In the name of transparency, the author of this article has holdings in $GUSD, $ETH, $MATIC and $ATOM cryptocurrencies.
A new partnership between cryptocurrency and cannabis has been budding.
Cannabis is no stranger to cryptocurrency, and while legislation that could enable digital banking services for cannabis companies is held up in the Senate, cryptocurrency is the easiest solution around current cash-only laws.
In response, many businesses, such as local dispensary Flower Power Botanicals, have begun to take crypto payments.
Cory Mitchell of Flower Power Botanicals has also expressed interest in offering nonfungible tokens alongside cannabis products.
“I think it’d be an interesting way to involve the upcoming digital wave,” Mitchell said.
Nothing is established yet, but the dispensary is looking into various crypto offerings — from NFT cannabis strains to digital artworks.
“With the strains that we currently sell to our customers, I think it’d be exciting to also allow them to own them digitally,” Mitchell said. Strains would be more like a collector’s item than genetic sequences; NFT strains would highlight the visual aspects of the flowers, making them collectible.
Some cannabis companies have already made the connection between NFTs and their products. California dispensary chain Backpack Boyz recently began offering a new product with Bored Ape Yacht Club branding called Crypto Gelato.
“I’m just starting to talk with some freelance NFT artists that have worked in these projects before,” Mitchell said. “I think it’d be kind of cool to offer additional discounts for people that use or that would buy or hold these digital assets.”
Mitchell emphasized that no plans have been finalized.
“I think that you’re going to see a lot of people coming into this market, whether it’s institutional or retail buyers.” -Cory Mitchell, chief operations officer of Flower Power Botanicals
NFT collections such as Best Buds and Crypto Cannabis Club are currently at the forefront of these sorts of partnerships. These tokens function much like membership passes. Owners of assets get perks like exclusive Discord servers, dedicated spaces in metaverses such as Decentraland — where members are able to participate in virtual weed growing competitions — and even discounts on products at real dispensaries.
“I’ve kind of bounced around talking with one of their people,” Mitchell said, referring to Crypto Cannabis Club and Best Buds. “It would be cool to highlight projects outside of our own as well.”
NFTs are digital assets similar to cryptocurrencies like bitcoin, but they prove ownership of a digital good. NFTs are created — or “minted” — on smart-contract blockchains such as ethereum or solana. They are not used like currencies but are on the same network as many currencies.
Think of NFTs like trading cards. There are hundreds to thousands of trading cards in a collection, such as Pokémon or baseball cards, each with a varying degree of value based on their rareness. NFT collections often function similarly, where certain characters in a collection are valued higher for their rarity.
NFTs are also full of controversy. There are plenty of ownership, legal, ethical and other ramifications to NFTs. The largest marketplace for these assets, OpenSea, was just hit with a $1.7 million phishing attack. Ethereum, the blockchain where many NFTs are minted, uses a massive amount of electricity worldwide — comparable to the entire Netherlands.
“I do think that there’s a lot of issues with how some of these (cryptocurrency) projects are laid out,” Mitchell said. “There are more sustainable ways to move this forward.”
NFTs also have many potential benefits. Artists are able to get a percentage of every sale through the use of smart contracts, enabling them to get a small commission for every trade of their work. Ownership of a particular asset can be proven on programs like Etherscan or Solscan, verifying ownership quickly. The tokens sold often do not involve the image sold in the contract, but a link to the image purchased. Artists can sell copyright with the images, but not always.
“I think that you’re going to see a lot of people coming into this market, whether it’s institutional or retail buyers,” Mitchell said. “I’m just excited to see kind of how it unfolds.”
Reach Grayson Acri at firstname.lastname@example.org or on Twitter @Guy1376.