Now that both could almost be considered mainstream, it won’t be uncommon to see many more tokens popping up with various purposes within the cannabis sector, such as the one Maximillian White is working on with MediConnectUK. Their blockchain technology is already used by patients, prescribers, pharmacies, and drug manufacturers. If this were adopted, medical patients could easily verify where products come from, ensure it complies with regulations, and even know who transported it.
The state of Nevada has already partnered with Multichain Ventures, Inc, a blockchain cryptocurrency company, and announced its contract to fulfill the requirements of Assembly Bill 466. This bill requires the State Treasurer to create a pilot program establishing a closed-loop payment processing system that safely and efficiently enables financial transactions for marijuana companies.
Aimed to provide a convenient and secure way for these companies to pay local and state taxes, it also offers an alternative to traditional banking that these companies would not otherwise have access to. It’s only a matter of time before other states (or business groups) decide to take these financial matters into their own hands, and we see similar strategies emerge.
Crypto and Investing
Cryptocurrencies are not stocks. They are still considered by most as volatile investments, as most coin exchanges and digital assets are. Many investors mocked bitcoin when it came out years ago. No one had heard of such a thing, and historical attempts to create alternative currencies - failed.
Whether it is because you want to support a business's goals and help bring DeFi to cannabis, making it the way of the future, or you’re looking at the prospect of padding your retirement fund, the most critical step is doing your research. Take the time to find out what you are investing in and support tokens that align with your beliefs and support the industry's overall growth.
There are endless sources one may use to look up a potential investment, do the work and invest when you are ready, and only invest what you could afford to possibly lose. Always look into the fees associated with any platform you chose to purchase your crypto with; those can vary greatly. Coinbase, Kraken, and eToro are examples of private companies on the centralized exchange that offer platforms to trade cryptocurrencies.
The Growing Cannabis Market and The Risk of Investment
Cannabis is certainly booming, but what is going on with its stocks? Many cannabis growers are posting losses as they continue to invest heavily in various equipment and systems to help speed up their own revenue growth. Beyond that, cannabis is still a relatively new industry, and many unknowns contribute to the market’s current roller coaster ride.
The number one factor is that cannabis is still federally illegal, keeping the possibility of enforcement and additional regulation lurking around in the background. But, when cannabis does become legal federally, and the big alcohol and tobacco companies jump in? There is much to be considered; hence, what we see right now in the market is largely speculative.
Beyond this, many companies available to invest in are Canadian, creating risk with limited access to financial information, making it difficult for legal recourse if an investment were fraudulent. And finally, we come back to the financial services industry. Again, because it is illegal on a federal level, many investment professionals won’t recommend a cannabis stock. This does not mean that this market should be overlooked. The broad potential truly is overwhelming.
SoFi, Webull, and Stash are platforms where an investor can explore options for putting funds in cannabis. Stash, for instance, is approachable for those new to the market and trading stocks. The fees are minimal and a $0 minimum to open a personal portfolio. Investors can find information on Recent IPO’s, ETFs, large global companies, and several other types of investments and earn perks on banking and regular spending. *Cryptocurrencies cannot be purchased or stored on Stash.
Is Crypto the Future?
Maybe. Cryptocurrency and cannabis have “come of age” together -- both faced issues with social acceptance continued to forge ahead on their own paths. Some of those paths converge into what could be a powerful and purposeful road into the future.
The public is becoming much more demanding for transparency as well as faster and cheaper transactions. Given the ability to choose tokens (investments) that reflect a consumer’s personal relationship and involvement with cannabis, tokens for medical cannabis purchases, tokens to supply grows, or that support agriculture in general, crypto won't be fading into the background anytime soon.
Crypto has taken a stand while financial institutions continually let the marijuana and hemp industries down. Businesses and individuals have taken notice, and that means together, cannabis and crypto’s virtually untapped potential has a very bright future ahead.