NEW YORK (MainStreet) — When a client walks in to purchase marijuana from the Oakland dispensary Blüm, bud tenders visually check the customer's identification and paperwork for authenticity.

"It's very easy to get a medical marijuana card in California and the black market is still alive, so there aren't many people who need to present themselves as someone they are not," said Derek Peterson who is an owner at Blum (and separately the CEO at Terra Tech Corp).

The doctor who issued the prescription is contacted to further verify that it's current and accurate. If the verification is completed without any issue, all patient information is logged into the Greenlife Medical System for tracking.

"Medical identification cards are issued by doctors not the dispensaries," Peterson told MainStreet. "Underage patients that come to the dispensary must be accompanied by a parent guardian or legal caregiver and all their necessary paperwork is verified upon entry similar to adult patients."

Enter Cyber Kiosk (OTC Pink: CYBK), which has developed security software specifically for the legalized marijuana industry. The company announced last week its agreement with Tranzbyte (OTC Pink: ERBB) for the use of its age, identification verification and fraud prevention software in automated dispensaries.

Verifying the identity of dispensary clients is not just about preventing fraud.

"We also track strains that work for individual patients so by verifying their ID we can help improve the patients experience," said Peterson. "So, the major downside to purchasing marijuana from an automated dispenser would be the lack of individual care we can provide at the dispensary."

With a $62.8 million market capitalization, Tranzbyte is a 15-year-old technology company that launched Altitude Organix, a cannabis ancillary business two years ago. Altitude Organix has developed ZaZZZ, an automated medical marijuana dispensing machine.

"Identity verification is important because the marijuana industry is held to the same standards as tobacco, alcohol and even controlled substances," said Stephen Shearin, chief operating officer with Tranzbyte in Arizona. "We are among the entrepreneurs who want to legitimatize the industry and that requires following federal and state regulations."

Tranzbyte will unveil the first ZaZZZ machine in the next couple of weeks now that the software has been upgraded.

"Cyber Kiosk is providing some verification software for use in the ZaZZZ machine," Shearin told MainStreet.

Cyber Kiosk isn't a marijuana company, so though it's not listed on Fred Fuld's Marijuana Stock Index or his master list of 31 marijuana companies, Tranzbyte is.

"ERBB is currently selling for two cents a share on the pink sheet," Fuld told MainStreet. "From May to December 2013 it traded for less than a penny."

--Written by Juliette Fairley for MainStreet