The cannabis industry and the emerging crypto industry have a lot in common: They both represent new spaces for enterprising investors, both attract innovative and early-adopter entrepreneurs, and the federal government isn’t quite sure how to deal with either one of them. (Not to mention the amount of cross-over between user-bases.)
It’s only natural, then, that the two industries have started to merge as they both gain more social and legal legitimacy. Cannabis companies are investing in crypto, crypto companies are investing in cannabis, and there are even specific canna-crypto coins that have already been minted and put into digital “circulation.”
“We’re really passionate about blending cannabis and crypto,” says Neil Demers, the CEO of Frost Exotic Cannabis. “I think we have a big opportunity to bring them together.”
Frost Exotic Cannabis is a Denver-based dispensary, defined by its creative approach to the cannabis business. Not only does Frost focus on exotic cultivation techniques, and not only is it an immersive art-based dispensary shopping experience (think “Meow-Wolf” with budtenders), but it’s also the first cannabis company in the state to embrace crypto-culture with open arms.
“We do want to be innovative and we want to always try to improve and think outside the box of how we can bring new value to our customers,” Demers says. Which is why, following Frost Exotic Cannabis’ recent rebrand (from Diego Pellicer), Demers gave his team a mission: to incorporate crypto technology into Frost’s operation.
And Frosts’ team delivered. Soon, the dispensary will be the first in Colorado to incorporate crypto in its upcoming customer loyalty program (called “Metanugs”) by offering discounts to non-fungible token (NFT) owners (Boulder Weekly, “The real disruption is coming,” March 11, 2021); it’ll be minting its own NFTs for customers and allowing customers to pay for purchases using cryptocurrency. Demers and his team have paved the way and opened the door, and by April of this year, crypto-cannabis will become a reality in Colorado.
“Frost is going to be part of a network to offer benefits to community members who hold different NFTs,” Demers explains. That could come in the form of discounts or special deals on specific cannabis products, unlocking Frost-exclusive podcasts from cannabis experts on cannabis topics, or any other creative deal Demers and his team cook up.
That incentivizes ownership of NFTs and attracts new customers who already have them and want to get cannabis rewards for it. Demers also outlined a plan to create Frost’s own NFT down the road, which could be incorporated into a meta-game where customers can breed their own meta-cannabis plants, and compete for the best strains with the most unique or potent meta-attributes. It could be like Farmville, with cannabis plants instead of animals, and NFTs instead of characters.
Of course, accepting crypto-currency payments will also allow Frost to circumvent the complicated business of banking cannabis money. Instead of going through a bank with government oversight, they will go straight through the blockchain—which is decentralized and unregulated.
Demers clarifies that’s not the main reason he wants to accept crypto as a form of payment, though, as there are now banks that accept cash from cannabis businesses. His tactic will be to save the crypto-currency income and sustain the business off of its regular cash flow.
“[Any crypto payments] can sit there and hopefully crypto will go up. So we get the benefit of the appreciation in the value,” he explains. “A lot of the benefit is in collecting the payment, letting it sit there as an investment opportunity to allow us to grow the value of that money.”
Demers might be the first cannabis entrepreneur in Colorado to try and merge the crypto- and cannabis-communities, but he’s not the first to pursue the idea nationally. The Crypto Cannabis Club out of California is an NFT collection and metaverse community likewise debuting this year, with a line of NFT’s it’s calling “NFTokers.”
The Crypto Cannabis Club partnered with CampNova to launch a line of premium packaged cannabis flower. It kicked off its first round of 10,000 NFTokers in August of 2021, and starting in March 2022, random 1/8th ounce flower packages they sell will contain an authentic Crypto Cannabis Club NFToker stashed inside—like a golden ticket to Wonka’s chocolate factory. Except this prize is valued at roughly $600 according to Forbes, and admits its owner to a game-themed canna-crypto meta-community.
There’s also been a number of attempts to start cannabis-specific crypto currencies like PotCoin (POT), HempCoin (THC), DopeCoin (DOPE), and CannabisCoin (CANN). Theoretically, developing digital coins specific to marijuana transactions could make it easier for businesses to get around banking problems associated with selling a Schedule I substance. However, all of those crypto-coins have been on a steady and semi-dramatic decline over the last year, as no dispensaries accept them as currency.
That’s changing, though. With Frost Exotic’s soon-to-launch crypto-cannabis and NFT-rewards-program, customers will be able to buy cannabis with crypto and use their NFTs for discounts. Demers says they’ll probably start by accepting what he calls “blue-chip” coins (like Ethereum or Bitcoin) but will open up to more forms of digital currency as time goes on.
“Our vision is to marry crypto and cannabis together, and try to turn it into the best opportunity we can, and the best [customer] experience we can,” Demers says. “We’re embracing crypto with open arms.”
