PDX, a cryptocurrency processor company, is banking on more cannabis consumers and retailers turning toward crypto to get around e-payment barriers.
“The cannabis business for us, I think, is probably the vertical that we most appeal to at the moment because of those high fees that many of them are paying [at banks],” said CEO Shane Rodgers. “I don’t know if they’re all paying those high fees, but certainly a lot of them are here in New York and in New Jersey.”
PDX operates a platform that allows users to convert crypto into fiat and back. PDX Beam launched in February and is the company’s point-of-sale system that allows customers to make crypto payments. The customer pays from their crypto wallet, and fiat currency lands in the merchant’s bank account.
The New York-based company does not exclusively cater to the cannabis industry, but it is looking to specialize in that particular market. Given the risk involved with cannabis due to its federally illegal status, financial services of any sort tend to be more expensive for cannabis operators.
“I was shocked, actually, to learn that a lot of the people in the cannabis dispensary space are being ripped off by their payment processors at the moment, where they’re not just taking purely cash, they’re paying 5-6-7%, and they’re waiting up to a week or eight days for their money, in some cases,” said Rodgers. “We make good money charging 2%. We don’t need to rip you off.”
So far, the company has only worked with hemp sellers, but the company is in discussions with marijuana retailers.
“A lot of the owners of these cannabis businesses aren’t very financially sophisticated,” said Rodgers. “I’m pretty sure some of them are quite happy to go on paying 7% or 8% and waiting eight days for their money. They’re not very business-minded. They’re very strange people.”
New Jersey’s Pipe Dreams is the only brick-and-mortar cannabis shop that the company has listed as a client on its website. It also lists hemp companies Releaf and CrescentCanna. Other clients include investment firms, online general retail, a tattoo parlor in New Jersey and a whiskey distillery in Florida.
Pipe Dreams’ owner Mahmoud Heikal told MJBizDaily that his store averages 2,000 transactions a month, and that about 12 of them involve crypto. When reached for comment, an employee of the store said customers were sporadically using crypto for purchases and that he had no problems with the conversion process.
The platform supports wallets from Ledger, Trazor, Metamask, Coinbase, Trust Wallet and Coinomi. And it accepts payments in Bitcoin, Solana, XRP, Ethereum, USDT, USDC, Lightcoin, Dogecoin and Trumpcoin.
“We support the major blockchains,” said Rodgers. “We’re adding more all the time.”
Trump trying to take crypto mainstream
Cryptocurrency and cannabis go back as far as the Silk Road, the infamous dark web bazaar where Bitcoin allegedly could be used to buy an assortment of illegal drugs from 2011 to 2013.
The Tokes Platform launched in 2017, announcing that it intended to be the point-of-sale solution for cannabis retail. The launch included the release of Tokes Coin, a cryptocurrency designed for the platform. By 2020, the company announced the release of its merchant gateway, but no further updates appear on the company’s website.
Crypto could become a reliable banking solution for cannabis, especially given the apparent priorities of the current Trump Administration.
President Donald Trump, who launched his own meme coin on Jan. 17, has been a vocal supporter of cryptocurrency in recent months. Trump hosted a fundraiser on May 5 for “crypto & AI innovators,” and then hosted another dinner on May 22 for holders of his Trump meme coin. He also pardoned Silk Road founder Ross Ulbricht.
In February, a congressional hearing that was meant to focus on debanking crypto companies ended up also including discussion on cannabis banking.
Then on March 28, an FDIC memo clarified that FDIC supervised-institutions may engage in crypto without prior approval from the regulator. At the same time the memo was released, the FDIC rescinded prior guidance from 2022 that required prior approval for crypto activity. This means that more banks might be willing to try crypto without fear of FDIC reprisal.
A few weeks ago, prohibitionist group Smart Approaches to Marijuana warned supporters that lobbyists were pressuring senators to add banking protections for cannabis transactions as an amendment to S. 394, the GENIUS Act, which would create regulations expanding the use of stablecoin, a cryptocurrency whose value is tied to a reference asset, such as the U.S. dollar.
The GENIUS Act had no offered amendments as of June 4.
“From a regulator perspective, it’s never been better,” said Rodgers. “I think we have everything we need now to really take the lead in crypto payments.”
