Portland Startup Introduces Electronic Payments System For Cannabis

Portland start-up cPay has introduced an Ethereum-based electronic payment processing method for the legal purchase of cannabis. Using cPay, businesses that accept payment for cannabis will not violate the terms and agreements of their respective credit card companies. According to CEO and founder, Jon Underwood, cPay has already met state regulatory demands.

“We have been approved by the Oregon Department of Financial Regulation to process in-store or online cannabis payments using our Ethereum based dual payment system.”

cPay utilizes blockchain technology to process secure, fast, and automated low-cost compliance payments. According to cPay’s CannaCrowd page, “The cPay dual payment system allows consumers to register their credit or debit cards and complete instant in-store or online cannabis payments. cPay also provides the transparency financial institutions need to offer our merchants a business deposit account.”

Currently estimated at over $5 billion and projected to boost to $50 billion by 2026, cannabis is one of the fastest growing industries in the US. Yet, federal laws prohibit financial institutions from accepting cash from these businesses, leaving 49 percent of the industry unbanked due to lack of transparency and risks of money laundering and/or organized crime. However, despite federal adversity toward the industry, Underwood tells ETHNews that financial institutions were extremely receptive to the service and it even influenced the startup’s business goals.

“Our original vision was to take the savings and donate it to charity, but we were approached by some credit unions on helping to solve the cannabis payment problem to reduce cash in communities, and we found out after a year and a half of development, our solution was perfect for cannabis payments.”

The company has deferred from the Initial Coin Offering (ICO) business model that is common in the blockchain ecosystem. According to Underwood, this decision was based on legal constraints.

“We operate in the highly regulated financial services industry, and need to comply with Bank secrecy act and know your customer requirements, as well as SEC requirements. There is no way for an American company to offer an ICO without violating SEC requirements unless it’s a nonprofit. We are a Benefit company, a mission-driven social impact company, and we believe in delivering a return to capital, but we just want to manage the company for the entire community of stakeholders, not only investor return.”

Instead, cPay is hosting a crowdfunding campaign to raise $100,000 for the venture. All potential investors must adhere to the guidelines below:

Naturally, the fund will close on April 20, 2018. All interested investors can find additional information here.

Upon completion of the crowdfund, the company will launch in Oregon, Washington, and California.

“We’re ready to launch, and we are inviting everyone to partner with us to help solve the cannabis payment problem, and eliminate excess cannabis-related cash from our communities,” said Underwood. “We are now integrated into 97% of the local and regional financial institutions and expect to launch before the end of the 2nd quarter.”