For several years now, the online digital world has been notified by this rapidly growing and exciting industry, called Blockchain technology. So far, a lot of experts agree upon its revolutionary and even disrupting properties but no real-life use case of Blockchain evolved out of this. Although there are no working solutions yet, the developments and growth within the Blockchain industry are quite impressive.
Not only the Blockchain industry is showing large growth spikes but also the Cannabis industry is on the rises again. In this article, I will explain why these two worlds are a perfect match and will lead to a successful solution on the Blockchain.
Blockchain & Cryptocurrency
If you have been following cryptocurrency over the last few years, you may have already come across the term “blockchain.” If you’re not a tech expert like me, then you would have relied on Google for the definition of blockchain. Moreover, Google may have given you an answer like this: “Blockchain is a decentralized, distributed, public ledger.”
It sounds a lot harder to understand according to this definition. Basically, Blockchain is the technology typically used by Bitcoin, which is a type of digital currency, in keeping track of its records.
It’s quite understandable why a few industries have misunderstood Blockchain technology, considering that it is a fairly new niche in a speculative market with a somewhat foggy set of laws. On another note, cannabis also exists in a speculative market with an unclear set of regulations.
Nevertheless, both industries are receiving an influx of talented programmers and entrepreneurs looking to present a solution that will resolve their respective industry’s biggest worries. With that in mind, I wanted to come here and present to you ways on how the Blockchain technology can actually assist in transforming the cannabis industry. As a result of this, is it realistic to have a real-world Blockchain use case?
The Cannabis Industry is Booming
Truly, the times are changing as 30 states in the USA have legalized the use of marijuana. Nine of the 30 states legalized the use of recreational marijuana, while the other 21 states have legalized medical marijuana. It is without a doubt that the cannabis industry is booming as a total sales of $6.7 billion was reported by 2017.
This number is expected to rise with a projected sales of $20.2 billion by the year 2021, which is quite an amazing figure. In fact, experts are saying that the growth rate of the cannabis industry outpaces that of which was set by the tech firms during the dot-com bubble.
Cannabis Industry a match for Blockchain Technology
I find that unlike the other industries, the cannabis industry tends to be subjected to careful examination from the public. It receives more scrutiny as compared to others.
As a result, this heightens the level of uncertainty in the cannabis marketplace. While cannabis enthusiasts are indifferent toward the idea of additional safety measures and regulations surrounding product provenance, this is an industry that would need all the help it can get. Regulators, businesses, and entrepreneurs should consider how Blockchain technology could be the answer to the challenges faced by the cannabis industry.
Blockchain Technology as the “New Internet”
Before I start discussing the reasons as to why numerous cannabis firms are utilizing their own Blockchain technology, it is only right that I talk a little more about what Blockchain technology is and what it can do.
A lot of people have been commenting on how blockchain is an “ingenious invention.” In fact, publicly traded companies, such as IBM, are now utilizing blockchain technology as a means to solve numerous issues. As its name suggests, blockchain is a chain of blocks. Blocks refer to digital information, which is then stored in a chain, also known as a public database.
Blockchain blocks and data storage
With that in mind, these blocks, which are digital pieces of data, have three parts:
- It stores the details concerning a transaction, which would involve the time, date, and dollar amount of the most recent purchase.
- It also stores the information concerning those participating in the transaction. However, instead of using a name, Blockchain technology reads data through unique digital signatures.
- Lastly, blocks store data that makes each block unique. A code, which is referred to by many as a “hash,” is assigned to a block which will represent a particular transaction. The code of your previous purchase may look identical to your recent purchase; however, the blocks can easily tell each transaction apart by using the codes.
Actual transaction process on the Blockchain
When a block stores new information, that information is added to the Blockchain. However, before a Blockchain is formed, there are four things that must first happen:
- A transaction must first occur
- The transaction must be verified
- The transaction details must be stored in a block
- The block must be provided with a hash
|Good to know|
|Blockchain technology is a real challenge to conquer. If you really want to dive more into this technology, I would advice you to buy this book called “Mastering Ethereum: Building Smart Contracts and DApps“. It will give you a head-start into this new world of decentralized applications and smart contracts.|
Why Cannabis Companies Are Embracing Blockchain Technology
Similar to most supply chains, the cannabis industry can greatly benefit from the blockchain technology. The enhanced provenance that blockchains can provide brings about the peace of mind in both suppliers and customers.
