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Cannabis and Crypto: Equal Beneficiaries In The Fight To Hit The Mainstream

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Cannabis and Crypto: Equal Beneficiaries In The Fight To Hit The Mainstream

Cryptocurrency caught mainstream attention when the industry’s total market cap hit $600 billion at the end of last year. The highly anticipated cannabis industry in the U.S. is similarly being pushed into the spotlight by a “green rush” of investors flooding Wall Street who expect the industry to be worth $75 billion by 2030.

Aside from attracting high volumes of bold new investors, the cannabis and cryptocurrency industries in the U.S. also share some major issues: both are high-risk, legally uncertain, and have government regulators breathing down their neck. The potential uses of cryptocurrency and blockchain align with the demands of the developing cannabis market, and through a coordinated effort the unexpected pair can propel themselves to legitimacy in the dynamic modern economy.

Legal status of marijuana in the US

Cannabis coins

Cannabis businesses in the U.S. operate on a cash-only basis because banks, which all operate under federal regulation, are prohibited to service an industry that is still deemed illegal under federal law. Cannabis dispensaries can hold up to $100,000 in cash at any given time, and if a businesses finances are not carefully reported to state regulators, their cash is extremely vulnerable to seizure by police using broad asset-forfeiture laws.

On the flipside, state treasuries don’t collect their fair share of taxes on marijuana sales. The inconvenient and unsecure tax collection processes, whereby dispensary owners may have to cross the state with armed guards to deliver hundred of thousands of dollars in cash to state IRS offices, leads many businesses to cut corners while reporting sales.

PotCoin, one of the most popular cannabis cryptocurrencies, was first created in 2014 to address the financial limits placed on cannabis dispensaries. PotCoin targeted the Colorado recreational marijuana market and installed a PotCoin ATM at a dispensary in the state, but failed to be integrated into dispensaries early on in its tenure. In a turn of events, the currency’s value shot up 76% in just one day after notorious NBA star Dennis Rodman wore a PotCoin.com t-shirt while traveling to North Korea under intense media spotlight. It’s current market cap hovers around $10 million by the press time.

Although Potcoin struggles to establish itself as a mainstay in the industry, it announced a promotional agreement with WeedMD last December in what appears to be the first ever partnership between a cryptocurrency and a federally licensed producer and distributor of medical cannabis. Community members eligible to shop on WeedMD will be rewarded for using PotCoin. The announcement was made in anticipation of the legalization of recreational pot in Canada this summer.

As part of a global initiative for mass adoption, Potcoin worked with development teams at PotWallet and General Bytes Potcoin to offer their currency in over 800 crypto ATMs around the world  to make funds more readily available for customers and to ease the transaction process for cannabis vendors.

Similar to PotCoin, CannabisCoin is described as a marijuana based cryptocurrency for medical marijuana point-of-sale. The developers created a ‘CAANdy system’ whereby 1 gram of marijuana costs 1 CANN. The creators of CannabisCoin sought to create a simplified and accountable system for dispensaries to record medical sales in order to comply with strict regulations in the U.S. that ensure medical marijuana doesn’t end up in the wrong hands.

HempCoin is also among one of the first 30 cryptocurrencies created in 2014, but focuses on the exchange between marijuana farmers and dispensaries. The coin first addressed the need of financial infrastructure for cannabis farmers but has broadened its mission to service the agricultural industry more generally.

In August, HempCoin announced a partnership with Evolution Host, a VPS hosting provider, which will accept HempCoin as payment in an effort to promote widespread adoption of its use. Likewise, HempCoin is accepted on Stembis.com, a major Canadian online cannabis marketplace.

Marijuana alt-coins have seen some success, however, most are struggling to find mainstream acceptance and have failed to provide a big return to investors. The most popular coins like PotCoin and HempCoin both stand at market caps below the  $10 million mark, numbers that can hardly be called impressive.

An unfinished ICO

Another major issue facing pot businesses are the high costs of opening a cannabis dispensary, which are much higher than those of a typical small business. The sum total of licensing and permit fees, finding pot-friendly retail space, investing in a POS and security systems, and having enough capital to demonstrate business viability can cost between $250,000 and $750,000.

Small businesses in the cannabis sector can take advantage of a provision in the Jumpstart Our Business Startups (JOBS) Act that expands entrepreneurs’ access to capital by allowing them to engage in crowdfunding initiatives like ICOs. Title IV, or Regulation A+, allows private businesses to raise up to $50 million from public investors, which is particularly beneficial for small dispensaries aiming to tap into a larger pool of online investors.

