Tokken's App Helps Solve the Marijuana Banking Block

Banking issues have been a major stumbling block for the cannabis industry, with banks refusing to work with marijuana-related companies for fear of coming under scrutiny of federal regulators. So far, attempts to clear up that conflict have gone nowhere in Congress — but now a former federal government employee has come up with a partial solution: Tokken, an app for both customers and dispensaries that was recently named a finalist for the 2017 SXSW Interactive Innovation Award.

A former banker for Merrill Lynch, Lamine Zarrad came to Colorado in 2014 as a regulator with the U.S. Treasury. He soon became the department’s liaison between the cannabis industry and Washington, D.C., helping to address fiscal concerns of both the federal government and Colorado businesses. That led to his working with compliance experts in the financial sector to try to untangle the banking issue.

The main problem he found was that most banks willing to work with cannabis businesses were too small and had too few resources to take on a new industry. “They’re community banks,” Zarrad explains. “They are autonomous historically because their risk profiles are very low, and here you take it from lending to farmers and local grocery stores suddenly to cannabis, which kind of put this whole model on its head.”

So he decided to leave his federal job and start a company that would take available automated processes and adapt them for cannabis. “Tokken was born by observing inefficiencies in the banking sector,” he says.
Zarrad founded the Denver-based Tokken last year; the app was officially launched in October. Although it can only be used in four dispensaries right now, Tokken is growing quickly; Zarrad is in the process of bringing fifteen more dispensaries on board, all located in Colorado. Customers can download the app and then upload their credit-card information, much as they do with the apps for Amazon or PayPal; then they can pay directly through the app — and skipping transaction fees — at any dispensary using Tokken.

Tokken provides banking services in addition to digital payment. Dispensaries can also pay their taxes through Tokken. The app’s dashboard has a “pay taxes” function that allows shops to pay the department directly.

Tokken also benefits budtenders: According to Zarrad, tenders who work in dispensaries that use Tokken have seen an 18 percent increase in tips — nearly $200 a day, by his estimate. A function on the app allows the customer to select a tip, much like the Square app used in many independent coffee shops — and while users can opt out of the tip page, many choose to use it.

“We try not to be Big Brother,” Zarrad explains. “We try to straddle the middle stretch of the seesaw in between complying with federal regulations that are very stringent, because the federal government sees this industry as a potential risk of money laundering and terrorist financing — and then on the other hand being as-user friendly as possible and being as unobtrusive as possible.”

For now, you can use the Tokken app at Ajoya and Green Man dispensaries, but more are coming.