Utilizing Blockchain Technology in the Cannabis Industry

by Awesome Author - June 23, 2019

Blockchain Technology and the Cannabis Industry

Few industries are as misunderstood, or as complimentary, as cannabis and blockchain technology. Both niches are young and exist in highly speculative markets with foggy regulatory conditions. They are also receiving an influx of high talent entrepreneurs and programmers looking to solve some of their respective industry’s largest problems.

In order to truly understand the synergy of cannabis and blockchain, we must look beyond the hype and speculation to understand how and why the cannabis industry needs blockchain technology. It is also important to understand how both industries may inevitably depend on each other.

Cannabis and Blockchain at a Glimpse

The North American cannabis industry has seen a major spike in growth and attention as of late. Much of that attention is coming from entrepreneurs seeking to create value and strike it big, and investors looking for a piece of the pie. There is also an influx in activists fighting for what they believe to be a truly beneficial product and politicians on both sides of the heated legalization debate.

The major strides in the cannabis industry were not without their pain points. Transparency, payment solutions, quality assurance and maintenance, and general regulatory uncertainty have plagued cannabis entrepreneurs for years.

The blockchain is essentially an immutable distributed database at the heart of what many people are calling a cryptocurrency revolution. Everything from popular cryptocurrencies such as Bitcoin and Ethereum to publicly traded companies such as IBM are utilizing blockchain to solve countless issues. These issues aren’t just being solved for a few businesses either, we’re talking thousands of businesses.

Combined with sister technologies like cryptocurrency (digital cryptographic currency) and smart contracts (programming-based contracts), blockchain can help the cannabis industry solve its current issues and navigate the uncertain path ahead.

Setting a Standard of Transparency

In an interview with Rolling Stone, Jessica VerSteeg, the CEO of a cannabis startup called Paragon is utilizing its own blockchain-based cryptocurrency, noted that “Blockchain is about [transparency]. And that’s what we need in the cannabis space.”

Since the blockchain ledger is unchanging, it significantly reduces or eliminates any potential human-based obfuscation or deceptive practices. This would make it extremely easy for financial institutions and governments to audit cannabis companies and keep track of taxes due.

This is particularly important in the cannabis space where businesses must face unclear regulations across borders. Blockchain would empower these businesses with tangible proof of the point of origin and whether any products are moving across national or state lines. This is one of the reasons VerSteeg and other entrepreneurs cite blockchain as being “one catalyst that could help legalize cannabis.”

Although Paragon would later become embroiled in a lawsuit due to its failure to register its Initial Coin Offering (ICO) with the SEC, their fundamental business plan to add transparency to the cannabis space remains the same.

Quality Assurance and Maintenance

Blockchain technology enables businesses to manage their supply chains in real-time, eliminating paper trails and their inescapable lag. Since the cannabis space is relatively new, few companies are able to create an effective vertical integration in their supply chain free from any lag or loss of product.

It’s likely that cannabis will touch many different businesses from farm to when it gets to an authorized dispensary, creating multiple potential costly points of failure. Cannabis businesses utilizing blockchain will be able to precisely pinpoint any inefficiencies in the process and, well, nip them in the bud.

Additionally, by utilizing blockchain in their supply-chain, cannabis businesses will be able to provide customers with the complete picture of their purchase’s journey. Starting from when it was just a seed and how many different parties it touched before ending up in their shopping cart.

Dispensaries will also be able to fully guarantee their products contain exactly the amount of THC, CBD and whether it is sativa or indica dominant as what they’re advertised. Many first-timers walking through legal dispensary doors tend to have concern about their sensitivities to the products. A supply chain supported by flawless math caters to a better overall customer experience.

Image Credits: Pixabay

Payment Processing and Storage

Payments are perhaps one of the largest blights for the cannabis industry.

Although the vast majority of states in the US have legalized marijuana in some capacity, whether medicinal or recreational, federal law poses cumbersome restrictions for how cannabis-based companies can accept and store payments. According to the Credit Union Times, out of the 11,000 banks in the United States, only 300 of them allowed cannabis business owners to create accounts.

This is leading many business owners to operate as a sole cash-only business. With hundreds of thousands and sometimes millions of dollars of revenue, business owners are facing a near-Wild West high stakes risky scenario. Additionally, accounting at high volumes tends to become a nightmare for cash-only businesses and regulators end up having to sift through nebulous financials and end up with an unclear view of tax liabilities, contributing to hesitations for more lenient regulatory policies.

Since cryptocurrencies are decentralized and unregulated for the most part, they enable cannabis businesses to accept secure, cashless, and fast payments that can convert into greenbacks or sent anywhere around the world at competitive speeds.

The North American cannabis industry is expected to count $20.2 billion in sales by 2021. While traditional payment solutions companies are bound by federal restrictions, cryptocurrency entrepreneurs are positioning themselves to not only change how the cannabis industry accepts payments, but how global commerce operates.

Final Thoughts

From payment processing and identity confirmation to tracking the entire supply chain from seed to end-product, the cannabis industry has plenty of entry points for blockchain technology.

As the cannabis and blockchain industries evolve together, there will be an even deeper mingling and collaboration between the respective entrepreneurial talents, technological advantages, and political activism of each die-hard community.

This article by Alex Moskov was previously published on MadeByHemp

About the Author:

Alex Moskov is the Editor-in-Chief of CoinCentral, a leading cryptocurrency and blockchain media publication. He also advises blockchain startups, enterprise organizations, and ICOs on content strategy, marketing, and business development. He also regrets not buying more Bitcoin back in 2012, just like you.

Featured Image Credits: Pixabay

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Blockchain for Europe Is Unifying the Industry’s Voices

by Awesome Author - March 4, 2019

What Is Blockchain for Europe?

