Businesses and operators selling or distributing recreational and medical marijuana are barred from using banks for their transactions because of federal legislation. The development and use of marijuana-specific virtual currencies fill the hole in this market.
In 2017, the Marijuana Justice Act was introduced to eliminate criminal penalties for an individual who imports, exports, manufactures, distributes, or possesses with intent to distribute marijuana.5 As the tide turned on the use and distribution of marijuana, the need for digital payment increased.
At the same time, IBM proposed the use of blockchain as part of the
seed-to-sale tracking solution for regulatory control. The company
suggested that blockchain could reduce or eliminate black market sales
by controlling the sourcing, selling, and pricing of products, and
assisting producers and retailers with supply and demand issues.6
Launched in 2016, Tokes helps solve the banking problem via cryptocurrency payments. Additionally, the platform builds blockchain-based "track and trace" solutions for supply chain visibility and merges with "seed to sale" software.
Tokes' merchant is a point-of-sale software suite that is crypto-payment
based and includes functions for inventory and product management,
accounting, and sales. As of June 2023, the company's circulating coin
supply was approximately 200 million.7
PotCoin was one of the earliest cannabis cryptocurrencies, launched in 2014. Its creators capitalized on Colorado’s legalization of marijuana and installed a PotCoin automated teller machine (ATM) at a marijuana dispensary in Colorado.8 In 2017, a press release and a video of former NBA star Dennis Rodman sporting a PotCoin.com shirt in North Korea doubled its value in one day.910
The supply of PotCoin is limited to 420 million coins, with 115 million in circulation in June 2023.11 It trades on five markets and transitioned to proof-of-stake, which allows people to mine or validate block transactions according to the number of coins they hold.128
CannabisCoin was developed in 2014. It is a proof-of-work, peer-to-peer open-source currency for easy transactions for medical marijuana dispensaries.13 CannabisCoin promises to convert cryptocurrency directly into marijuana.
Under the name CANNdy, there is a line of medicines and marijuana strains grown for the specific purpose of exchange at the rate of 1 CannabisCoin to 1 gram of medication.14 The total supply of CannabisCoin is 91.8 million, with over 77 million in circulation.15
Marijuana-specific cryptocurrencies also use digital wallets to hold and store coins, just like regular cryptocurrencies.
DopeCoin was founded by Adam Howell in January 2014.1617 Little is known about the specific markets the currency serves except that its "mission is to provide marijuana enthusiasts with a modern and secure way of doing business for the 21st century."18
Starting with a vision of creating a Silk Road for transactions in marijuana, DopeCoin has approximately 117 million coins in circulation as of June 2023.19 It is also a proof-of-stake currency, giving investors 5% annual interest.20
Established in 2014, HempCoin was designed for use by the farming industry and medical and recreational dispensaries. HempCoin's website claims to "help facilitate secure transactional relationships between farmers, distributors, and consumers."2122 As of June 2023, HempCoin has 267 million coins in circulation.23
Cryptocurrencies, coins, and tokens connected to the cannabis industry can be purchased directly from the crypto company or through platforms such as coinbase.com.
No federal legislation has been passed to formally decriminalize marijuana, although several measures have been introduced, including the Marijuana Opportunity Reinvestment and Expungement Act and the Marijuana Justice Act.
NFTs are Non-Fungible Tokens and provide investors an easy and affordable entry into the global cannabis market through this tokenized investment instrument.
Popular marijuana-based cryptocurrencies include Tokes, PotCoin, CannabisCoin, DopeCoin, and HempCoin which allow merchants and consumers to complete transactions and avoid the banking system. The U.S. federal government hasn't fully decriminalized marijuana for legal bank transactions.
