Changing the medical pot buy

An enterprising Birmingham, Mich., company hopes users of medical marijuana in the Detroit area may not want to leave home without them: digital identification cards that can be used at pay-as-you-go kiosks to pay for transactions at marijuana dispensaries.

If all goes according to plan, the MediPay kiosk and identification system tested in Detroit may be rolled out to California, Arizona, New Jersey and other states that have legalized the use of marijuana for medicinal purposes, said B. Michael Freidman, CEO of MediSwipe Inc. (OTCQB: MWIP) a small publicly traded company that recently moved to Birmingham from Florida.

The interest in the MediSwipe system stems from its ability to provide transaction options besides cash, and secure record-keeping systems.

"There were many questions why we chose Michigan as a home base rather than Colorado, Washington state or even California," Friedman said in a news release."Michigan was the perfect proving ground for our state-of-the-art product lines for this industry and provided all the right elements for success, including new and favorable laws as they relate to medicinal marijuana operations and urban atmosphere with high volume of patients seeking alternative cash solutions for payment of medications."

While he wouldn't comment on the effectiveness of MediSwipe's products and services specifically, the editor of trade publication Medical Marijuana Business Daily in Denver said MediSwipe certainly has taken aim at the challenges faced by dispensaries.

The all-cash model, in turn, brings challenges with "security, taking cash and storing it, transporting it to the bank."

"If you can do it in a legal way, you are probably going to have a big market," he said. Other companies in the United States have begun to offer kiosk services, but it appears that MediSwipe's system is the first in Michigan for medical marijuana.

In a conference call with shareholders on Thursday, Friedman said his company expects two business opportunities that will be tested in the Detroit area to become primary revenue producers for MediSwipe: digital identification cards for medical marijuana users and kiosks made by Payteller LLC in Boca Raton, Fla., for transactions at dispensaries.

Patients have their medical records scanned and encrypted, then stored on cloud-based software for $20 annually. MediSwipe's system makes it convenient for existing and potential patients of medical marijuana to access the information for themselves or permit authorized entities to access the records. Friedman said the system also protects dispensaries from the threat of law enforcement agencies seizing hard drives or physical files containing patients' records if their operations were raided for violating the Michigan Medical Marihuana Act.

Patients who use MediSwipe's MediPay kiosks will identify themselves with their digital cards, then insert cash or other form of payment into the machine to receive a coupon voucher or payment card that can then be used for reimbursing expenses.

The system is designed to prevent fraudulent transactions, cut down on employee and potential theft, generate receipts for insurance companies and "begin to set up a proper infrastructure for the states to receive revenue from these operations," MediSwipe said.

MediSwipe's annual report filed for fiscal year ended Dec. 31, 2011, indicated that the company provides merchant services to approximately 40 medical dispensaries and wellness centers throughout California and Colorado through its sponsor bank EMS. The company intends to grow "its merchant processing network of independent medical dispensaries and wellness centers by continuing to provide credit card and cash advance services" in 19 states that have existing or pending medical marijuana laws.

At the end of 2011, the company reported approximately 375 million common shares outstanding. MediSwipe formerly was named Cannabis Medical Solutions Inc., a small publicly traded company based in Ashland, Ore.

The company news release stated that Friedman, key executives and major shareholders will be based in Michigan. The annual report said the company's management team has three employees: Friedman, President Erick Rodriquez and CFO Barry Hollander.


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