Legal Marijuana Industry May Change How the World Pays Itself

Tokken CEO Lamine Zarrad on digital payment, data integrity, weed.

Weed money is difficult to manage. Ask anyone working in the nascent cannabis industry, and they’ll tell you that banking is among the most problematic aspects of daily operations. 

According to Lamine Zarrad, CEO of digital payment provider Tokken-––if legal pot operations embrace an analog payment system that actually includes banks in the process, the marijuana business could be a harbinger of change in the global economy, with blockchain tech powering a meaningful, lasting disruption. 

“There are more than 40 large banks exploring blockchain solutions for various purposes,” Zarrad tells KINDLAND. Where Tokken enters the picture, and what its CEO sees as the future of banking, is providing a system that values both secure and reliable transfer of funds, and the integrity of data.

“Once information enters the blockchain ledger, it is virtually impossible to edit, or distort,” Zarrad tells KINDLAND.

Due to strictures in the Bank Secrecy Act, monetary keyholders such as banks and credit unions are unable to provide basic financial services to the cannabis industry and other marginalized demographics. A risk is attached to working with partners that deal in a Schedule I drug. Zarrad draws a parallel between the cannabis industry’s inability to secure its financial assets and undocumented workers who are forced to work and live in a cash-only, black-market economy, because they too represent risk to financial institutions.


"In essence, banks view dispensary owners, or the industry at large, as possibly having connections to the black market,” Zarrad tells KINDLAND. “For example, say there is a grower that has been in the industry for 20 years in an illegal capacity. Now they’re legal, but they’ve made those nefarious connections––the bank is going to turn them away, because it simply cannot know the risk that this person represents,” says Zarrad. “But Tokken can. We use similar methodology to that of an intelligence organization.”

The startup is developing Tokken Sell––a point-of-sale system marketed to dispensaries that Zarrad says is supported by geo-fencing technology and confirms weed transactions take place in compliant and legal retail locations. 

The cannabis-finance space is indeed crowded, though problems persist at each point of the quasi-legal supply chain. Zarrad sees a void he hopes Tokken will fill. He recognizes the opportunity for his company to generate revenue by closing that gap, and he isn't alone. 

According to MOTHERBOARD

“Cannabis Hemp Exchange (CHEX) is another startup using blockchain technology to validate transactions between wholesalers and retailers (i.e., pot growers and dispensaries). Through the company's blockchain, data is decentralized and stored across multiple servers.”

A future where marijuana is actually legal, and money doesn’t have to come from a bank, may seem like a nice place to live, but the general public is not moving there just yet. In November, voters in nine states will decide whether or not to normalize weed to some degree, but in most states, voters won't see cannabis legislation on the ballot, at all.

In 2016, marijuana is the "new gold rush," but until the larger national bottleneck to legality opens, cash transactions may very well rule everything around weed—and it's that unsatisfactory reign that might just bust out in blockchain solutions.