The cannabis industry is flourishing the legalization makes its way into the country, but there are still some flaws to be fixed. Specifically banks because they will not deal with weed businesses, which means they can not accept credit cards. That means consumers must carry cash, and sellers end up with large amounts of cash on hand. Certain dispensaries in Denver can do sales of $ 500,000 per month. Handling cash increases the risk of theft, and if the sellers attempt to deposit sizable amounts of cash at the bank, they may be suspected of laundering money or other crimes. However, one company thinks it’s a method to keep both banks and legal cannabis businesses satisfied.
Tokken is a secure mobile payment option connected with identification checks that meet banks’ strict requirements. A former Marine and Regulator at the U.S. Office of the Comptroller of the Currency, Lamine Zarrad, founded it. “The trend is irreversible,” Zarrad told CNBC at the South by Southwest Festival in Austin, Texas. “Cannabis is not going anywhere.” How it works: First, a buyer concurs to allow Tokken to confirm that they are able to legally purchase weed. This confirmation may include checking mobile carrier records, gathering bioidentification data used to log into your phone or relaying who you are established by GPS coordinates. As soon as your information checks out, you can upload your credit card information to the app. When you want to buy marijuana, you simply provide a numerical code to give to the cashier.
It’s a complex issue between the states and the federal government whether banks can legally support marijuana businesses. To allow the banks to endorse the marijuana-related businesses, Tokken changes credit card transactions into a digital token. Those tokens can be swapped back for money that can be deposited in a bank account. All the transactions are logged publicly through a blockchain ledger, the same method that makes bitcoin entirely anonymous and verified at the same time. Banks feel secure accepting this money because they are certain the purchases are legal, Zarrad said. It helps that Tokken uses some of the same security regulatory protocols the government uses, he said.
Tokken is aware about the ambiguity around the continued legalization of marijuana, specifically given Attorney General Jeff Sessions’ anti-pot stance. However, the Trump administration has been supportive of states’ rights, Zarrad said. “We are acutely aware they have been flip-flopping on the topic,” he said. Tokken’s verification system can help solve other issues, Zarrad said. Zarrad, who came to the U.S. as a refugee from Azerbaijan, said many immigrants and refugees are denied from banks because of verification issues. This often forces them to take jobs that pay out in cash, and prevents them from taking the next steps to securing the future for their families. “If we can solve this issue with cannabis and use this model to apply to immigrants and refugees, we can solve this issue with cash-based jobs,” he said.