High Times Holding Corp. first announced it would accept Bitcoin and Ethereum in its IPO in August, making it the first ever traditional stock offering to accept cryptocurrency investments by taking advantage of Regulation A+. However, the company apparently backtracked on its promise to accept BTC and ETH in its IPO  just two weeks later when it filed regulatory paperwork with the Securities and Exchange Commission (SEC) excluding the cryptocurrencies.

Despite the confusion, Bitcoin remains as a payment option on the company’s investment portal. A representative from High Times clarified that a third-party will convert Bitcoin to fiat currency for the company to avoid holding any investments as cryptocurrency and any controversy with the SEC. The CEO of the marijuana media organization, Adam Levin, said while he “didn’t believe that the ICO process was the right move for [the] brand, it would’ve been foolish to leave this emerging investor base out.”

Blockchain as a legitimacy tool

Advertising cannabis businesses and products is prohibited in many instances due to stringent federal regulations. Major platforms like Google and Facebook are unlikely to change their policies against advertising legal and recreational drug use until marijuana is cleared at the federal level, which isn’t expected under the anti-pot Trump administration.

Despite 29 states having already legalized medical marijuana, there are few educational resources or services that provide information about the benefits and potential side effects of particular marijuana strains. The history of production or origin of strains for sale is even less clear to consumers.

A Canadian, Blockchain-based ‘social marijuana network,’, CannaSOS, is addressing many of the shortcomings of the newly legalized cannabis industry in the country. CannaSOS integrates blockchain tech into its platform to connect buyers, sellers, and advertisers in a transparent and accountable network. CannaSOS provides a centralized online meeting place for cannabis enthusiasts to engage with other users, find and share cannabis related information, search and review particular strains, and locate 420-friendly businesses. The site rewards user participation with Perk$coins that can be converted to fiat currency or exchanged for goods and services offered by businesses within the CannaSOS network.

The Cannabis Hemp Exchange, or CHEX, is a similar service that provides a platform to cannabis cultivators, manufacturers, intermediaries, and product brands to use for marketing, order management, and distribution. CHEX is described as a service for wholesale exchange of cannabis commodity in B2B transactions, or for business to business customers.

The Blockchain firm Paragon is addressing the demand for more transparency and standardization in cannabis supply chains through creating a crypto-token built on smart contracts to systematize the traditionally fragmented cannabis industry. The company’s digital token, ParagonCoin, allows users to directly participate on the Paragon platform and, like others of its kind, offers a banking alternative to cannabis businesses. Paragon’s ICO that took place last year raised $70 million but was hit with claims that ParagonCoin was overvalued.

In tandem, Paragon’s open source Blockchain, Parachain, ensures immutability and easy access to data concerning final cannabis products. Paragon’s ‘seed-to-sale’ solution means businesses won’t have to question the source of the final product sold to customers. Each stage in the supply chain is recorded by responsible parties, like growers, manufacturers, logistics, and scientists testing the product in labs, and launched as a smart contract.

Additionally, Paragon’s business model accounts for the need for physical workspaces for cannabis businesses and entrepreneurs and offers co-workspace locations that members can pay for exclusively with cryptocurrency–one of the first all crypto real estate offerings. Paragon’s CEO Jessica VerSteeg says the workspace is near full capacity with 80 tenants, and that Paragon has partnered with various cannabis aficionados like Dank City, Aurora Elixirs, Green Helix and the podcast Casually Baked.

Cannabis and Cryptocurrency: A match made in heaven

Logistics and supply chain management are the strongest cases for Blockchain adoption. The efforts to add transparency and accountability to the supply chain management of cannabis businesses yields positive effects to the social stigma surrounding marijuana use. Medical marijuana dispensaries are successfully rebranding the drug by providing detailed information about the medicinal properties of particular strains, but communities moving to legalize pot still see pushback over concern that the legal cannabis will inevitably fall in the wrong hands.

Blockchain solutions like Paragon’s ‘seed-to-sale,’ or CannaSOS’s ‘social marijuana network,’ or dispensaries using cryptocurrencies as a secure and accountable mechanism for sale are the key to ensuring accountability in the pot industry and to facilitating a positive ecosystem for buyers and sellers.

The growing cannabis industry in the U.S. has proved its profitability (national marijuana sales in the U.S. are estimated to hit $11 billion this year), but in terms of commoditization, pot still faces many hurdles.

Article originally found at https://cointelegraph.com/news/cannabis-and-crypto-equal-beneficiaries-in-the-fight-to-hit-the-mainstream

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Marijuana and CBD companies can’t advertise on Facebook and Google, so they’re getting creative – CNBC

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David Bozin used to get cuts and scratches on his arms when it came time to bathe his golden retriever, Jax, who rebelled against the prospect of being dunked in water.

