The Future of Blockchain in the Cannabis Industry

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Much of
blockchain’s initial success came from startups using digital currency to raise
capital and bypass federal regulations via an initial coin offering, or ICO.
After the ICO market crashed, cannabis companies began to view blockchain as a
resource that could help track and validate their products.

Without
transparency, the integrity of CBD oils comes into question. The Food and Drug
Administration, for instance, considers CBD a supplement. This means
the FDA doesn’t check labels, which could lead to inaccurate marijuana
concentrations — among other issues.

Blockchain,
on the other hand, enables reports to be uploaded directly to the chain by
distributors and viewed by users. Some organizations even use blockchain to
track cannabis and hemp transactions from the grower to the end user without
ever touching the product.

As blockchain
and cannabis become further intertwined, the former can help lift the veil from
the latter. In turn, this increased
transparency can
further entrench cannabis as a viable and acceptable option for consumers.

Facing
Cannabis Challenges

Whether
you live in a state where cannabis is legal, the plant is overtaking the
marketplace. Because of the lack of established infrastructure and
technologies, startups run the risk of turning customers and potential partners
away from doing business with them.

In
2016,
11 million pounds of California-produced cannabis left the state — most likely headed to areas where
it’s illegal. California is losing money in taxation as a result and
inadvertently shining a light on one of the biggest problems cannabis faces: an
inability to track the supply chain between growers, processors, retailers, and
consumers.

When the
problem isn’t with tracking, it could be with compliance. Consumers sidestep
the maximum daily amount of purchased marijuana products by hopping from store
to store or simply by leaving one dispensary and returning a few hours later.
For example, the city of Denver ended up revoking all of
Sweet Leaf’s municipal licenses for such a problem.

Not all
challenges are negative, though. For instance, 47 Nevada-licensed cannabis
retailers are
running out of supply due
to problems with scaling to meet market demand. This failure to keep pace with
demand could create an opening for unlicensed businesses to take market share,
which creates its own set of legal issues.

Another
issue involves doctors selling medical cannabis cards to users who don’t have
legitimate medical conditions. This situation has led to several negative
consequences, including people who have legitimate medical conditions having to
pay higher prices because of the lack of products at the dispensaries.

To
resolve these issues, companies incorporate blockchain into their operations to
track cannabis throughout the supply chain. This keeps data untouched and
allows consumers to search for products and review them for authenticity.
FTZ
Blockchain
, for example, uses both the
Internet of Things and blockchain to educate regulators and consumers — even
when demand is high.

The more
cannabis companies use blockchain to resolve their issues, the better the
industry will be. While that added transparency will be a huge boon for the
cannabis industry, there are still other uses for blockchain.

Cannabis
2.0

The
future of cannabis depends on
how companies choose to
incorporate blockchain into their core practices. Marijuana isn’t going
anywhere, and blockchain can help industry leaders turn existing challenges
into future opportunities.

Here are
three opportunities for blockchain to benefit the cannabis industry:

1.
Storing the Genotypes of Cannabis Strains

Strain
creators are trying to patent their strains in the same way Monsanto patents
its seeds. Lighthouse Genomics, for example, recently distributed
certification documents for the master plants of 10 genomic varieties. Using blockchain,
CEOs can enable these strain creators to store the phenotypes or genotypes of
their new strains to prevent theft without the need to track documentation
manually.

2.
Providing Source Information

Big corporations like CVS, Walmart, and Walgreens want to know the source of CBD-based products from
highly regulated agriculture. Now that
the Farm Bill allows
farmers to grow hemp, just about anyone can be part of the supply chain. With
blockchain in place, CEOs can gain proof of product sources without the added
stress of potential tampering.

3.
Tracking Medical Records

The more
the healthcare industry uses cannabis as a treatment, the more regulation and
tracking need to be in place. Electronic medical records, or EMRs, have been
notoriously difficult to implement without a blockchain system in place to
determine best treatment programs and dosage outcomes. Thanks to blockchain, a
system like
StatePass allows
CEOs to put processes in place that can streamline the EMR process for cannabis
patients.

When it
comes to the cannabis industry, blockchain is more than a tracking tool. It can
take the industry from startup to enterprise, expanding the cannabis sector’s
reach while legitimizing its business with each record.

Sean
Caputo is the co-founder and chief strategy officer at
Augusta HiTech, a consulting firm that works with social-impact focused
partners to improve their product development, software, and technological
services.

___

Equities Contributor: Sean Caputo

Source: Equities News


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