Using Blockchain Technologies in the Cannabis Sector

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Handful of industries are as misunderstood, or as complimentary, as cannabis and blockchain technologies. Each niches are young and exist in hugely speculative markets with foggy regulatory circumstances. They are also getting an influx of higher talent entrepreneurs and programmers hunting to resolve some of their respective industry’s biggest issues.

In order to really fully grasp the synergy of cannabis and blockchain, we will have to appear beyond the hype and speculation to fully grasp how and why the cannabis market wants blockchain technologies. It is also critical to fully grasp how each industries could inevitably rely on every single other.  

 

Cannabis and Blockchain at a Glimpse

The North American cannabis market has observed a big spike in development and consideration as of late. Significantly of that consideration is coming from entrepreneurs searching for to produce worth and strike it huge, and investors hunting for a piece of the pie. There is also an influx in activists fighting for what they think to be a really useful item and politicians on each sides of the heated legalization debate.

The big strides in the cannabis market have been not with no their discomfort points. Transparency, payment options, top quality assurance and upkeep, and common regulatory uncertainty have plagued cannabis entrepreneurs for years.

The blockchain is primarily an immutable distributed database at the heart of what quite a few folks are calling a cryptocurrency revolution. Anything from well known cryptocurrencies such as Bitcoin and Ethereum to publicly traded firms such as IBM are using blockchain to resolve numerous troubles. These troubles are not just becoming solved for a couple of companies either, we’re speaking thousands of companies.  

Combined with sister technologies like cryptocurrency (digital cryptographic currency) and sensible contracts (programming-primarily based contracts), blockchain can assist the cannabis market resolve its existing troubles and navigate the uncertain path ahead.

 

Setting a Normal of Transparency

In an interview with Rolling Stone, Jessica VerSteeg, the CEO of a cannabis startup known as Paragon is using its personal blockchain-primarily based cryptocurrency, noted that “Blockchain is about [transparency]. And that is what we will need in the cannabis space.”

Considering the fact that the blockchain ledger is unchanging, it drastically reduces or eliminates any possible human-primarily based obfuscation or deceptive practices. This would make it exceptionally quick for monetary institutions and governments to audit cannabis firms and maintain track of taxes due.

This is specifically critical in the cannabis space exactly where companies will have to face unclear regulations across borders. Blockchain would empower these companies with tangible proof of the point of origin and no matter if any items are moving across national or state lines. This is 1 of the factors VerSteeg and other entrepreneurs cite blockchain as becoming “one catalyst that could assist legalize cannabis.”

While Paragon would later turn out to be embroiled in a lawsuit due to its failure to register its Initial Coin Providing (ICO) with the SEC, their basic organization strategy to add transparency to the cannabis space remains the exact same.

 

Excellent Assurance and Upkeep

Blockchain enables companies to handle their provide chains in genuine-time, eliminating paper trails and their inescapable lag. Considering the fact that the cannabis space is somewhat new, couple of firms are in a position to produce an powerful vertical integration in their provide chain absolutely free from any lag or loss of item.

It is probably that cannabis will touch quite a few diverse companies from farm to when it gets to an authorized dispensary, generating various possible pricey points of failure. Cannabis companies using blockchain will be in a position to precisely pinpoint any inefficiencies in the approach and, effectively, nip them in the bud.

Furthermore, by using blockchain in their provide-chain, cannabis companies will be in a position to present shoppers with the comprehensive image of their purchase’s journey. Beginning from when it was just a seed and how quite a few diverse parties it touched just before ending up in their purchasing cart.

Dispensaries will also be in a position to completely assure their items include specifically the quantity of THC, CBD and no matter if it is sativa or indica dominant as what they’re advertised. Lots of very first-timers walking by way of legal dispensary doors have a tendency to have concern about their sensitivities to the items. A provide chain supported by flawless math caters to a greater general client expertise.

 

Payment Processing and Storage

Payments are possibly 1 of the biggest blights for the cannabis market.

While the vast majority of states in the US have legalized marijuana in some capacity, no matter if medicinal or recreational, federal law poses cumbersome restrictions for how cannabis-primarily based firms can accept and retailer payments. According to the Credit Union Occasions, out of the 11,000 banks in the United States, only 300 of them permitted cannabis organization owners to produce accounts.

This is top quite a few organization owners to operate as a sole money-only organization. With hundreds of thousands and occasionally millions of dollars of income, organization owners are facing a close to-Wild West higher stakes risky situation. Furthermore, accounting at higher volumes tends to turn out to be a nightmare for money-only companies and regulators finish up obtaining to sift by way of nebulous financials and finish up with an unclear view of tax liabilities, contributing to hesitations for a lot more lenient regulatory policies.

Considering the fact that cryptocurrencies are decentralized and unregulated for the most component, they allow cannabis companies to accept safe, cashless, and rapid payments that can convert into greenbacks or sent anyplace about the planet at competitive speeds.

The North American cannabis market is anticipated to count $20.two billion in sales by 2021. Although standard payment options firms are bound by federal restrictions, cryptocurrency entrepreneurs are positioning themselves to not only alter how the cannabis market accepts payments, but how international commerce operates.

 

Final Thoughts

From payment processing and identity confirmation to tracking the whole provide chain from seed to finish-item, the cannabis market has a lot of entry points for blockchain technologies.

As the cannabis and blockchain industries evolve collectively, there will be an even deeper mingling and collaboration amongst the respective entrepreneurial talents, technological benefits, and political activism of every single die-tough neighborhood.

About the Author

Alex Moskov

Alex is the Editor-in-Chief of CoinCentral, a top cryptocurrency and blockchain media publication. He also advises blockchain startups, enterprise organizations, and ICOs on content material tactic, advertising and marketing, and organization improvement. He also regrets not acquiring a lot more Bitcoin back in 2012, just like you.

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