Berkeley City Councilmember Ben Bartlett became the first elected official to purchase cannabis with cryptocurrency at a demonstration facilitated by the Blockchain Advocacy Coalition on Tuesday.
The purchase was made at Emeryville dispensary Ohana Cannabis Co. during a live presentation of cryptocurrency financial technology produced by Cred, a cryptocurrency financial platform. The event brought awareness to AB 953, a bill sponsored by the Blockchain Advocacy Coalition. If passed, the bill would enable the state to accept cannabis tax remittance via stablecoins, price-stable cryptocurrencies created by the Universal Protocol Alliance.
"By providing a cash-free method of cannabis tax collections, AB 953 can reduce costs and safety risks for cities and businesses," Bartlett said in a press release. "The Green Rush is a 21st-century industry; it deserves 21st-century legislation. Tax collections leveraging stablecoin technology will help bring this new industry into the light."
Liam DiGregorio, the executive vice president of external partnerships and business development of Blockchain at Berkeley, said industries cannot open banks because cannabis is federally illegal. The businesses either store large amounts of cash or make transactions through credit unions instead.
According to the press release, the transaction through Cred took seconds and resulted in significantly lower transaction fees for the dispensary.
Ohana Cannabis Co. accepted Bitcoin Cash using Cred's LBA token— the company's digital asset value — as a translation utility, the press release states. Sales and city tax proceeds were settled in the Universal Dollar, a stablecoin with a 1:1 ratio to the U.S. dollar.
"We are thrilled to build technology that solves real problems for customers, merchants, and politicians which will help usher in the next 100 million users of crypto," said Dan Schatt, the co-founder of Cred and the Universal Protocol Alliance, in a press release. "Not only does crypto result in significant cost reduction for consumers and merchants, but it also enables highly productive tax collection, transparency, and predictability for city and state governments."
Seventy percent of the state's cannabis industry is not banked and the business is mostly cash-based, according to the press release. Operating in this manner is a risk that increases costs and the time needed for local governments to accept tax payments in the form of large cash deposits.
The transition to cryptocurrency has not been embraced by the general public, however. DiGregorio said different federal regulators define cryptocurrency as assets, property, security or commodities. One of the biggest barriers to cryptocurrency becoming mainstream is the lack of clear and uniform regulation, he added.