While legal marijuana made inroads in several states this year, federal criminalization of the drug means businesses that operate in the industry cannot access financial services they need like bank accounts and payment services — even when they're legal.
One marijuana business has announced plans to use blockchain to address some of these challenges.
An announcement by Cannabis Science on Thursday (Dec. 28) said it is planning an initial coin offering (ICO) next month as it prepares to launch its third dispensary in California. Its first two dispensaries are also slated to open in January.
As it preps for the ICO, the company highlighted the potential of blockchain technology not only to facilitate the sale of its CBIS Asset Back Blockchain, but to solve several challenges businesses in the industry face due to their inability to get banked.
“With cannabis legal in about 29 states and as many as six more on the ballots for 2018, payment solutions are needed for dispensaries and customers — so we plan on integrating the upcoming cryptocurrency to make this process more efficient for retailers and consumers,” said Raymond C. Dabney, Cannabis Science president, CEO and cofounder, in a statement. “Today, most cannabinoid enterprises cannot open bank accounts, engage POS systems and accept credit card payments. This forces the industry to use cash as the main transaction medium. Cash is employed to pay for rent, inventory, supplies, taxes and all canna-related B2C and B2B transactions.”
The company said pre-launch sales will begin in January, and will be followed by ICO trading on several blockchain currency exchange markets.
Earlier this year, regulators in California floated the idea of creating a state-backed bank to service legal marijuana businesses. Reports in the LA Times in November said California Treasurer John Chiang is looking into the initiative as regulations that legalize recreational marijuana in the state come into effect next month.