Blockchain is arguably the most talked about and least understood technology on the market today. It’s a fair bet to think that a majority of readers who see that word immediately think one of three things: Bitcoin, “that cryptocurrency with the dog on it,” or Elon Musk. In many ways, the cannabis industry isn’t that different. Most readers outside of the industry conjure up pictures of head shops or Cheech and Chong, or at the very least, some tie-dyed hippies talking about government conspiracies and peace on Earth. The truth of the matter for both industries is that they are incredibly complex and dynamic industries that are both growing at a rapid rate and attracting some of the best talent around.
The parallels don’t really stop there. Blockchain at its core is a foundational technology, meaning it is a technology that allows for the creation of other technologies on top of it, called transformational technologies. An easy example of this would be the relationship between the internet (the foundational technology) and something like email or social media (the transformational technology). Blockchain can do a lot more than cryptocurrency. It allows for decentralized and immutable ledgers, it can allow for near-instant verification of information, and has many other use cases.
To really understand where these use cases can be most effective, one must start with a basic understanding of some of the problems and challenges present in the cannabis space. First and foremost, cannabis is still quasi-legal at best and as such requires intense levels of tracking, tracing, and monitoring of products at every lifecycle stage. Cannabis also has an intense need for verification of vital information like funds, licensure, and other key details due to the framework that has been created to circumvent this precarious legal situation. Add on the lack of traditional banking services, and it would seem the problems in cannabis are insurmountable. That’s where blockchain comes into play.
Let’s start with the most basic foundational principle of blockchain technology: Immutable Ledgers. In simple terms, these are lists of data that can’t be altered. Sounds a lot like what is required in the seed-to-sale, track and trace systems in cannabis, right? That’s because it is. Cannabis track and trace programs rely on correct data following a seed through its growth, into its batch at harvest, and then either through packaging to retail sales, or through an additional series of steps during extraction.
The ability for cannabis operators to track all portions of a plant through all steps with complete accuracy is a prime example of blockchain being used in the cannabis space. This is second to the ability to track inventory for internal business purposes and, as well as satisfying regulatory requirements, would be all of the details needed to vet a potential deal. Blockchain data allows for smart contracts. Smart contracts are essentially algorithmically controlled interactions without the need for third-party verification. Imagine a world where operators don’t need to verify a license or proof of funds manually. Where the need to ask for a Certificate of Analysis isn’t a hoop to jump through, but rather an intrinsic part of the process. This is what smart contracts can allow. A supplier uploads all of the data to a given blockchain, and a buyer does the same. Without any additional effort, all of this data is verified, tracked, and shared at the appropriate step.
Beyond making the data more secure and reducing the amount of work needed for a given transaction to take place, the other concept which most people probably think of when they consider blockchain is Cryptocurrency (or Crypto, for short). This form of payment method can be easily understood in video game terms. No one bats an eye at spending gold or gems or rubies when purchasing something in their favorite app. The same mechanics can be applied to real-world transitions. This can be a bit of a grey area legally, but multiple companies and states are working on solutions that allow for more access to banking and funding — something the cannabis industry has struggled with since its inception.
Essentially, blockchain provides a level of security and transparency that isn’t a unique need to cannabis but is of utmost importance when looking at the current and future landscape of the cannabis industry at large. As previously mentioned, blockchain is merely the foundation that will allow cannabis operators to come up with new and exciting solutions to the ever-changing landscape or hurdles and problems the industry faces.
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