Then he learned that dogs, like humans, respond to the properties of cannabidiol, also known as CBD, a cannabis compound that helps the body relax without producing intoxicating effects. Bozin got to work on a line of CBD-infused dog products, including a dry shampoo and puppy treats, that he calls ZenPup.

But in trying to find customers for his new company, Bozin faces a unique challenge in today’s market. He doesn’t have access to Google, Facebook or Instagram (owned by Facebook), which have banned CBD and marijuana promotions. The two dominant online advertising platforms account for 57 percent of the U.S. digital ad market, according to eMarketer, and almost all emerging brands today count on Google’s search ads and Facebook’s precision targeting to efficiently get the word out.

“Facebook is not the end all, be all. Instagram is not the end all, be all,” Bozin told CNBC. “Does that mean you’re not going to see as much traffic at the get go? Sure. But at the end of the day the most important point is conversion,” or getting people to buy your products, he said.

Marijuana is legal for recreational use in 10 states and Washington, D.C., and available for medical purposes in many others parts of the country. CBD is a bit more complicated because the laws are murky.

Currently, 47 states allow some form of CBD sales. The 2018 Farm Bill, which Congress passed this week, allows states to decide if CBD products made from hemp can be sold in their jurisdiction. However, it doesn’t protect the products from the Food and Drug Administration, which can penalize companies for making inaccurate health claims.

“We avoid talking about anything too specific about what the product will do,” said Cary Smith, senior vice president at agency North 6th Agency. “If you come from an educational standpoint, you skew towards less restrictions, and have a bit of a larger organic reach.”

With so much uncertainty in the market, Google and Facebook have shied away from allowing marijuana and CBD advertising, taking a similar approach to how they handle tobacco and related paraphernalia. When it comes to alcohol, Google prohibits companies from targeting underage users or promoting unsafe behavior, while alcohol advertising on Facebook has to adhere to local laws.

In the absence of Google and Facebook, ZenPup has been forced to find alternative ways to launch its products. The co-founders, who worked in marketing and public relations, are spending time building relationships with media companies, high-end dispensaries and pet accessory retailers, along with other brands that might be open to partnering with a CBD provider. They’re finding popular social media influencers, who can support the products organically on their accounts.

ZenPup has also focused on clean, attractive packaging so that it’s appealing for “shelfies,” or staged product photos that people post on their feeds.

“Those younger consumers are looking for something different from an aesthetic standpoint, that also is top quality and at a good price point,” said Nicholas Weatherhead, ZenPup’s chief marketing officer and co-founder.

Other approaches are available to CBD companies, depending on the specific industry. Hillary Wirth, media director at the agency Noble People, said there are plenty of ways to get your brand in the right place.

To promote Viceland’s digital show “Weed Week,” in April Noble People bought local and national TV ads with DirecTV and Comcast, as well as on channels like IFC , USA and BBC America, and focused on pornography site Pornhub. There are also digital ad networks like like Traffic Roots that allow marijuana and CBD ads.

“So you can’t advertise on Facebook or Google – it’s not the end of the world,” said Wirth. “There are plenty of other media channels that will get you contextually next to relevant weed content.”

Noble People got creative in other ways. The firm organized a Washington, D.C., Viceland event to allow people to “Smoke Weed with Jeff Sessions.” But it wasn’t the former attorney general — just a man from Wisconsin with the same name.

Another approach is storytelling and finding a narrative that can generate PR.

For example, branding agency Abel told the story of Charlotte’s Web, a dietary supplement company named after Charlotte Figi, a young girl who suffered from epileptic seizures. With the help of CBD, Figi was able to to reduce her seizures and improve her health.

With “brands like Charlotte’s Web, the founders, who are very positive about the cannabis opportunities, have been able able to use PR as a marketing channel,” Abel CEO Julian Shiff said. “The word of mouth is so strong they are developing a tribe around their brand.”

Sponsoring sporting events and concerts are effective ways to find brand resonance. Smaller gatherings can work as well. Recess, which makes a CBD-infused seltzer, holds information events at places like hip-hop yoga chain Y7 Studio and samplings at Rise by WeWork. The company is based around a beverage, but it’s really trying to sell a lifestyle, said CEO and founder Ben Witte, who used to run mobile strategy for ad tech company AdRoll.

Witte said Recess has reached 50 times its projected sales this year, amounting to hundreds of thousands of dollars. The product is mostly sold online, but is also available in New York City stores.

“The most important thing is to have a clear mission and purpose,” Witte said. “The best way to communicate that mission and purpose is not through a Google or Facebook ad.”

Original Article at https://www.cnbc.com/2018/12/14/facebook-google-dont-allow-cbd-ads-so-zenpup-has-to-get-creative.html

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How Cannabis Could Become The Next Real Estate Disrupter – Forbes

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Outdoor restaurant renderingDesign by M-Rad Inc.

