Disclaimer: The author does not provide investment advice. This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for investment advice.
By now, Bitcoin is as famous as can be.
But deep down, Bitcoin is just blockchain technology disrupting our concept of money.
Blockchain is rapidly revolutionizing more and more industries. And it’s all thanks to tokens, tools that aim to do more than just to replace money.
Nowadays, the legal cannabis industry is just another stage for the blockchain to rock in.
It doesn’t matter if you’re a cannabis enthusiast yourself, an investor or just an up-to-date citizen of the world, the speed at which social and political perception of cannabis are shifting is a sight to behold (see USA and Canada).
Last year, several tokens and coins tied to cannabis emerged, meeting this fast-growing market. Analysts point to an even better development for 2018. Both tokens and the industry are truly flying high.
It doesn’t matter if you’re a user, connoisseur, business-owner or investor, you absolutely must understand how this game will play out.
So, buckle up, because here we are about to break down the cannabis industry, then discuss the most important tokens that will stick to its unstoppable growth. We’ll also get to highlight some talking points along the way.
Because the hard part of this popularity peak of cannabis tokens has led to so many projects and start-ups that choosing the right one has become a huge hassle; so we’ve taken the liberty to do the homework.
Here’s what’s going down.
Recreative cannabis was first legalized in 2014 in the state of Colorado. In the following years another 9 states joined the legalization initiative in the US (1). Since then the market has experimented an ongoing boom, creating thousands of jobs and millions in tax revenue.
Some years down the line, historians may well call it the green rush.
An enormous user base and no previous legal competition make this a market ripe for investment. The industry of legal cannabis is expected to grow at least by 16% each year until 2025.
By then, it’ll have reached a market cap of $24 billion.
And the growth is fast. Dispensaries’ monthly revenue has increased from $10 million in 2014 to above $70 million in 2016.
Credits to Frontier Financial Group
But this infant market could grow faster. Indeed, the tricky legal status of the plant hinders the growth of this industry.
Not only do they have to fight against social prejudices and federal laws in conflict with state regulation. Cannabis businesses still have no access no banking. Their multi-million dollar industry runs mostly on cash.
Besides, there are no standards for product quality, use of pesticides and origin.
It is wild.
But where governments and regulation have failed to make room for a strong, growing industry, blockchain has come to the rescue. Many tokens and solutions have sprung last year, ready to give the cannabis market a turbo boost.
First, let’s check why tokens can be catalyzers for change.
The Tokens: An Overview
You’re probably asking yourself how on earth can a big business flourish without access to banking.
Picture gas stations, fast food chains or pharmacies working on cash only.
Sadly the federal ban on cannabis prevents banks from servicing cannabis dispensaries and related businesses.
That’s why many cannabis tokens are basically payment solutions like bitcoin is.
This means they’re straightforward ways to facilitate payments between industry players like dispensaries, clients and growers. In a way, then, most cannabis tokens are basically cannabis-related money.
Thanks to a reliable, secure, digital tradable value coin, the logistics nightmare of cash-only dealing may be over.
We can call these tokens cannabis-money.
But there are others which aim even higher.
Projects like Paragon, Hemp Coin, Smoke Exchange and Budbo are trying to not just solve major hurdles in logistics and management. They want to tangibly improve the infrastructure of the whole cannabis industry.
- Making supply chains more efficient and manageable,
- Allowing payments between different parties
- Increasing transparency when it comes to the origin of seeds and produces
And of course, there’s the odd one out. There’s one blockchain project from AgroTechFarm, that is about cannabis production.
That’s how we will divide the guide: production, cannabis-money, and infrastructure
You’re probably wondering how can a token affect cannabis production. Although it’s not so straightforward, you’ll see that blockchain can be used in many ways.
The cool part: changing how cannabis is produced will transform the industry. Especially if it can disrupt the distinction between industrial producers and individual users.
AgroTechFarm occupies a blue ocean in the cannabis industry. The aim of the project is to provide a zero-chemical, zero-environmental impact way to grow cannabis and other crops.
Their product uses aeroponics in their smart appliance for organically growing cannabis, tomatoes, peppers and other large crops at home. The appliance allows people to become self-sufficient and produce their own fruits and vegetables. Everything is automated, the yield is optimized and less resources are used.
Since everything grows in the user’s kitchen there is no need for transportation neither for farming land. Considering that these two are among the biggest contributors to global warming.
We could not find any other cannabis token that was dealing with production. And it’s a nice combination of the cannabis industry with organic farming. In one sense, it implies diversification (the art of not putting all your eggs in one basket).
This means that in case the cannabis industry goes down, their other clients will be intact.
Industry Boosters: Infrastructure
Infrastructure is the backbone of all industries.
A market’s growth potential is worthless without proper infrastructure. Without it, nothing can happen. Think about it this way: even if you have the fastest car in the world, it would be good for nothing if there were no roads.
That’s why some visionary projects want to create a stronger base for all cannabis-related businesses to flourish.
The boost can come in many ways, as we’ve seen. And some projects focus one some over others, but each has something to contribute. This showcases blockchain’s amazing capability to change our markets!
Let’s jump in and see what these projects can offer.
Budbo has created a global cannabis blockchain, on which any ancillary service or cannabis related business can utilize and harness its immutable ledger.
Budbo has been an operating company since 2015, offering an enterprise level suite of business products. Budbo has a consumer mobile application that focuses primarily on product discovery, a dispensary and product manufacturer dashboard that breaks down predictive AI consumer analytics, and a GPS enabled program it calls Budbo Trax that monitors commercial cannabis shipments through geofencing technologies and electronic documentation.
