Silk Road may be dead, but in at least one Washington State city, people can still buy marijuana and related products using bitcoin.

Medical marijuana dispensary Kouchlock Productions, which opened on Monday February 3, began accepting bitcoin for its wares this week. The dispensary, based in Spokane, is said to already have sold the drug in several bitcoin transactions.

In Washington State, medical dispensaries were legalized in 1998, under initiative 692. This allows dispensaries to sell the drug to patients with terminal or debilitating medical conditions including cancer, HIV-positive status, hepatitis C, and anorexia. A patient can be granted a permit by a naturopath.

While medical mariijuana dispensaries are legal in the state, they are still federally illegal, which makes it difficult for them to process credit cards. This makes bitcoin a useful alternative for them.

Along with Colorado, Washington State legalized pot use in November 2012. Washington's measure, Initiative 502, allows for the drug to be purchased from licensed retailers. License applications opened late last year.

Paradoxically, now that I502 has been passed, the days could be numbered for medical dispensaries. State Representative Eileen Cody has proposed a bill that would limit the amount of pot that patients (as opposed to non-patients) could possess.

The reasoning is that the untaxed medical dispensary business would undercut the legal business, which will be subject to taxes. The current limit for patient-owned pot is 24 ounces in any form, whereas I502 allows for personal possession of one ounce of usable marijuana.

Counter staff at Kouchlock Productions confirmed that the company was now accepting bitcoin. However store owner Scott O'Neil did not respond to questions yesterday. News reports suggest that the store plans to transition to a non-medical licensed retailer when licenses become available. Eventually, it is estimated that there will be hundreds of retail outlets in the state.

Some businesses are hoping to extend beyond simply selling the drug, which the government will also now allow to be grown for non-medical purposes.

Revenues from marijuana sales, both legal and illegal, amounts to around $1.2bn a year in Washington state, according to public policy research. 80% of the pot is said to be consumed by 200,000 particularly heavy users. In Colorado, where retailers are already open, taxes from the pot business were estimated to be between $1.24m and $3m in the first 30 days of operation.

Alaska is said to be close to becoming the third state to legalize pot, and entrepreneurs are getting interested. Diego Pellicer, founded by former Microsoft manager Jamen Shively, is building a brand of marijuana products, in the hope that the product will become legal in all states over the next ten years.

Bitcoin users can't legally order their marijuana over the Internet. I502 does not allow for home delivery or Internet orders, but nevertheless, home delivery based on phone orders is already a common under-the-radar occurrence in Eastern Washington.

It is now legal to own an ounce of weed, and lawmakers have said that they consider how it is delivered to be irrelevant. Law enforcement are said anecdotally to be disinterested in investigating these services, and they continue to flourish in advance of retail businesses opening this spring.

Cannabis image via Shutterstock