This Blockchain Business Is Banking on Pot Entrepreneurs

Recreational marijuana is legal in nine states but that doesn’t mean it’s fully legit, not when the U.S. government still considers weed to be an illegal drug.

Still, it’s a legal business in some states (in the District of Columbia pot can be used in private but can’t be sold in public) and that means entrepreneurs still need money for expansion and other purposes. That creates a problem for the cannabis industry when the nation’s banks aren’t exactly willing to serve these companies.

Enter blockchain.

Alt Thirty Six is a new digital payments platform specifically designed for the pot industry. It uses blockchain technology to allow cannabis businesses such as suppliers, vendors and dispensaries to accept and receive payments in the dash (DASH) cryptocurrency.

The platform went live in May, and the company says it is building significant industry relationships. Alt Thirty Six announced recently a partnership with CannTrade, a marketplace and customer relationship management platform that offers order management, inventory and compliance services for cannabis brands, distributors and retailers.

Alt Thirty Six’s technology will now be available to CannTrade’s more than 400 business clients. In May, Alt Thirty Six announced a partnership with WebJoint, an all-in-one software solution and point-of-sale system for cannabis businesses.

Alt Thirty Six isn’t the only company seeking to use blockchain to streamline the cannabis industry. Earlier this year, three Canadian businesses teamed up to use blockchain to increase the transparency of the marijuana supply chain.

Cash Crop

Legal marijuana for recreational use is projected to become a $32 billion industry by 2022, according to a report by Arcview Market Research. 

But to the Trump administration, marijuana is still an illegal weed. Under the Obama administration the U.S. Treasury Department’s Federal Crimes Enforcement Network, or FinCEN, put out guidance on how the federal government looks at banks doing business with cannabis companies. But that guidance, known as the Cole Memorandum, was rescinded by current Attorney General Jeff Sessions. That has left the states where recreational pot is legal to work with banks on their own.

Cash Only

Amid this legal uncertainty, it’s not surprising the Washington Post found that in states where recreational pot is legal, 70 percent of businesses operate in cash.

Cash-handling activities such as transportation, handling, counting, storage and security cost the typical cannabis business between 15 percent to 25 percent of gross revenue, Ken Ramirez, CEO of Alt Thirty Six, tells ThirtyK. “In addition to a high cost, operating in cash also comes along with huge security issues from robbery to internal theft,” he adds.