From the Marines and Merrill Lynch to Marijuana Startup CEO

Published: Feb 17, 2016

Topics: Finance Job Search Technology

As I've written about previously here and here, opportunities abound in the budding legal weed business. And these aren't just for growers, trimmers, and budtenders, but also for CPAs, lawyers, bankers, and marketing and advertising executives. Today, these positions can be found across the country. To date, 23 states and the District of Columbia have legalized marijuana for medical purposes, and four states (Colorado, Oregon, Alaska, and Washington) and D.C. have legalized pot for recreational use. In fact, last year, in Colorado, perhaps the leading legal weed state, recreational and medical marijuana accounted for $1 billion in revenues.

Though booming, the industry faces a few major problems, one of which is the fact that marijuana is a Schedule 1 drug according to the U.S. government, putting it on par with heroin and LSD, meaning banks and credit card companies, regulated by the federal government, have stayed away. The thinking goes: since weed is illegal to sell at the federal level, if a bank were to take money from a weed operation, even if that operation is located in a state were weed is legal, said bank could be guilty of money laundering. And so, according to the New York Times in a recent article entitled "The First Bank of Bud":

Without a bank account, pot businesses deal in cash, lots of it, held in safes, handed out in clipped bundles on payday, carried in brown paper bags and cardboard boxes to the tax office and the utility company, ferried around the state by armored vehicles and armed guards. And without access to essential banking services — from credit cards to electronic transfers to loans — those businesses pay a huge premium. The reality in Colorado is that it is legal to grow pot but extremely hard to grow a pot business.

Which is where Tokken comes in. Tokken (yes, pronounced tokin') was started by Lamine Zarrad, an ex-Merrill Lynch broker, former Marine, and, most recently, ex-federal bank examiner with the Office of the Comptroller of the Currency, a division of the U.S. Treasury Department.

Mr. Zarrad’s start-up, Tokken, is ... aiming to offer something new — an electronic payment system that will not rely on the credit card companies or debit networks. Somewhat like PayPal or Venmo, Tokken will use the electronic money transfer system in the United States known as the Automated Clearinghouse, or ACH, to move money from the bank account of a dispensary customer to Tokken’s bank account. Tokken will then keep subaccounts for each dispensary — making it unnecessary for the banks to deal directly with dispensaries.

Incidentally, Zarrad started Tokken while he was still working for the federal government.

Mr. Zarrad began working on Tokken in his free time, and found a programming partner, Tom Rau, who lives in North Carolina. The system they have built will allow customers to make purchases with a Tokken app on their smartphone, taking cash out of the equation.

However, Zarrad didn't start tokin' until he left his job with the Feds.

Now that he is off the federal payroll, he will also be able to enjoy the products peddled by the dispensaries, especially the edible marijuana products. “I lean toward edibles — I just don’t like smoking,” he said.

In any case, Zarrad's is not the only U.S. company vying to become a sort of PayPal for pot. In Washington, PayQwick "enables legal marijuana commerce." And, of course, there are many other marijuana startups looking to take various pieces of the $50 billion national legal weed market. Here are 23 in San Francisco alone.

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