LIVE FROM THE USA•CBD EXPO
Truth be told, the KannaKnowledge team was surprised to find out that a significant number of first-time dispensary visitors arrived with no special intention of making a cannabis purchase. Rather, they were coming in to use a service that has become widely popular at dispensaries due to the both having the same user base: cryptocurrency ATMs.
The leader in this space is Chicago-based CoinFlip, now the world’s leading Bitcoin ATM operator and a big mover and shaker in the technology area. They provide retail locations with ATMS that deal in nearly a dozen digital currencies — including Litecoin, Ethereum, Dogecoin, Dash, Aave and others, with Bitcoin taking the lion’s share though 90 percent of all transactions. First-time users make their purchases in cash, and get a digital wallet for their currency purchase and storage.
CoinFlip tells us that the wide majority of people who come to a dispensary intending just to use the machine wind up browsing and making a purchase — which of course pleases the operators to no end. The operators do not pay for the CoinFlip ATMs; they are installed in dispensaries at no cost, and the company handles everything from shipping to customer support to cash collections.
The relationship between cannabis and cryptocurrencies, of course, dates back to the very beginning of this asset. Bitcoin was launched in 2009, as a way of making secure and anonymous payments for a substance that was still illegal for recreational use at that time on both the federal and state levels. As the operators selling both medical and recreational cannabis were barred from using banks for their transactions, many were attracted to the new cryptocurrencies as a viable alternative.
Some cryptocurrencies have been created specifically for cannabis transactions. These coins are designed with actual cannabis as their reserve; with strains grown specifically to allow for exchange at the rate of 1 coin to 1 gram of cannabis — including PotCoin, CannabisCoin, DopeCoin and HempCoin. However, none of them are presently supported by CoinFlip. An on-premise CoinFlip ATM, of course, is not enough to give a dispensary the ability to accept crypto as a form of payment — that’s an entirely separate issue. The overwhelming majority of dispensaries are staying away for now, as the IRS does not treat crypto transactions as money changing hands. Instead, all crypto payments are considered investments, subject to income and capital gains taxes, and this can make the cost of doing business costs prohibitive for any dispensary with multiple crypto transactions per day. So while the cryptocurrencies purchased at dispensaries may not be usable on the spot, it’s nonetheless a service you can expect to see more of in months to come.