While most canna-businesses are left without access to traditional financial institutions, some Colorado companies are turning to non-traditional enterprises in order to cut down on the number of cash transactions. One such enterprise, the blockchain startup Tokken, is targeting the 75 percent of cannabis businesses operating without bank accounts in Colorado.
Tokken provides an online banking experience, using an indelible blockchain ledger to ensure proprietary compliance and data integrity. Tokken allows app users to link their bank accounts and credit cards and then pay using their online wallet at any dispensary that accepts “Tokkens.” Not only can dispensary customers use the digital currency at retail locations, but dispensary owners could use it to pay their suppliers, employees, and anyone else that has the Tokken app. The Tokkens can be transferred from the app and converted into US dollars.
Lamine Zarrad, Tokken’s founder, suggested that many banks won’t serve the industry because their books are easy to manipulate due to the cash-only nature of the business.
“At the end of the day, they rely on us to make sure those transactions are not tampered with. When you have blockchain security, it takes away the uncertainty factor,” Zarrad said in the Motherboard report.
Cannabis Hemp Exchange (CHEX) co-founder Eugene Lopin explains that because blockchain data is decentralized and stored across multiple servers, it is “trustless” — users no longer need to trust the company to have data integrity. CHEX “provides transparency and audit ability into wholesale cannabis transactions,” Lopin said, which allows regulators to look into the blockchain to see a transaction instead of having to request an audit of the company’s central server.
This type of access is important because it will allow agencies to keep tabs on the seed-to-sale system imposed by most cannabis legislation.
“When we have a lot of data and regulators want to see what’s going on, it will be transparent for them,” Lopin said. “You’re putting out a message that your company has integrity.”