Medicinal Genomics Seeks to Put Cannabis on the Blockchain

Is it possible to put cannabis on the blockchain?

With one company, that’s exactly what’s taking place. Motherboard reports that Medicinal Genomics is creating a registered list of all cannabis genomes to be stored on the bitcoin blockchain. The purpose is to take any confusion out of marijuana purchases; MG wants to make sure every customer receives the strain they’ve set out to purchase, as each type can have varying effects on patients.

“The Bitcoin blockchain has been going since 2009, and its security is in its proof of work,” says CSO of MG Kevin McKernan. “If, for any reason, we ever got shut down, all the people in the community that have the sequence files we gave them could recreate our database. I think that’s important for the cannabis field. If we ever want to figure out the mitochondrial Eve of cannabis, it can’t exist in a centralized database under one company’s control.”

Since the days of legalizing marijuana first hit newsstands, it seems bitcoin and cannabis have been a match made in heaven. Adoption of the digital currency has grown in size and scope over the last year and half among marijuana dispensaries, and some companies have even found new ways of delivering medical marijuana by drones, ensuring customers get what they need when they need it.

The first patent on a medical marijuana strain was filed in 2015, and MG has been cooking up its idea ever since. Growers buy purification kits for their plants, then ship them to the company so executives can complete a sequencing process. Once that’s finished, MG compares it to a separate “reference strain” to make sure it’s original. The test done and its individuality confirmed, the strain is then added to the registry, while the grower basks in the glory of creating an original strain.

The entire process costs about $600.

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Federal Reserve has officially rejected a financial institution’s request to serve the medical marijuana industry’s banking needs in Colorado.

The request, that was filed in November by the Fourth Center Credit Union (FCCU), was seeking to create a “master account” that would act as an interactive platform between the state-licensed marijuana businesses and banking institutions. It had received the governor’s backing when it decided to bring expert money laundering officials to build the policies. Having received the state license, the FCCU was only waiting for the Fed’s approval to begin operations in Colorado.

According to the union’s backer, Mr. Mark Mason, they had accurately followed every protocol that could have enabled them to create such a platform. But to him, Feds were never interested to come out of their rigorous compliance — that terms medical marijuana as a Schedule I drug and bars financial institutions from conducting business with its dealers.

“I felt all along like they were trying to figure out a way to deny our application,” Mason told the New York Times. “A federal judge who is only concerned in applying the law can make the decision.”

As a result of the said verdict, the medical marijuana businesses are once again back to conduct their operations in an unsafe environment. Many of them have already equipped themselves with armed guards and cars to protect their cash from being stolen by criminals. The state’s government is also concerned about the public safety under such circumstance, and has further expressed the difficulties tax authorities might face while collecting taxes from the pot industry.

Lawsuit Against Federal Reserve

The FCCU has recently filed lawsuits against the Federal Reserve and the National Credit Union Administration to understand the latter’s authority over them — once for all. The marijuana-supporting firm would definitely be backing its case on the legal status of cannabis industry in Colorado, which somewhat remains illegal on the Federal level. The NCUA’s decision to nullify FCCU is also backed on the same Federal status, for it has questioned the master account’s legal boundaries.

A Parallel Banking System for Marijuana Industry?

At one point or another, legal cannabis industries throughout the US will have to come together to voice their agenda against the conflicting Federal laws. A parallel and decentralized banking system would be an easy answer at that point of time. The industry’s top experts have previously ignored to adopt such systems — read Bitcoinsaying that they still fall in a grey area thanks to their low adoption and limited case studies.

It is about time they start to think back. Developers, on the other hand, can tap on this industry’s needs to create viable — and legal — transaction platforms — with offshore bank accounts, perhaps.

The usage of Bitcoin ATMs and vending machines could increase among marijuana dispensaries, predicts Green Rush Review.

In its recent promotional press release, the medical marijuana news website blamed the absence of proper banking infrastructure as one of the major reasons why cannabis businesses would move towards other bankable options such as Bitcoin. It said:

“Marijuana businesses are unable to open checking accounts or accept credit cards. They are left without secure options, and are forced into dealing only with large amounts of cash — risking their safety and raising employee payroll and tax issues. Thus, dealing in bitcoins may wind up being the better and more secure alternative.”

To solidify its claims, Green Rush Review presented some recent events that involved companies setting up Bitcoin kiosks near the medical marijuana dispensaries in Seattle, Michigan and Colorado area.

As noted in one of our earlier articles as well, banks indeed are experiencing a conflict when it comes to providing their basic services to cannabis businesses. The “conflict” arises from a Federal Law that lists marijuana in the list of Schedule I drug, therefore putting it in the likeness of drugs like heroin. It simply inspires banks to maintain their business from a multi-billion dollar industry.

The medical marijuana dispensaries are therefore at risk, fearing thefts as their returns are mostly saved in cash. Meanwhile, the cannabis industry is expected to rise by 2-3% annually, therefore putting more pressure on small businesses to keep their returns safe. Bitcoin comes as a natural option, as it doesn’t require users to be dependable on centralized authorities when it comes to conducting transactions.

There will however be concerns even with Bitcoin thanks to its extreme volatile nature which makes it a risky asset to hold. A renowned payment processing company like BitPay has earlier rejected to be associated with medical marijuana business as well.

Cannabis based cryptocurrency Potcoin had an impressive week in the USD markets, where its climbed around 75% amid a notable buying volume.

