Spare: The Little Marijuana App That Won't Say It's About Marijuana

Where does Spare fit into the portrait of cannabis as a young industry?

Payment-processing is a migraine for businesses and entrepreneurs at virtually every level of the somewhat legal marijuana industry. As has been stated repeatedly, It is extremely difficult for cannabis businesses that "touch the plant" to access fundamental financial services.

Enter, Spare

The mobile money startup's website says Spare uses "new paradigms and software to provide unique financial services." Spare received a $50,000 investment from cannabis-first investment firm Arcview Group. According to a release from Arcview, the cash-injection into the "mobile ATM" was the prize for being named the first victor of Arcview's "Winners Fund"––seed funding put up by Arcview's venture capitalist membership hoping to cash in on legal weed. 

From the Arcview release:

"The SPARE mobile app allows people to withdraw cash from their bank accounts on demand simply by walking into a participating store. The store gives the person the amount they requested in cash and is instantly reimbursed as the money is transferred out of the person’s bank account and back to the store. This app is of particular value to cannabis stores who are often forced to conduct business almost entirely in cash due to the reluctance of banks to do business with them. Customers are able to seamlessly withdraw cash from their bank accounts at a dispensary and then use that cash to pay for their purchase, cutting out the need for an ATM."

Nowhere on Spare's landing page, social media accounts, app store description, or in its branding, does the startup mention even the slightest association to the cannabis industry. Another app of the same name exists for a user-base of diners to round up their nightly bills as a donation to charity.

So where then does Spare fit into the portrait of cannabis, as a young industry? 

In May, Arcview presented Spare's founder, D'Ontra Hughes––a finance world vet, turned startup founder, according to his AngelList profile––with a check that even Preston Waters of the 1994 film Blank Check would be stoked on.  

Image via Arcview release.

A source with deep experience in the banking, FinTech, and cannabis startup spaces describes Spare's mobile ATM, over email, as "a temporary fix for cannabis businesses." Aside from the novelty of being a mobile-first platform, The KIND's source doesn't "feel it has impact outside of cannabis. Businesses have been able to provide cash back at registers for years."

On the payment app's lack of 420-friendly branding: "To mention cannabis directly may impact backend partners (financial) and further raise their profile (to regulators)," writes The KIND's source. "Spare is small enough to fly under the radar. For now. As it becomes larger, it may run into issues with state regulators regarding money transmission." 

"There are roughly 100 financial institutions in the country that will work with cannabis companies. But that list is not published."

Other digital-payment processing solutions servicing legal marijuana businesses are also remaining low-key, while attempting to corner the cannabis market. SericaPay deals in what could be described as digital currency, what it calls: "digital assets." Customers load a digital wallet, and purchase the digital currency with real currency, which is then exchanged with businesses for goods and services. 

"The industry is at a crossroads,"  SericaPay founder Taarig Lewis is quoted as having once said. Previously, when contacted by The KIND, Lewis declined to comment on anything cannabis related. 

"There are roughly 100 financial institutions in the country that will work with cannabis companies," the source writes in an email. "But that list is not published.

"FinCEN [the Department of the Treasury's Financial Crimes Enforcement Network] has provided guidance for financial institutions on how to comply with the Bank Secrecy Act (BSA). But it would require most banks to invest significantly more [money] into compliance."

The KIND's finance source agrees that weed is at a "crossroads," with banking insecurity appearing to hinder the industry's progress. But: "The cannabis space is ripe for financial innovation. I think you'll see some great companies come out of it." 

At time of posting, representatives from Spare had not responded to a request for comment. 

An Arcview spokeperson replied that the person best qualified to give a quote is "currently off the grid now and for the rest of the weekend, and has an incredibly packed schedule next week. I realize I am putting up a bunch of brick walls here....  Please don't hesitate to reach out to me for future inquiries."