Medical marijuana users will be among the earliest users of bitcoin, according to bitcoin entrepreneur Peter Klamka. Klamka’s Ann Arbor, Mich.-based company, Bitcoin Brands, has placed a bitcoin ATM machine at one medical marijuana dispensary and is in the process of placing another two in the Grand Rapids area.
Klamka’s bitcoin ATM machine, made by Portland, Ore.-based Skyhook, provides the customer a QR code which they get scanned at the checkout counter by a clerk using a bitcoin payment tablet.
The (payment) technology is like a gift card,
Klamka has provided his three medical marijuana dispensaries with bitcoin payment tablets to facilitate bitcoin transactions.
You can buy your bitcoin, buy whatever you want to buy in the dispensary, pay and leave,
says Klamka, who calls his bitcoin payment system “bitMD.” As the name of his service indicates, he envisions pharmacies signing on to accept bitcoin payments for prescriptions and medical testing services.
The dispensary gets a percentage of the sales from the bitcoin ATM machine, Klamka says. Since his first ATM machine has only been on site for two months, he did not wish to release sales figures. Klamka has provided the bitcoin processing tablets free to his first three medical marijuana dispensaries to encourage them to have bitcoin ATM machines. “It is a very modest investment for me building this business,” he says. He does not know how much longer he will provide the tablets for free as the business grows.
Klamka also offers to sell the bitcoin ATM machine to locations (machines go for $1,500), but so far, they have preferred to take a commission and let Klamka operate the machine. Medical marijuana dispensaries are receptive to bitcoin because they realize some customers view bitcoin as a more private way to pay than using a credit or debit card, Klamka says. In addition, marijuana merchants have had trouble getting credit card companies to authorize marijuana purchases.
If and when credit card acceptance becomes easier for medical marijuana buyers, Klamka says bitcoin transactions are still faster and don’t have transaction fees or potential chargebacks.
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Klamka got the idea to focus on medical marijuana after trying to place bitcoin ATM machines and realized there is a general lack of understanding of the benefits bitcoin offers merchants. In addition to marijuana dispensaries, he has found interest in some martial arts gyms. He also expects gaming businesses to be receptive to bitcoin ATM machines.
It (bitcoin ATM vending) really needs to be in niche markets, and it’s got to be sold. It really hasn’t evolved into a business yet.
Klamka estimates there are about 300 bitcoin ATM machines globally. He thinks his business has a good future as the medical marijuana industry grows.