Price of Weed Coins Is Stagnant After Canada Legalizes Cannabis

At midnight last night, Canada legalized marijuana, becoming the largest legal market in the world for what in the U.S. is still federally classified as a Schedule I drug.

Besides the countless puns about “smelling green” and “buzzkills,” another main feature of the media coverage leading up to weed’s legal status in Canada was the comparison to the crypto frenzy of late 2017. The stock price of Tilray, the British Columbia-based medical marijuana producer, was volatile last month, climbing to $214 on September 19 before dropping back down to $99 on September 24. (It currently sits at $158.)

The swings were drastic enough to stop trading of the stock multiple times during that period, according to The Sydney Morning Herald. “We just went through this eight months ago with cryptocurrencies,” Ken Mahoney, CEO of a New York-based asset management firm, told the Herald. In a comprehensive September column, Bloomberg author Joe Weisenthal compared many aspects of the cannabis and crypto “bubbles,” including the active traders’ demographic (“millennial-aged males”), the counter-culture associations and Reddit connections, and the trajectory of their market value graphs.

Former Goldman Sachs banker and crypto heavyweight Mike Novogratz also spoke of these similarities, citing the rise of bitcoin and ether prices around December 2017. Both cryptocurrencies reached record highs then—above $19,000 for bitcoin in December and $1,300 for ether in January—before sliding back down into their current depressed values.

Novogratz still thinks the cannabis industry has the potential to thrive in the long-term, he said at the Yahoo Finance All Markets Summit in September. But he also thought bitcoin was going to be worth up to $40,000 by the end of this year.

In addition to cannabis stocks mimicking late-2017 crypto prices, there’s the connection between the illegal weed industry and decentralized digital currencies. Last month, Canada’s federal Public Safety Department posted a notice stating its plans to look into how frequently Canadian marijuana ends up on dark web drug markets.

“Since 2013, cannabis has been the most popular drug sold on the dark web, making up 33 percent of drug marketplace transactions,” the notice said. “What is unclear is the number of illegal, online transactions that occur in Canada, as well as the proportion of cannabis that is traded on the internet.” In 2013, Canada was one of the top wholesale suppliers of drugs on the Silk Road, and today’s legalization is meant in part to stop these illicit sales.

In early 2014, cryptocurrency started to embrace legal marijuana. That year, three anonymous Montreal developers debuted PotCoin, hoping to support transactions across the legalized cannabis industry, especially in the U.S., where marijuana remains federally illegal in spite of individual states’ legalization and decriminalization efforts. This means big banks wouldn’t support the industry, causing marijuana vendors and buyers to seek an alternative.

After PotCoin first launched, more than 40 businesses accepted the currency, the company reported. According to the Montreal Gazette, that number decreased to 12 in 2016 (the company has also engaged in some questionable PR; former NBA player Dennis Rodman sported a PotCoin T-shirt on a PotCoin-fan-sponsored visit to North Korea this past June). PotCoin’s value barely improved with Canada’s big news this week. However, PotCoin did put out a press release (in December 2017, no less) stating that it had partnered with WeedMD, a federally-licensed Canadian medical marijuana producer and distributor. In time for today’s nation-wide legalization, WeedMD opened up an “education center” in Toronto, where visitors can not just purchase cannabis products but also learn about different strains and proper dosing.

Values of other weed-related cryptocurrencies aren’t looking much better than PotCoin. CannabisCoin had just a minor upward blip this week, as did DopeCoin. HempCoin’s been in the doghouse since September, and CannaCoin prices keep heading down.

Regardless of what happens with weed-friendly cryptocurrencies and cannabis stocks, the biggest news to come out of Canada’s marijuana legalization has to do with the many thousands of Canadians who’ve been convicted of possession. New legislation, introduced the morning of October 17, will help these Canadian citizens apply for pardons, abolishing the minimum five-year wait period and fee of $631 Canadian to gain amnesty. Since cryptocurrency use has historically been linked more strongly to illegal marijuana sales than legal, Canada’s new cannabis-friendly environment may not be too hospitable to crypto.