Brave New Coin will lend its data to a pilot program for cannabis payments in Nevada.
Based on the Solana blockchain, the program hopes to digitize transactions in the cash-dominated industry.
In the future, the pilot will also allow customers to turn their cash into tokenized “credits” at retailers.
Crypto data infrastructure company Brave New Coin’s (BNC) technology will be used in a pilot program for blockchain-based cannabis payments in Nevada, according to a press release shared with Decrypt.
This data will be used to create a “tokenized, closed-loop financial ecosystem” based on the Solana blockchain, and fulfill the requirements of Assembly Bill 466—a pilot program to enable cannabis companies to make payments.
“Most business operators take traditional banking for granted, but the cannabis industry is cut off from most financial services in the US,” said Fran Strajnar, founder and CEO of Brave New Coin, adding, “Operators have had to be particularly innovative when it comes to managing their cash.”
He explained that BNC’s data and pricing technology will be used to help legal cannabis operators better handle payments and accounting.
Solana is a high-throughput and censorship-resistant blockchain that was designed with speed, security, and scalability as its main priorities. Its native token, SOL, has more than tripled in price since the start of 2021, surging from around $1.5 to $5.16 today, according to crypto metrics platform CoinGecko.
As it stands today, while cannabis is already legalized in several states for medicinal and recreational purposes, it is still a Schedule 1 federally controlled substance. Thus, entities regulated at a federal level—such as payment processors and banks—are reluctant to deal with cannabis-adjacent firms.
This makes physical cash the only option for many dispensaries and other cannabis-related businesses. This poses serious security risks since such firms can’t deposit their cash in banks and have to hold and transfer it on their own.
Initially, the pilot would allow cannabis operators to convert cash into a “fully collateralized stable token” and exchange it with other participants of the ecosystem. In the future, the service will also add support for consumer-to-business payments and alternative cryptocurrencies.
This would allow operators to connect with banking services while consumers will be able to turn their cash into tokenized “credits” at retailers.
As Decrypt reported, crypto derivatives exchange FTX listed tokenized stocks of five cannabis-focused companies in mid-December. And they’ve grown pretty high since then.