US cannabis merchants could soon have a major new service to accept payments using bitcoin, which would sidestep the federal ban on cannabis businesses using bank accounts.
Singlepoint Inc. is a publicly traded holding company based in Phoenix, Arizona, that focuses on acquiring undervalued companies in emerging markets, including cannabis. On Tuesday, the company announced that it has closed a $1 million funding deal with an institutional investor.
This funding will help close many acquisition deals which are already in the pipeline, according to CEO Greg Lambrecht, adding that “we have many technical developments that are ready to launch.” According to the announcement, several companies have already been acquired in the cannabis industry and discussions are underway with even more. In addition:
Proceeds from the investment will be used to execute on the company’s previously announced bitcoin payments solution, as part of its partnership with First Bitcoin Capital.
The management believes that the capital raised will enable the company to “move very quickly to develop a cryptocurrency solution and continue acquisitions in the cannabis space.”
Growth in the Cannabis Payments Industry
The cannabis industry has been growing rapidly as the legal market expands in the U.S. and Canada. In 2016, North American marijuana sales grew by 30% to $6.7 billion, according to Arcview Market Research.
However, cannabis business owners in states that have fully legalized marijuana still have difficulties accepting payments due to federal law prohibiting banks and credit unions from taking marijuana money. “In Colorado, everyone involved with the state’s legal cannabis industry has a banking problem. Businesses can’t get loans, customers have to pay in cash, and state tax collectors are processing bags of bills,” wrote The Pew Charitable Trusts last year.
A number of these businesses subsequently turn to accepting bitcoin payments instead. In March, Bitcoin.com reported on fintech startup Posabit, which has been helping dispensaries in Seattle accept the digital currency. This followed the State of Washington giving marijuana dispensaries approval to accept bitcoin for cannabis sales. Payment platform Indospace has also been helping cannabis merchants accept bitcoin.
Singlepoint’s Solutions for the Cannabis Industry
Singlepoint provides payment products and services for the cannabis industry through its subsidiary, Singleseed.
In January 2014, Singlepoint began working on a bitcoin payment solution. Since then, demand for bitcoin as well as its acceptance as a method of payment has grown significantly. The company noted:
Bitcoin payments are catching on and cannabis dispensaries need a solution fast.
Singlepoint partnered with blockchain technology provider First Bitcoin Capital earlier this month to solve the payment problems in the cannabis industry using Bitcoin and blockchain technology. The pair will jointly “develop a proprietary solution specifically for high-risk payment verticals including the cannabis industry,” the company announced at the time, noting that this “will help solve the banking issue in the cannabis industry and other high-risk markets.”
The two companies have planned four developments based on bitcoin, ethereum and blockchain technology. In addition, Singlepoint is also working on a potential Initial Coin Offering (ICO) that “would support transactions on the blockchain specifically for cannabis and other high-risk industries.”
In Tuesday’s announcement, Singlepoint explained that it has been working on finding solutions for the cannabis industry for many years:
With this new partnership and development, Singlepoint no longer needs to wait on federal banking guidelines to advance its plans to specifically address the payments challenges in the cannabis industry and other high-risk markets.
The company is also planning to release a full-scale web development and online marketing solution for dispensaries. Some of the funding raised will be used for an online marketing system to drive customers to Singleseed, Tuesday’s announcement revealed.
What do you think about Singlepoint’s efforts to help cannabis merchants? Let us know in the comments section below.
Images courtesy of Shutterstock, First Bitcoin Capital, Singlepoint, and Singleseed