Price Movements throughout Last Week

As you can see the CoinGecko chart below, the POT/USD closed at 0.00117 on Feb 18th last week, after crashing from its intra-week peak level of 0.00137. The aforesaid closing point acted as a strong support to influence another rally, and price once again began to trend upwards during next days. There was a little resistance in between the Feb 20th  and 22nd trading sessions, probably due to the early exits. The market therefore slumped a little towards the prevailing support level at 0.00117.


But in last few days, Potcoin seems to have been retaining its bullish momentum and has surged to 0.00127. At press time, the price is testing the previous peak near 0.00137 — a point where a huge selling pressure awaits.

Potcoin 3.0 Announced

The 75% rally throughout  last week could be credited to a new development plan, introduced by Potcoin developer Russ Thomas recently.

“There will be a PotCoin 3.0 and it will be based on core principles, as follows: Transparency; Collaboration; Community; Decentralization; Empowerment; Support; [and] Shared Gains,” he stated on Reddit.

Thomas meanwhile revealed the development timeline to Potcoin followers that will be effective February 27th with a detailed public announcement. The event will be followed by plan authorization on March 2nd, public review by March 9th, and ultimately the response from MED on the use of Potcoin for purchasing medical marijuana by March 15th.

Potcoin team has also launched a new marketing campaign to attract more and more cryptocurrency fanatics to their community.

Cannabis-based cryptocurrency Potcoin has earned enough reputation as a cash alternative to medical marijuana businesses and users. However on the trading front, the coin is falling drastically against the USD.

Screen Shot 2015-02-15 at 23.29.38

At the start of last week, the POT/USD pair was looking fairly optimistic. On Feb 8th, the pair was valued around 0.00121944 and rose comfortably to around 0.00137490 by the end of Feb 11th. A part of this surge was credited to Potcoin investors who jointly sent a letter to the Colorado MED on Feb 7th — a day before the actual uptrend took place. The letter was written in regards to know whether virtual currencies could be used as one of the payment methods for legal marijuana.

Potcoin Getting high yet

In our knowledge, it was the first time a team belonging to one of the cannabis-based cryptocurrencies actually took an initiative to confirm its position in a legal framework. Investment-wise, this move could have inspired traders to roll-in some money to its market cap; hence the surge.

However, the hype surrounding the surge failed to extend itself and later overtook by huge selling pressure. As a result, the POT/USD formed a bearish flag — falling from 0.00133436 to 0.00115359 in the last 48 hours. One can also peg this drop to Bitcoin’s volatile surge during the same span, which might have deviated traders’ conscience towards more profitable trades.

Overall, Potcoin is a more speculative investment than the coins above it. Even if state governments allow virtual currencies to flourish in medical marijuana industries, Potcoin will definitely face strong competition from other successful coins like Bitcoin, Darkcoin, etc.

A multibillion-dollar, “legal” industry like Medical Marijuana, whose network is spread across 23 US states and the District of Columbia, is still deprived of the very basic thing any industry would need — a banking system.

According to a report by Jeffrey Stinson of The Pew Charitable Trust, the cannabis centers all across the United States are finding it hard to obtain even a simple banking facility. “The abundance of cash makes the country’s 2,000 retail shops and medical dispensaries tantalizing targets for criminals,” the report reveals.

“Without bank accounts, legal marijuana businesses have a hard time paying their employees and vendors. Relying solely on cash leads to a lack of transparency in accounting and auditing, and it complicates paying the taxes that states impose on cannabis.”

The trouble for the cannabis industry doesn’t end here. There are reports of eleven more US states voting in favor of legalizing medical marijuana, thus adding more cash to the vendor’s drawer. The upcoming “lucrative” laws still remain risky for businessmen, who have been kept away from accessing even the basic checking and credit card service from their respective local banks.

There are some reports available on the internet that clearly explain how marijuana dispensaries have become a soft target for burglars. For instance, a crime statistics report last year concluded that marijuana-related incidents has contributed 2% to the overall crime scenario. Among these data are 317 burglaries during 2012 and 2013, and 74 in 2014. Don’t forget that these figures just represent Denver. A wider picture would be more shocking.

The cannabis industry revenue meanwhile is estimated to be rising $2-3 billion annually. Now we know there is definitely a problem. Let’s focus now on WHY there is a problem.

The Conflicting Medical Marijuana Laws

The one, and might be the only, reason why banks are sending cannabis businesses back is a Federal Law which refers to marijuana as a Schedule I drug. Seeing it from a legal perspective, even a drug like heroin looks equivalent to state-approved medical cannabis. Thus, the banks simply want to avoid associating with businesses that deal in Schedule I drugs — legally or illegally. Going into such a partnership simply makes them vulnerable to certain drug laundering laws, which could even lead to suspension under the Fed’s law.

The State and Federal laws are conflicting. The previously introduced bills to support medical marijuana businesses have died. What the industry now hopes for is modification in the current national bill, which puts marijuana in a non-narcotic list.

Is Cryptocurrency an Alternative?
I won’t rerun a show describing the benefits of using a cryptocurrency, as I expect you all to understand what I am trying to say. But to sum up, the cannabis industry could indeed be more open towards adopting cashless and secure methods. And from where I see, there could no better alternative than decentralized cryptocurrency like Bitcoin to act as a payment medium between cannabis users.

Other than Bitcoin, retailers could also opt for altcoins – Dopecoin, Potcoin, etc. – that are specifically designed and launched for cannabis industries. These cryptocurrencies are already being used at online drug stores, but are still lacking access to thousands of physical stores. As technology like NFC expands, we might even see this happening anytime soon– a state-regulated cryptocurrency network to buy/sell cannabis.

Though, let’s not forget BitPay has rejected offering services to marijuana businesses in the past as well. Just reminding!

Images from Flickr.