On July 1, Nevada residents flocked to their local marijuana dispensaries to
be among the first recreational marijuana customers.
The first month of recreational sales raked in more than $27 million –
doubling what any other state had done in their first month. In August, that number went up to $33 million.
That’s a lot of money and dispensaries are primarily a cash-only business. It creates many issues - from security to other banking challenges.
The cash-only issue is one other states have had problems with.
Benjamin Hoskins is the founder of Pisos dispensary in Las Vegas.
He explained that many people believe it is against the law for banks to work with marijuana businesses but that is not the case. He said banks could face sanctions or lose their bank charter if any business they work with is doing something illegal.
“So, most banks aren’t very excited about taking on the risk of marijuana-related enterprise," he said, "So, they stay away from it.”
But there are banks that do work with some dispensaries or other related industries, which is why some dispensaries will take debit and credit cards. However, those are rare.
Hoskins says the banking issue causes quite a few problems.
“It certainly causes a lot of issues and headaches managing the business,” he said.
However, a cryptocurrency company, which specializes in the legalized cannabis industry, is trying to fix those problems.
Michael Wagner is the founder of Tokes.
“We provide both electronic payment and banking solutions to the legal cannabis industry,” Wagner said.
This is how it works. Customers connect their bank account to a regulated and registered currency exchange. They can then buy a cryptocurrency. The most well known is BitCoin. From there, they can go to an alternative exchange and buy Tokes.
“Once you have Tokes you have the ability to move those onto a mobile wallet or move those onto a client on your home computer," Wagner explained.
The Tokes are then used to buy marijuana. Hoskins' dispensary is currently taking Tokes, but it is the only one in Nevada.
Wagner said his company wanted to test the technology to make sure it is working perfectly before they scale up the product to more dispensaries. Also, he admits it is a new technology that not many people are familiar with, which makes it difficult for them to adopt.
“It is going to be a challenge," he said, "We need to educate the masses.”
Another thing to understand about the cryptocurrency is unlike money in the bank, it is not insured by the federal government.
“We really do not have any of those guarantees at this point," he said, "To an extent, it is experimental technology.”
But because of the way the currency and the technology works people who buy into the currency are in control of it.
“It does provide power to the people in that they have complete control but that complete control and autonomy comes with the responsibility of protecting your assets,” he said.
Benjamin Hoskins, founder, Pisos Dispensary; Michael Wagner, CEO, Tokes