ATM fees at dispensaries are a buzzkill. A vast majority of cannabis retailers won’t take debit or credit cards because marijuana is still illegal on the federal level, leaving customers with no choice but to pay in cash.
Since many of us don’t carry cash anymore, we often resort to withdrawing money from the in-store ATM, which charges up to $5 for a transaction. So let’s say you’re spending $20 on some flower or a few prerolls, the total cost just rose to $25. And you’re already paying 16% in state excise and sales taxes, and Gov. Gretchen Whitmer wants to raise them to 38%.
At a time when cashless transactions are the norm, there has to be a better way, right?
Two innovative college buddies from metro Detroit are confident they have a better solution. Jonah, 22, and Benjamin, 20, founded Coinnect LLC, a start-up that wants to help dispensaries bypass the need for cash by using cryptocurrency. They asked that we withhold their last names because of highly publicized attacks, including kidnappings, on crypto innovators.
The idea behind Coinnect is to allow dispensaries to accept cryptocurrency payments seamlessly, while keeping the process simple for businesses and customers unfamiliar with the technical side of blockchain.
“Our system makes it easy for businesses to accept crypto without even understanding crypto,” Jonah tells me. “We thought of everything and made it as user friendly as possible. We think this is going to be very common in dispensaries because of the regulations they face in the industry.”
Using Coinnect is as easy as scanning a QR code. When a customer checks out, the dispensary enters the total into Coinnect’s system, which generates an invoice for the retailer and the customer. If the customer already has a digital crypto wallet, they just scan a QR code, send the payment, and the transaction is approved within seconds at a tiny fraction of the cost of an ATM fee.
For those without a crypto wallet, Coinnect allows the customer to scan the QR code to purchase digital tokens using a credit card and then enter their payment details on a secure webpage to complete the transaction. The system saves the customers’ information, so future purchases are even faster.
Coinnect also enables direct bank transfers secured by Plaid, a financial technology company that connects bank accounts to apps and services.
“It’s very seamless, and it’s meant to be as easy as possible,” Jonah says of Coinnect. “We handle all of the logistics.”
The system runs on Polygon, a fast and low-cost blockchain network, and integrates with Uniswap to instantly convert customer payments into USDC, a stablecoin pegged to the U.S. dollar. That means dispensaries can receive digital dollars instead of volatile cryptocurrencies like Bitcoin.
“If you have a crypto wallet, our system runs on Polygon. It’s super fast,” Jonah explains. “The transaction is confirmed immediately.”
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