Smoakland, a cannabis company, is facing a major problem that is common in the cannabis industry: payments and payment processing. Even though recreational cannabis has been legalized in 21 states and decriminalized in several others, cannabis is still primarily a cash business. As cashless transactions become more popular, this is an issue for both consumers and businesses. Smoakland is beta-testing a loophole that allows customers to pay by credit card. The secret is crypto.
According to Jeff Dillon, the managing director of Marketing at Smoakland, customers aren’t actually buying cannabis with a credit card; they are buying crypto, which is then immediately used to purchase cannabis. The crypto is then cashed back out. This means that the credit card company only sees that users are purchasing crypto, which is not illegal. Anything involving crypto is deemed high risk, and Smoakland expects to pay higher processing fees. Currently, the company is in beta-testing and is charging customers approximately 5% in processing costs.
Smoakland plans to offer credit cards on a full-scale basis starting on April 20th, also known as 4/20, which is synonymous with marijuana. The company hopes that credit card availability will help smooth out fluctuations in average order size throughout the month and make its products available to customers who need them. The company is also pushing for lower prices, as it believes that cannabis is an essential medicine for people. The company compares itself to Fred Franzia’s Two-Buck Chuck wine, which sells at affordable prices.
Smoakland is aware that its products are used recreationally, but it believes that it is on a bigger mission to offer a critical medicine to people. The company is optimistic about the future and believes that the SAFE banking act is putting its thumb on the proverbial scales in favor of what it is doing.