Around 2 am on December 16, 2016, James Bowman awoke from a half-sleep to find seven dark silhouettes crowding his bedroom. Before he could make out much about the men behind the Teenage Mutant Ninja Turtle masks who closed in around him, Bowman was hooded and pistol whipped. Zip-tied to a chair and beaten. Burned with a blowtorch and mutilated with an electric drill.
Bowman was a cannabis farmer in Southern Oregon. His assailants were looking for money, and as one of Oregon's most outspoken medical cannabis farmers, Bowman was an easy target.
Because of the federal prohibition of cannabis, most traditional banks won't touch businesses that get their hands sticky—and so the cannabis industry works in cash. It's no secret, and it's left weed businesses of all shapes and sizes vulnerable to violent criminals who want a quick cash injection.
In lieu of traditional banking options, it seems that if we could only remove cash from the cannabis equation, things would be much safer for farmers, processors and retailers.
Enter cryptocurrencies such as Potcoin, Hempcoin and Cannabiscoin—new designer, digital monies created to solve the cannabis industry's big cash problem.
Like the widely buzzed-over Bitcoin, these cryptocurrencies use public and private keys to conduct secure transactions over the internet, each of which is recorded across a decentralized digital ledger known as a blockchain—a database shared and stored by all coin holders that accounts for each and every transaction made using a given currency.
If the industry were to adopt such a form of digital money, it would deincentivize violent crimes like the one suffered by Bowman.
But all cryptocurrencies aren't created equal, and these technological solutions have been slow to make an impact.
"Largely, the strategy underlying a lot of those [early cannabis] tokens was let's just put a pot leaf on a digital currency and hope the industry adopts it," says Michael Wagner, founder and CEO of Las Vegas-based Tokes Platform, perhaps the most promising cannabis-specific cryptocurrency in a growing ecosystem of options.
Wagner says the put-a-leaf-on-it strategy was doomed from the start: "The technology itself is not intuitive. It's pretty difficult to use."
What's more, Bitcoin and cannabis-oriented services that rely on well-known cryptocurrency aren't well suited for consumer-end cannabis purchases: transaction times are slow and fees are high. And more inconvenient yet, the value of coins can rapidly fluctuate—which is great when you turn a profit, but crummy when your buy-in is exposed to market volatility. Especially if all you're trying to do is pick up some weed at your local dispensary.
As an alternative, Tokes is built on a super-fast platform called Waves. This offers flat-rate, less-than-a-penny transaction fees and payment verification in under a minute. Additionally, Tokes offers various ways to "peg" tokens at their current dollar value—essentially, removing money from the Tokes economy to shield coin holders from market fluctuations and unwanted exposure to risk.
In this way, Tokes works a bit like a bank, designed to protect its users' green-earned green.
Making payments with Tokes is relatively simple: a user downloads the Waves platform for their desktop or mobile device, buys a desired amount of Tokes tokens and then trades key info via QR code with a retailer, wholesaler or other cannabis business.
So far, only a single pilot dispensary in Las Vegas accepts Tokes in exchange for product. But Wagner says cannabis consumers are only one segment of the coin's target market. The business-to-business arena, where large, very risky sums of cash are regularly traded, stands to gain the most.
Not only is Tokes posed as a safer-than-cash solution for transactions between dispensaries, producers and processors, but Wagner is beginning to forge partnerships in supporting industries—such as with power companies and utility providers—allowing cannabis businesses to keep their money within the Tokes economy when paying bills.
Tokes will soon debut operating software for dispensaries, and is currently developing applications to help producers track their products from seed to sale while automating compliance.
It's hard to say whether Tokes will achieve its vision of a universally adopted cryptocurrency suite for the cannabis industry—that is, whether a utopian, self-sufficient economy will come to fruition before banks come to their senses and start playing nice with the cannabis industry—but it certainly would be a delightful little shock toward the future if it succeeds.