By utilizing blockchain technology, it would be easy to identify how marijuana was grown and by whom, who were the parties involved in every cannabis transaction, and that no link along the cannabis supply chain was involved in any illegal elements.
Without further delay, here are some of the reasons why cannabis companies are embracing Blockchain technology.
Processing of Payments
The processing of payments is probably one of the struggles of the cannabis industry. Despite having the majority of the states in the US legalized either recreational or medical marijuana, the federal law still poses a number of restrictions as to how payment is accepted and stored by cannabis-based firms. Moreover, 300 out of 11,000 banks, in the United States of America allow cannabis business owners to open an account.
Cryptocurrencies and other digital currencies are a form of digital cash unregulated and decentralized. As a result, cannabis business owners like the ability to accept secure and fast payments that are cashless. Since cannabis-based businesses are cash-only businesses, Blockchain technology can greatly aid in the accounting processes of the business.
With Blockchain technology, owners of cannabis companies no longer have to sift through an infinite amount of financial statements. Blockchain technology will not only change how payments are accepted by the cannabis industry but also the entire operation of global commerce.
The production process of cannabis may touch on numerous businesses – from the farmers and growers to the authorized dispensaries, and from cannabis retailers to consumers. Nevertheless, the utilization of Blockchain technology in the supply chain of cannabis businesses provides a complete picture of its end-to-end process; thus, ensuring quality assurance.
Stemming from the previous point, Blockchain technology also allows the consumers, regulators, and business owners of cannabis products to pinpoint the inefficiencies in the cannabis end-to-end process. Remember, a supply chain that is supported by the Blockchain’s flawless math has the potential to produce an improved overall customer experience.
Standard of Transparency
Paragon CEO Jessica Versteeg shares with Rolling Stone on how her cannabis startup is utilizing its very own cryptocurrency based on Blockchain technology. For VerSteeg, it’s all about transparency in the cannabis space, considering the fact that this industry is facing unclear regulations across borders.
The ledger used by the Blockchain technology can either reduce or eliminate any trace of human-based complication because it is unchanging. Financial institutions and government agencies that are performing audits on cannabis-related transactions can utilize Blockchain technology as a means to keep track of its legality.
Blockchain technology is designed to be transparent. All transactions concerning cannabis on a personal level can be easily tracked and traced. As a matter of fact, Blockchain is a very powerfull monitoring tool.
There are two companies that use Blockchain technology to solve this kind of issue. With IBM’s proposed solutions, there is increased transparency on the legality of cannabis sales. In addition, BlockMedx is working on various ways in which Blockchain can assist in combatting opioid abuse.
No matter where you buy it or how much you paid for it, you are always going to face a heavy tax when purchasing marijuana products; this was a huge part of the legalization pitch, after all. In fact, California reported over $2.7 billion worth of cannabis derived tax.
If one is to utilize blockchain ledger technology and that this would be mandated for dispensaries, there is a high chance that sales figures would become certain and stable. By extension, it would lead to accurate taxation and simpler audits for all of the parties involved. The best part is that the revenues from cannabis-related transactions are given back in larger amounts to the citizens of the states who have chosen to legalize marijuana.
Again, IBM as one of the companies who proposed to the Canadian Government a particular blockchain solution for ensuring the effective and accurate tracking of cannabis so much so that it would lead to easier taxation.
It is without a doubt that Blockchain technology has the ability to transform any business process. It can do so by disintermediating the business’ processes and central entities, improving any of its efficiencies, and allowing the creation of an immutable audit on transactions.
According to what has been explained about Blockchain technology, and what has been shared regarding the current state of the cannabis industry in the United States of America, it is clear that this industry can benefit from using this developing technology. As a matter of fact, this technology is a perfect way to track and monitor its end-to-end process. Even without ever neglecting marijuana laws.
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