Welcome The right drugA weekly series that explores the cannabis industry in Michigan.
Automatic designs for dispensaries are a buzzkill.
A large majority of cannabis retailers will not have debit or credit cards because marijuana is always illegal at the federal level, leaving customers other choices than paying in cash. Given that many of us do not transport money, we often have recourse to the withdrawal of the automatic window in store, which charges up to $ 5 for a transaction. So let’s say that you spend $ 20 for a flower or a few prerolls, the total cost has reached $ 25. And you already pay 16% of the excisees and state sales taxes, and Governor Gretchen Whitmer wants to increase them to 38%.
At a time when transactions without species are the norm, there must be a better way, right?
Two innovative university friends from Metro Detroit are convinced that they have a better solution. Jonah, 22, and Benjamin, 20, founded Coinnect LLCA start-up that wants to help dispensaries get around the need for money using cryptocurrency. They asked that we refuse their surnames because of Highly publicized attacks, including kidnappings, on cryptographic innovators.
The idea behind Coinnect is to allow the dispensaries to accept cryptocurrency payments transparently, while keeping the simple process for companies and customers who do not know the technical side of the blockchain.
“Our system allows companies to easily accept crypto without even understanding the crypto,” said Jonah. “We thought of everything and did things as friendly as possible. We believe that this will be very common in dispensaries due to the regulations they face in the industry. »»
The use of Coinnect is as simple as the scanning of a QR code. When a customer checks, the dispensary enters the total of the Coinnect system, which generates an invoice for the retailer and the customer. If the customer already has a digital cryptographic portfolio, he simply scans a QR code, sends payment and the transaction is approved in a few seconds to a tiny fraction of the cost of atm window costs.
For those who do not have a cryptographic portfolio, Coinnect allows the customer to scan the QR code to buy digital tokens using a credit card, then enter their payment details on a secure web page to finish the transaction. The system records customer information, so future purchases is even faster.
Coinnect also allows direct bank transfers guaranteed by PLAID, a financial technology company that connects bank accounts to applications and services.
“It’s very transparent, and it’s supposed to be as easy as possible,” said Jonah about Coinnect. “We treat all logistics.”
The system operates on Polygon, a fast and low cost blockchain network, and integrates with Uniswap to instantly convert customers’ payments to USDC, a stablecoin set to the US dollar. This means that dispensaries can receive digital dollars instead of volatile cryptocurrencies such as bitcoin.
“If you have a cryptographic portfolio, our system works on polygon. It’s super fast, ”says Jonah. “The transaction is confirmed immediately.”
Coinnect also works on a mobile application that will allow customers to type with Crypto, similar to Apple Pay, but with lower transaction costs.
The system is also designed to protect users. Unlike certain payment processors, Coinnect does not hold or does not access cryptography keys. Instead, transactions go directly between you and the dispensary, keeping your funds safe and under your control, says Jonah.
Jonah believes that this could be the future of dispensary transactions, especially since the younger generations depend more on digital portfolios.
“We are not trying to earn money in the short term,” says Jonah. “We are trying to develop this business and give customers the best possible experience. We think it can help many dispensaries. It could be really big.
The platform is currently in its beta phase, and Jonah says that several dispensaries are interested in testing it.
Since recreational cannabis sales started in Michigan in December 2019, most dispensaries have relied on cash transactions because federal law still classifies marijuana as an illegal drug. This means that large banks and credit card companies will not treat payments for dispensaries, because they are afraid of penalties for the management of money linked to what is technically an illegal industry under the federal banking regulations .
Without access to traditional financial services, dispensaries are found with few options. For the most part, Cash remains the only viable way to do business, leaving customers the inconvenience of automatic distributors of store tickets and their steep costs.
And it’s not a little problem. The Michigan cannabis industry generated more than $ 3 billion in sales last year, and the vast majority of these transactions were made in cash. It is a massive amount of dough.
The management of large piles of cash creates risks for companies, from theft to accounting challenges, and it is also pain in the ass for those of us who are stolen at the automatic counter because we do not wear any Money as if it was the 20th century.
You can follow Coinnect on Instagram.
If you want us to taste your cannabis products, send us an email to (Protected by e-mail).