Their app already has 75,000 individual active users and 2,000 dispensaries within their network. Their application has an interface similar to “Tinder”, in the way it allows users to quickly swipe through 100s of locally available strains and products. Allowing for online ordering, or getting directions to the dispensary that has the desired product.
Budbo wants to integrate all players in the industry, with a stated mission of bringing together a solid global community.
Their platform currently involves seed suppliers, growers, dispensaries, users, and patients.
The platform will provide not just information, but tracking as well to help with complex local, state, and federal compliance regulations, which will benefit all recreational and medical cannabis users and patients.
Budbo is currently closing out their token sale, having sold more than 130,000,000 utility tokens. The tokens act as the API key for access to the transactions stored on the ledger.
The Hemp Coin project is a bit of a hybrid. It combines a payment solution with a mission to rebrand the industries they serve. In contrast with Dope Coin and Smoke Exchange, this project is one whole thing.
Their eight-page whitepaper does not shed much light on what they mean by this rebranding. The only explanation we get in their roadmap is that implies: “Connecting with agriculture industry to accept HempCoin’’.
A user on Reddit defended the team saying that the information was not made public due to pressure from competitors.
So, what we can make out of this is that they seek to develop a community of people who will be actively pushing pro-cannabis materials like artwork, blog posts and articles. This would, in turn, improve the image of cannabis and its industry.
Paragon intends to put the cannabis industry on blockchain through its extensive suite of solutions
Paragon successfully launched its initial platform and functionality in late 2017 and is now progressing towards a fully-fledged release in mid 2018.
Importantly, Paragon aims to do a lot more than just solve part of the cash problem that the cannabis industry currently faces. Paragon is developing a seed-to-sale tracking solution for cannabis products. All users and governments will be able to verify the entire life cycle of a product for free and be certain that no data was manipulated or deleted. These solutions are all made possible by smart-contracts and fueled by PRG to incorporate all elements of the supply chain.
On top of the extensive blockchain-based solutions that Paragon is creating, the company is also launching Paragon Spaces – these are co-working spaces that serve the cannabis industry with flex desks and office space – all paid for in PRG.
All of these tokens are peer-to-peer cash systems devoted to payment within the cannabis industry. The -coin in their names says it all.
But do we really need a cannabis-bitcoin?
As we explained earlier, the industry is handicapped without access to banks. Security becomes a headache, logistics are nightmarish and your consumer base is hindered. This is all because of bad policy.
Crypto has always been praised as a way to go around governments and banking institutions. It’s even how most illegal trading is paid for, sadly.
So it’s inevitable that this new tech can now serve as the safe, easy to use money this industry so desperately needs.
As a bonus, a specialized payments solution allows for reward programs and community building and integration. So, if they become widely used, they do offer some benefits over money.
Let’s take a look at this new cannabis money!
We bundled these two together since we found them to be quite similar in terms of what they do, when were they launched and how they perform.
Both projects market themselves as the peer-2-peer cash systems for cannabis and aim to facilitate payments to cannabis businesses in a secure way. Similar to a cannabis bitcoin.
Yet, their websites do not offer enough information about the projects or the teams. Information is good, always.
We could not find a dedicated whitepaper for either of them. Whitepapers have become the bread and butter of tokens market for a reason: they’re professional tools that explain all aspects of any token-venture.
The main issue is that dispensaries may not benefit from a dedicated token only for them. They have to pay for for most of their supplies and logistics in cash. It is possible that they will need something more widely used or more liquid.
If you are interested in the code, you can take a look over at Github, where you’ll find both.
Pot Coin stands out among other tokens in this section. Their website looks professionally made and contains all the information you’ll need.
Also, its whitepaper is well laid out and there is a thorough explanation of how the company aims to reach every milestone on their roadmap.
PotCoin offers some key bonuses: it aims to tokenize seeds and strains through a reward program. People will be able to convert their PotCoins into real cannabis seeds. Also, those who develop a new strain will have the opportunity to sell it on their platform and earn tokens.
These two reward options sound like good incentives to prefer Potcoins over bitcoin or fiat money.
So, what can we make out of them? It seems Pot Coin’s success or failure will largely depend on their skill and effort at creating and maintaining an engaged community.
Dope Coin/ Smoke Exchange
Just as the name suggests, Dope Coin is made to serve the underground world.
Their mission is to provide a payment solution for both the legal cannabis market and the illicit one like the darknet silk road.
Since last year, when governments around the world announced they could now track bitcoin, privacy coins have been big. For example, the price of Monero (a secrecy-oriented cryptocurrency) skyrocketed from around $50 to around $300. This came about because the darknet was switching from bitcoin to Monero, to avoid wary eyes.
Just recently the Dope Coin team announced that they are starting a new project called Smoke Exchange that aims to be a marketing and advertising platform specifically for cannabis businesses. They will integrate dope coin and bitcoin as payments on this platform.
Smoke Exchange is to release a working demo in Q1/2018.
The future is even wilder
The cannabis industry is a wild place.
Cannabis tokens have come as a much-needed relief for its main issues, a powerful boost to its infrastructure, and as a new paradigm in its production.
These tokens are definitely a good buy in 2018.
But be cautious when it comes to projects without a working product or that have too much hype around them. We all know that sometimes huge profits can come from investing in tokens with a lot of FOMO surrounding them. Other times, it’s just a loss.
There are many ways to improve your decisions, but the key to all is basically the same: acquire as much reliable information as you can.
Pro tip: look at the whitepaper!
Think about the product, the solution they offer. Whatever your plans for the future, make sure to keep an eye out for the legal cannabis industry. It’s size, its potential and individual characteristics make it one of the most interesting of our times.
And if you’re looking to invest, think about real-world problems and real-life solutions.
Often the not so flashy looking projects turn out to be, you know, the big hits.