California Officials Make First Legal Cannabis Purchase with New Cryptocurrency
Recently, two elected municipal officials from California became the first politicians in the state—and the country—to officially use cryptocurrency to purchase legal cannabis products. Ben Bartlett and Diana Martinez, members of the city councils of Berkeley and Emeryville respectively, formally bought several ounces of cannabis at Ohana Cannabis, a shop located within Emeryville. The purchase was made to demonstrate to state residents the new official cryptocurrency designed specifically for the legal cannabis industry, as well as to showcase the simplicity, efficiency, and security of this payment method.
Introducing the Stablecoin for Cannabis Transactions
The new currency, called a “stablecoin,” is a digital currency pegged 1:1 to the US dollar. It was created specifically for transactions within the legal cannabis industry, which still lacks full access to the national banking system due to the federal legal status of cannabis. The development and promotion of this currency is led by the Blockchain Advocacy Coalition, a public organization that also actively lobbies for legislation to legalize cannabis businesses statewide, regardless of local laws, provided that businesses conduct all transactions in the new virtual currency.
“Essentially, the stablecoin is a fully virtual equivalent of the US dollar, which cannabis businesses can use to transfer large sums and pay taxes and fees electronically,” Bartlett told reporters. “Overall, it’s a convenient and transparent payment technology, worthy of the 21st-century industry.”
Demonstration and Reactions
Although photos from the event show Bartlett holding a pamphlet advertising VetCBD, a CBD extract for pet therapy, it’s unclear what he and Martinez actually purchased at the store. The officials declined to comment on their personal views regarding full legalization and recreational use of cannabis.
Background: Banking Challenges and Legislative Efforts
The plan to use virtual currency to expand the cannabis market in California follows the state legislature’s recent decision to drop a bill that would have allowed local cannabis companies access to regional banks and credit unions. Just a few weeks ago, even the bill’s main sponsor, Democratic Senator Bob Hertzberg, withdrew his support, suggesting he would introduce a revised version at the start of the next legislative session.
Unlike Hertzberg’s proposal, the idea of using a separate blockchain for regional cannabis market transactions has attracted interest from a wide range of politicians in California and other states facing similar federal restrictions on cannabis business banking. There is also a possibility that the issue could be resolved at the federal level soon, as members of Congress have been actively discussing relevant amendments and bills aimed at expanding cannabis reform nationwide.
Potential Impact of the New Cryptocurrency
“It’s hard to say what excites our team most: the fact that our cryptocurrency will soon help solve real economic barriers in the cannabis industry, or that its use will introduce millions of people from all walks of life to cryptocurrency technology,” said Dan Schatt, a programmer from Universal Protocol Alliance, the organization that developed the stablecoin technology. “Besides reducing certain costs associated with the legal cannabis market, this currency can make the entire industry’s payment system more open and transparent for outside observers, allowing government agencies to more effectively combat corruption and tax evasion.”