Arizona State has approved a blockchain-based, cannabis industry-oriented payment solution into its fintech sandbox.
As per the latest press release from the office of the Attorney General, Crypto startup Alta is opted as a cash management solution for licensed medical marijuana providers and vendors. Arizona based financial services provider wants to offer a stablecoin, which is pegged 1:1 with the United States Dollar.
At the time of Sandbox’s testing phase, Alta will trial its member’s onboarding and payments platform. The primary purpose of the platform is to allow the members to pay for goods and services using stablecoin rather than fiat money.
In one statement, Jesse Forrest, co-founder, and CEO of Alta highlighted some unique features of the product due to legal considerations:
“We help solve the banking challenges facing medical marijuana companies and their vendors. ALTA uses blockchain and geofencing technology to protect clients’ digital payments and transfers. Other digital payment companies require a bank account. We provide all the financial services medical marijuana companies need without requiring a bank account.”
Banking Issues for the Marijuana Industry
Marijuana is legal in some U.S. states, but it is still considered a controlled and illegal substance by the federal government. As of now, banks are not sure to deal with cannabis-related business as it would be in the grounds for the government to cancel their federal deposit insurance, which is a vital financial safety net for banks.
Co-Founder and COO of Alta, Sarah Wessel, stated that this blockchain-based service could offer vital financial assistance and make local communities safer:
“The cash economy for legal cannabis in Arizona exceeds $350 million annually. These are legitimate companies, innovators, and entrepreneurs that are forced to operate in cash. We offer them peace of mind. Our digital payment technology lifts the burdens of having to operate solely through cash and makes our communities safer.”
Various other businesses and state governments have tried to reduce the gap between the cannabis and financial services industries. In 2017, Dash network started paying the firm Alt Thirty Six to incorporate Dash as a payment option in the Cannabis industries’ point-of-sale systems.
As of legal side, lawmakers in the state of California proposed a bill in February which would accept crypto for tax payments from cannabis-related businesses. The bill is not yet approved by the committee since March, which was supposed to relieve tax offices from the large pile of money brought by the cannabis industry.
Arizona Fintech Sandbox
Arizona became the first state to launch a regulatory sandbox in March 2018. State Representative Jeff Weninger welcomed Alta to the program.
He said:
“There’s huge potential for stablecoin technology in cash-intensive businesses around the world, and Arizona is fortunate to play a critical role in the development and growth of this emerging industry.”