Could blockchain technology be the cannabis industry’s magic bullet?
If the hype behind blockchain is true, it should benefit growers as a seed-to-sale tracking technology, while retailers can use it as a payment-processing device and banking solution.
Advocates contend blockchain technology could be used to:
- Solve payment and banking conundrums facing cannabis businesses by replacing conventional currency with cryptocurrency.
- Help marijuana companies obtain loans from cryptocurrency financiers.
- Improve recordkeeping: Blockchain records are immutable and harder to hack.
- Provide seed-to-sale tracking – a common requirement among growers and retailers in legal U.S. marijuana markets.
“Blockchain technology can be used in the cannabis space the same way it can be used in any industry”.
Blockchain is essentially a decentralized digital ledger of transactions. Each transaction, or “block,” is added to the ledger linearly, forming a chain of blocks. Before a block can be added to the chain, however, it must be verified by existing participants within the blockchain.
- Roughly speaking, the two types of cannabis-related companies that currently leverage blockchain technology are those:
- Using it for payment solutions and banking, such as retailers.
- Deploying it for seed-to-sale tracking and recordkeeping, such as growers.
Companies big and small are keen to combine blockchain and cannabis.
Verification is Key
Advocates say blockchain’s verification feature, coupled with how the blockchain is structured and programmed, makes three of the technology’s most notable features possible:
- Every event or transaction can be traced, such as when a grower destroys contaminated product or ships product to a retail client, or when a customer buys cannabis.
- The blockchain digital ledger cannot be manipulated or changed.
- The data is decentralized, so the technology is much more difficult to hack.
Tracking and Recordkeeping
Marijuana businesses, primarily growers, are finding use for blockchain in seed-to-sale and recordkeeping. While blockchain records everything that current tracking systems do, the technology’s advocates point out that it’s harder to manipulate a decentralized digital ledger of transactions.
Seed-to-sale executives acknowledge that blockchain’s constancy is valuable. Blockchain doesn’t replace transaction systems, that digital ledger is valuable, but it requires highly skilled programming personnel and lots of time to build.
Furthermore, blockchain requires many business participants to truly work. “It does not work unless there are peers to share from and with. Blockchain does not work unless there are peers willing to host the chain and that both validate and accept changes on a peer level,”
And what happens when not all industry participants are involved in the blockchain? “It becomes meaningless".