A Toronto-based Internet technology company, CannaSOS Corp., is hoping its cryptocurrency, PerksCoin Tokens, will be the future of buying and selling pot. The idea is that the funds, using blockchain technology, will be used within its online network of medical cannabis providers, producers, doctors, dispensaries and consumers.
“The best way to explain it would be – imagine Bitcoin but with less volatility, with a service like PayPal and with transaction processing only being a couple of seconds,” said company co-founder Daniel Cheine.
But is there a place and purpose for PerksCoin and what does it mean for the future of buying medicinal marijuana?
In 2013, the company’s CEO was meeting up with one of his friends who owned a hemp farm. The friend’s daughter and aunt were diagnosed with liver cancer around the same time. The creation of CannaSOS a year later was rooted in wanting to help people use alternative forms of medical treatment.
“The aunt went through medical cannabis treatment – CBD oil – and the daughter went for chemotherapy,” said Cheine. “What happened was the daughter passed away within five months from the side effects and the aunt went for eight months’ treatment and then the doctors couldn’t find anything in her liver anymore.”
According to the company, users can search over 5,000 strains of marijuana, read reviews on them, share treatment success stories. Cheine argues that businesses dealing in cash, especially on the weed dispensary level, put themselves in danger by getting robbed. For customers, it’s just another way of paying for transactions and they get loyalty rewards by way of more PerksCoin tokens.
What is unique with the PerksCoin platform is they have a holding pattern for the funds to make sure consumers get what they paid for. With Bitcoin, once you spend it, it’s gone into the ether without any means of recourse.
“Imagine, right now, you’re in Brazil and you go and do business with a guy that’s in Uruguay. That guy can rip you off, take your money and not give you the product,” said Cheine.
“But with Secure Sale, you pay the supplier an amount of money and the PerksCoin transaction platform holds it until that supplier sends over the product to you. In two days, when you’ve confirmed you’ve received the product and everything is fine, then the cryptocurrency go to that supplier. If not, then you return the package and you receive the cryptocurrency back.”
After March 15, the company will be listed on a digital assets exchange (think: TSX for cryptocurrency) and people who have invested can start trading – or take out the value of the tokens they’ve invested and convert it into cash using services such as PayPal or through debit cards.
“We pushed out to every corner of the globe, except North Korea,” Cheine said. “And by 2020, around 200,000 locations. Lots of growth.”
And with Canada’s plans to legalize marijuana this summer, it could give the tokens an extra boost.
“It will increase the circulation of the token and thus will lead to an increase in the market cap. More users equals more businesses using it and thus will lead to the flourishing of PerksCoin in the cannabis industry of that state/country,” explains Cheine. “However, I want to underline that PerksCoin is not tied to the cannabis industry, it will be used in many industries.”
But that plan is also being met by skepticism from economic experts in the Toronto area.
Jean-Paul Lam, a monetary economics associate professor at the University of Waterloo, said cash will still be king when it comes to the weed business.
“It provides the ultimate anonymity for people who are buying and selling stuff,” he said. “Cryptocurrencies offer convenience and some extent of anonymity, but if I wanted to hide my consumption, I can go into a shop, I don’t have to give you any of my information, I give you my $10 and you give me a gram. And we’re done. Cash will still rule.”
Lam said he is skeptical of the tokens’ usefulness given people won’t be able to use PerksCoin anywhere else except for the company’s ecosystem.
“I’m not so sure what’s the point of them other than just cashing in on the frenzy,” he said. “I’m very skeptical. Just think about the typical consumer. Obviously, a lot of people gravitate towards the most dominant cryptocoin. Right now, it’s still Bitcoin. I think they will still dominate the market for that. If you believe these coins are created for transaction purposes, you would naturally tend to gravitate to the one that is widely accepted and convenient.”
Meanwhile, Andreas Park — associate professor of finance at the Rotman School of Management — admits the Initial Coin Offering (ICO) business is “booming” at the moment, but he also said there doesn’t appear to be a need for this new cryptocurrency.
“It’s an entertaining enterprise,” he said. “There are a lot of entities that try to issue some form of coins or tokens that presumably has some value going forward…We see a lot of these ICOs these days, and this is all these get-rich-quick schemes, where people try to pre-sell something, on the promise that it’s the thing of the future. Are these things going to come into being? It’s really difficult to say, it’s just concepts.”
The Canadian medical cannabis industry seems mixed on endorsing a concept like PerksCoin.
“As much as I’m open to somebody explaining to me the benefits or the need for cryptocurrency, at the moment, the cannabis business in Canada does not need a cryptocurrency because business is working extremely smoothly with regular currency,” said Cam Battley, the chief coordinator of Aurora Cannabis, one of the dominant medical pot producers in Canada.
“It will in the future accept cash, we accept debit and credit because it’s immediate and traceable and goes directly into out bank account.”
But Lisa Harun of Toronto-based Vapium said her company welcomes “and celebrates innovation and growth in this space. Financial instruments are key to continued growth for our industry. We wish the platform success.”
Cheine said 10% of users come from Canada. 70% come from the United States. The rest come from the U.K., parts of Europe, Australia and Africa. The main traffic they get from Canada is from Vancouver and Toronto.
As of now, he added, there are 2.5 million users on the site and 1,000 businesses throughout the globe, with a projection of 2,500 businesses coming on board after the ICO – or investment sales of the PerksCoin tokens, which closes Feb. 28. If you’re investing using cryptocurrency, the minimum is $50 US and through wire transfer, $500US. Only 75.2 million of the 100 million of these tokens are being offered and there won’t be any more after. The company says it sold 1/10th of its tokens in the first stage of its sale.
“They’re not the ones creating the ins and outs of it, so I don’t think they know how it’s going to look like, so they’re skeptical,” he said.
“I understand why, but in the next three to five years, everything will be laid out on the table. Time will tell.”