Multichain Ventures Inc., a pioneer in blockchain, tokenized ecosystems and digital financial infrastructure, utilizing their proprietary patent pending commerce solutions, is pleased to announce that alongside another vendor, has secured a public sector contract with the State of Nevada to fulfill the requirements of Assembly Bill 466. The Bill creates a Pilot Program and legal framework within which legal cannabis entities and supporting businesses can eliminate the necessity of transacting exclusively in cash, through the implementation of blockchain-based financial technology services.
Multichain Ventures was an early participant in roundtable discussions which ultimately culminated in the AB466 proposal, contributing feedback during two events over the course of 2018. Early discussions centered on a variety of potential alternative solutions to issues facing cannabis operators. Co-founders Michael Wagner, CFA and Gabriel Allred, PhD consulted directly with more than twenty five public officials on the fundamentals of tokenized ecosystems, and the inherent advantages of speed, functionality, and transparency of such systems.
Cannabis remains a Schedule I federally controlled substance by the DEA in the United States. As a result, federally regulated entities, such as banks and payment processors, are reluctant to provide services to marijuana businesses, despite some form of legal status across 35 states.
The Cannabis 2021 outlook for federal reform is staging for major strides due to the new U.S. Senate revamp. Recent Democratic victories in Georgia give the Democrats 50 seats along with Vice President-elect Kamala Harris holding the tiebreaking vote.
Recent cannabis public market activity increased, with investors feeling inclined to activate investment vehicles in response to Washington’s projected approval of policies and legislation opening commerce to increase business across the nation.
Without a Republican-anchored Senate, cannabis reform efforts stand a chance in congress. But not without grit, perseverance and time. The U.S. economy and the coronavirus pandemic are at the forefront of our Nation’s priorities. Historically, President-elect Joe Biden’s marijuana agenda includes a moderate approach:
- Legalizing medical marijuana federally
- Rescheduling marijuana
- Supporting states’ rights
Cannabis banking reform would enable more marijuana enterprises to use not only traditional banking sources but to also tap into additional sources of capital for business operations and expansion. However, we see a long road ahead until dispensaries and other industry supply chain operators can transact safely with our Nation’s biggest banks.
“Supply chain and financial managers struggle to implement strategic decisions, arrested by a regulatory environment characterized by commerce restrictions. Despite continuous obstacles the cannabis industry continues to see year over year growth driven by global demand. As we look forward into the cannabis economic mechanics we have the opportunity to build this industry with a best in class financial infrastructure benefiting the consumer experience, operator value chain and government regulatory mandates. ” Pablo Quiroga, Chief Operating Officer, Multichain Ventures, Inc.
The AB466 Pilot Program represents a first-of-its-kind solution to the rapidly growing cannabis sector, which continues to see expansion in state legalization. It is a major step in reinventing how cannabis operators conduct business. AB466 specifically calls for a tokenized, closed-loop financial ecosystem. Operators and supporting businesses will have the opportunity to optionally participate in the pilot. The system is designed such that cash deposits are converted to a fully collateralized stable token, which can then be freely transacted with other participants. Ecosystem parties are able to remove cash from the ecosystem through the redemption of stable tokens, and withdrawals to external facilities.
“The Pilot Program presents a tremendous opportunity for Multichain Ventures to demonstrate the enormous potential of blockchain and decentralized technology to solve problems facing the world today. Cannabis institutions have long faced stigma and have lacked access to financial infrastructure most businesses take for granted.” Michael Wagner, CFA – Co-Founder and CEO, Multichain Ventures, Inc.
The Bill saw considerable support from both legislators and local law enforcement during the legislative process in 2019, during which it passed without opposition at both the committee level and on the floor of both houses. Crime related to cash held at dispensaries and cultivation facilities has been problematic for operators. With large volumes of cash transacted daily, and no banking facility to deposit, they are a considerable target for criminals.
“We are very excited to launch this innovative pilot program to provide the legal cannabis industry a safe and efficient way to engage in financial transactions. It is our hope that this pilot program will not only increase public safety in Nevada, but will also provide government entities with a streamlined process to collect tax revenue.” Zach Conine, Nevada State Treasurer.
CUSTOM TAILORED TECHNOLOGY SOLUTION
Multichain Ventures developed a custom solution to satisfy the requirements of the Bill. Leveraging its established digital currency financial infrastructure (patent pending), and integrating the Solana Blockchain Protocol for smart contract deployment, they further developed a software suite dedicated to operators within the Nevada market. Functionality exists to view token balances, review invoices, conduct business-to-business transactions, and mint and redeem stable tokens. All processes are encapsulated in a robust compliance process that factors marijuana retail business (MRB) reporting requirements. Supply chain transparency and seed-to-sale tracking on blockchain will be implemented in the future. The platform is currently capable of integrating with METRC, a standardized government and regulatory reporting platform utilized in Nevada, and numerous other states.
The solution initially targets licensed cannabis operators, including dispensaries, cultivators, and production facilities. However, Multichain Ventures sees a great opportunity to expand into surrounding businesses, such as utility companies, landlords, payroll companies, ancillary service providers, and with the Nevada Department of Taxation for tax remittance. This ecosystem could further provide value to existing popular canna-tech companies, such as Distru and Akerna, as an enhancement to their platforms.
Operators should encounter little disruption to existing business procedures, as the onboarding process was designed from the ground up with the end user in mind. During the initial rollout, operators will continue accepting cash from the consumer as they do today. However, post-consumer transaction, the operator is presented with the ability to deposit reconciled cash with a federal bank facility provided as a resource within the Pilot. Cash becomes tokenized upon deposit, and can then be transacted electronically throughout the ecosystem. Upon completion of the lifecycle of the digital token, it will be redeemed for cash at a one-to-one value with dollars collateralizing the token.
Early feedback from the industry has been positive, with several operators interested in participating in the beta program. TapRoot Brands, a vertically integrated Nevada-based operator, sees the potential for such a system to resolve safety and security issues they face in cash handling and management.
“The strong growth that the cannabis industry has seen nationwide over the last year further reinforces the need for a solution to minimize or eliminate cash transactions and develop banking solutions ahead of federal legalization. Not only does the current cash-only system lead to public safety vulnerabilities for employees, dispensary customers and regulators, but it ties up valuable resources due to the time commitments of cash handling and documentation. TapRoot is excited to participate in the development of this pilot program, and assisting both the Multichain Ventures team and the Nevada State Department of Taxation implement a much needed solution for the industry.” Shane Terry – TapRoot Brands, CEO