At the end of 2018, five blockchain heavyweights joined forces to create Blockchain for Europe, an effort “to create a unified voice for the blockchain industry at [the] European level.” The initial committee of Ripple, NEM, Emurgo/Cardano, Bloq, and Fetch. AI hosted a summit in November 2018 in partnership with the four largest European parliamentary groups to discuss an array of topics regarding blockchain, cryptocurrency, and their associated regulations.

As blockchain technology continues to enter the limelight, it’s important that the regulators behind the inevitable legislation understand the ins-and-outs of the technology and what impact their decisions will have on innovation.

CoinCentral’s Steven Buchko and Sarah Rothrie had the opportunity to speak with Kristof Van de Reck, Chairman of Blockchain for Europe and NEM’s Regional Head of Europe, about what’s driving this new organization and some of the challenges that it may face in the coming years.

What are the goals of Blockchain for Europe in 2019?

In 2019, Blockchain for Europe has three priorities:

Establish ourselves as a trusted stakeholder towards policymakers in the blockchain space;
Educate EU and member state institutions on the true nature and potential of distributed ledger technology (DLT) and blockchain technologies; and
Engage in policy discussions, notably around blockchain protocol standards as well as crypto assets. Other topics will follow in the coming years.

Since 2019 is also our first year as an association, an important focus will also be to drive our membership. Our primary constituencies are blockchain originals (i.e. organizations whose prime reason for existence is blockchain).

Describe how discussions with European regulators have been going so far.

The first reactions are very positive. European regulators are generally very open to receiving input from us on this topic. The current stakeholder landscape has been largely dominated by large, non-blockchain originating companies, law firms and universities. We can bring a different perspective to regulators.

In your opinion, which countries are approaching blockchain regulation in an appropriate way?

As of today, France, Malta, Lithuania, Switzerland and Liechtenstein lead the way in Europe on cryptocurrency regulation. Also, the UK is taking steps in the right direction. On blockchain regulation in general, the picture is much more complicated as it often requires an application-based approach and is not necessarily linked to the technology itself.

What do ideal blockchain and cryptocurrency regulations look like to you?

We believe blockchain technology as such should not be regulated. Regulation should be technology-neutral by default. Probably the most important point about dealing with regulation is to bring on board companies developing this new technology so that regulators can better understand its future impact. That is also the mission of Blockchain for Europe.

How can regulators keep up with the pace of blockchain development, particularly in the EU where (by necessity), passing new regulations is a bureaucratic process involving many parties? For example, the GDPR took two years from approval to enforcement. Isn’t there a risk that by the time regulation becomes effective, it’s already obsolete?

We think that regulation should be, to the degree possible, technology-neutral so that technological development is not harmed. Regulation should be based on the applications, not on the technology. Blockchain cannot be regulated with one regulation but requires a nimble, sectoral approach.

Regulation should be, to the degree possible, technology-neutral so that technological development is not harmed. – Kristof van de Reck, Blockchain for Europe Chairman.

What’s your view on the conflict presented to blockchain by the GDPR requiring a “right to be forgotten?” How can blockchain projects ensure compliance?

The EU Data Protection Regulation is certainly a challenge for businesses working with blockchain. In scenarios where users are in control of their own data, like public blockchains, the GDPR is not an issue. However, we have to wonder whether users are actually aware of the consequences of certain actions in this environment.

Blockchain technology, in combination with cryptography, actually provides huge opportunities for privacy. And we can imagine scenarios where the GDPR may be a little strict. There will hopefully be opportunities to improve the GDPR in the future.

Are there any areas where you see blockchain adoption is gaining particular traction in the EU? For example, the My Health My Data initiative seems to indicate a particular enthusiasm for implementing blockchain in healthcare. How does the association intend to represent blockchain adoption in different sectors?

Europe is really keen on becoming a leader in the blockchain space. We see blockchain quickly gaining ground in governance applications, including identity, research cooperation between universities and in the logistics/supply chain area.

While our goal in 2019 is to educate policymakers about blockchain protocol standards as well as crypto assets, in the coming years, we also want to focus on other sectors. Our members are keen to get involved in the discussions around notably digital identity and smart contracts.

There will be a new European Parliament elected in 2019. Do you think this will affect the tone or direction of the blockchain/cryptocurrency policy debate?

There is certainly a risk that the tone of the blockchain/cryptocurrency policy debate will change after the May 2019 European elections. Not only will we likely lose all British MEPs, generally a pro free-market force, we also expect the Parliament to become much more fragmented. While today it is quite easy for us to have a direct impact on the debate through a few members of Parliament that have a real interest in the topic, in a future Parliament, this might become much more challenging. Depending on how the balance of powers shifts, the Parliament might also take a more or less restrictive approach toward regulating blockchain technology.

Does the association intend to get involved in European cross-technology initiatives such as the Smart Cities Initiative?

No, at this stage it is not a priority for us.

Thank you, Kristof and the rest of Blockchain for Europe, for your time and efforts toward further blockchain adoption.

This article by Steven Buchko was previously published on Coincentral.com

About the Author:

Based in Austin, TX, Steven is the Executive Editor at CoinCentral. He’s interviewed industry heavyweights such as Wanchain President Dustin Byington, TechCrunch Editor-in-Chief Josh Constine, IOST CEO Jimmy Zhong, Celsius Network CEO Alex Mashinsky, and ICON co-founder Min Kim among others. Outside of his role at CoinCentral, Steven is a co-founder and CEO of Coin Clear, a mobile app that automates cryptocurrency investments. You can follow him on Twitter @TheRealBucci to read his “clever insights on the crypto industry.” His words, not ours.

Featured Image Credits: Image by pixel2013 on Pixabay