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Say thank-you to these fintechs. They are making it possible to buy pot legally in the US

By NexChange

As legalization spreads across the U.S., marijuana is becoming big business. Startups keen to capitalize on cannabis have sprouted up all over the country and the plant’s popularity as a medicinal aid and a recreational drug is growing. But it’s not an easy business.

While some states now tolerate the trade, the same can not be said of the many banking institutions that are still reluctant to deal with marijuana money. This is mainly due to its gray legal status. While the herb is legalized in many parts of the country, it is still listed as a Schedule I drug by federal authorities, putting it on a par with Heroin and LSD. An article in the New York Times recently explained this predicament in Colorado:

The State of Colorado legalized marijuana for recreational use in 2014, joining several other states where the drug has been decriminalized in some form, but Visa and MasterCard will not process transactions for pot dispensaries and most banks will not open accounts for the businesses — leaving dispensaries dealing with a constant influx of cash, and nowhere good to put it.

Of course there are workarounds for dispensaries, like opening an account under a false name, but none of these methods are legitimate. This has opened up an opportunity for fintech start-ups willing to go where banks fear to tread. Companies like Kind Financial or Tokken are developing software that helps banks and startups track transactions while at the same time helping dispensaries move away from cash. Here is a breakdown of some of the fintech companies that dispensaries are turning to:


This Arizona-based start-up was set up in 2014 by a team of banking compliance and software entrepreneurs. According to Inc., the company has a software platform that can audit a cannabis company in its entirety to ensure that it is legal and legitimate. It is currently focusing on businesses based in Colorado. The software connects to the company’s point-of-sale system and then to the state’s seed-to-sale system which follows marijuana plants from the grow house until they’re sold. This solution has helped convince a number of (undisclosed) banks to take on clients in the cannabis industry.


This startup’s shtick is all about security and compliance, hence the domain name Operating out of Denver, Colorado this startup helps marijuana dispensaries go cashless by providing self-service kiosks. Benefits of the kiosks include increased sales, faster transactions, more transparency, and better security. The business is the brainchild of CEO David Ellerstein, a former mobile software company executive.

Kind Financial

Based in California, Kind Financial offers financial services specifically for the cannabis industry. Its platform includes merchant and payment services, financing, equity investments, and insurance offerings. It also has a seed-to-sale software called Agrisoft which makes it easier for pot-growers to comply with state regulations. It raised its second undisclosed round of venture capital funding early last year.


Tokken is one of younger startups in the latest crop of cannabis-related startups in Colorado. The company was founded by financial regulation industry veteran Lamine Zarrad. It offers an a bitcoin-based electronic payment system that does not rely on the credit card companies or debit networks. It works a lot like popular U.S. P2P payments platform Venmo. Customers connect their bank account to a Tokken account and Tokken will then keep subaccounts for each dispensary so that banks do not have to deal with the dispensaries directly.

Photo: Cannabis Pictures

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