For a while it looked like the best thing to bring to a neighborhood was a new Whole Foods grocery store. One study showed that homes in these neighborhoods would appreciate at a much faster rate than if they were near a Trader Joe’s (and both were better than a Starbucks). Another sign a neighborhood is on the cusp of revitalization is when the yoga studios start vying for space with the arthouses. Usually it is not long after that the expensive coffee shops and cupcake stores start showing up at street level. But now that so many states have passed laws favorable to the marijuana movement, the next big thing to bring a neighborhood back from the brink just might be the increasing number of organizations that work in the industry.

Downtown Los Angeles could be the first case study to see this phenomenon in action. Next month, a seven-story building in the heart of Los Angeles’ Jewelry District will open up, filled with tenants who all have cannabis somewhere in their job description. The 67,000-square-foot Green Street Building (the name is in reference to its anchor tenant, the Green St. Agency, which works solely with clients in the marijuana industry) will house everything from co-working spaces to an art gallery, dispensary, restaurant, law firm, luxury spa and lounge. Real estate investment company Bow West Capital purchased the property last year for a reported $14 million. Once open it will be the largest real estate space dedicated to cannabis in the U.S.

“The buildings in [the Jewelry District] have not received the proper upkeep, allowing for low sale prices of the buildings but also requiring full renovations,” said Matthew Rosenberg, CEO and Founder of M-Rad, Inc, the design team behind the project. “With the prosperity and funding in the cannabis industry on the rise, this is a perfect combination for this exciting new industry to make this area their home, with Green St. being the catalyst.”

While there are not many residential properties for sale within the Jewelry District itself, data from Realtor.com shows the few that are on the market have a median asking price of $525,000. Surrounding neighborhoods vary quite a bit with the neighborhood of Florence-Graham about five miles away to the southwest seeing median list prices of $440,000 compared to Greater Wilshire a few miles to the northeast seeing median list prices of $1.7 million.

Lounge renderingDesign by M-Rad Inc.

M-Rad took the 1913 building and completely renovated the interiors to create mixed-use spaces that cater both to the requirements of offices and restaurants as well as the unique needs of cannabis companies. They needed to create the right proportion of an open-plan design matched with a set of cloistered, secluded rooms for those who want privacy. Here are some images of the interior provided exclusively to Forbes.

For example one concept for behind the hidden door of the library bookshelf could be the Bud Bar, with a custom-designed table. (Interested? A Forbes contributor put together a Gift Guide which includes some of the most unique marijuana rolling papers, with some that are made from gold and others that look like money.)

Concept of tableDesign by M-Rad Inc.

The lounge, MOTA—which if, like me, you didn’t know is a Spanish slang term for marijuana (at least one dispensary out there has ascribed the words Medicine Of The Angels to the letters, but the term doesn’t have its origins as an acronym)—will complement the restaurant which may prepare cannabis-infused menu items and have a U-shaped bar designed specifically for potential cannabis tastings. It will also have fully transparent windows into the kitchen so guests can see the food being prepared. Sound-proof rooms are also available for private meetings and the Flower Room can be a designated smoking area. [Update: The design team followed up after this was published to clarify these features are just in concept stage and have not been confirmed or approved. No cannabis products will be sold on site based on current plans.]

MOTA Cafe renderingDesign by M-Rad, Inc.

“The companies who are part of the building are some of the biggest players in the industry,” says Rosenberg. “Which will bring in high-level clientele and investors who may feel encouraged to invest in the development of the area. The building itself will host a number of cannabis-related programs such as cultural activities and gastronomic experiences which will attract new clientele.” Some of the big names affiliated with the project are prolific investor Gary Vaynerchuck, who is a 50% stakeholder in Green Street Agency, and Vicente Sederberg LLC, dubbed The Marijuana Law Firm, is one of the tenants.

Typically neighborhood revitalization follows the pattern of stores opening up on a neglected city block one retail space at a time. But this model is different. By bringing a critical mass of companies to the neighborhood all at once, the sudden influx could accelerate the resurgence all the more quickly. Los Angeles’ Jewelry District could become a major player in a matter of months, not years.

Follow me on Twitter @amydobsonRE

Article originally found at https://www.forbes.com/sites/amydobson/2018/11/27/cannabis-as-real-estate-disrupter-how-the-largest-marijuana-retail-space-plans-to-revamp-a-district/

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[Winner] November 1, 2018 Giveaway (Episode 2)

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Brady Shepherd wins our 2nd Rate.Review.Win! Giveaway!

hosted by Automatic Weapons

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