The cannabis and cryptocurrency industries are two of the hottest areas for investors over the past few months. With the adult-use legalization of cannabis in California and Nevada, cannabis revenues are expected to soar to more than $50 billion per year over the coming years.
Meanwhile, Bitcoin and Ethereum’s tremendous rise in value over the past two years has finally brought cryptocurrency and blockchain technologies into the mainstream.
There are many different ways that these two industries can work together, but some of them are more of a stretch than others. Future Farm Technologies Inc. (CSE: FFT) (OTCQB: FFRMF) recent investment in FlipCoin represents one of the most promising applications of cryptocurrency in the cannabis industry. FlipCoin solves many different problems in a way that’s easily accessible to both consumers and businesses.
Crypto for Cannabis
The cannabis industry is expected to generate upwards of $50 billion per year by 2026, according to Cowen & Co., which could exacerbate the industry’s banking issues. While some states have established cannabis credit unions, most commercial banks have long avoided the industry due to federal-level regulations.
Attorney General Jeff Sessions’ rescinding of the Cole Memo further underscores the risks of banking the cannabis industry.
Cryptocurrencies have been around for several years, but they’re just starting to gain traction among businesses and consumers. Since they operate on a blockchain, they are not part of the federal central banking system and aren’t subject to the same regulations as commercial banks. The downside is that they are a lot more volatile than fiat currencies, like the U.S. dollar, and nobody was aware of them until their recent rise in popularity.
There are two ways that cryptocurrencies and blockchain technology could help the cannabis industry. First, cryptocurrency could become a viable payment method and way to store capital without putting cash in a vault.
This could improve the security of many dispensaries and simplify the payment process for consumers. Second, blockchain technology can be used to keep careful record of transactions in a tamper-proof ledger for regulators.
FlipCoin’s New Model
There are several cryptocurrencies that have already targeted the cannabis industry, but creating a new ‘coin’ is a challenging process. In essence, you’re forced to create your own economy by generating both demand and supply sides of the market, which is a long-term process.
The value of the ‘coin’ may also be very volatile in the early days, which makes it difficult for dispensaries to use in practice.
Rather than launching their own coin, FlipCoin is built atop CoinBase, a leading broker of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin more than 13 million active accounts. FlipCoin processes payments through this platform to accept cryptocurrencies and immediately convert them into cash.
The company plans to initially roll out the technology in its partner dispensaries, which could provide immediate traction ahead of a larger roll-out.
By charging a transaction fee, the company would generate revenue from each sale while providing immediate settlement, unparalleled security, and other benefits for dispensaries. The technology is also ideal for international expansion where users would no longer worry about currency conversions.
