Cannabis and cryptocurrencies are two of the hottest topics in the investing world, and a Seattle-based company called düber is looking to bridge the gap between them. The company is planning a new cryptocurrency called dübercoin (DBR) that will be used to reward cannabis consumers, solve payment problems and alleviate some of the safety hazards that come with a business that deals mostly in cash.
I talked with düber CEO Glenn Ballman about dübercoin and the challenging regulatory environments in both the cannabis and cryptocurrency spaces in Part 1 of this exclusive two part interview.
Karl Kaufman: What was the inspiration for dübercoin?
Glenn Ballman: Cannabis companies have a very difficult time getting bank accounts.
Getting a bank account from a federally chartered bank is impossible because federally, cannabis is still illegal. Getting a bank account at a local credit union is doable but the cost of managing this for the credit unions has gotten quite high, so many of them have discontinued their programs as well.
That’s the backdrop for discussions we started having last year with regulators in California and Oregon around a potential solution — using cryptocurrency to reduce the amount of capital flowing through the system in cash. If you can’t do banking, the only way to really do business is cash. You can’t use credit cards or debit cards because those transactions need to clear into a business banking account. If you don’t have a business bank account, Visa and MasterCard can’t help you.
So everyone operates with cash. When you look at the volumes of cash moving through these dispensaries, they deal with $50-$75,000 per day on pure cash transactions. This makes it difficult to create a safe environment for your employees. It makes it difficult to make payments to the government for taxes.
So you end up doing a lot of things — we see store owners using duffel bags, burying seed containers to store the cash and then using vehicles to move the cash around. Of course, that’s not safe — it’s very easy for someone to steal a very large amount of cash.
Cryptocurrency can reduce the amount of cash moving through the system. You’re never going to eliminate cash completely from any economy. Roughly 30% of all transactions done at retail are still cash.
The goal is not to eliminate cash, because that’s an unlikely outcome, but you can reduce the cash moving through the system and you can enable participants in the industry to pay their taxes using an alternate method. You can increase the safety and increase the velocity and predictability of payments for tax revenue to the state. That’s where it started.