With an anticipated growth of about $30 billion and an expanding job market, it’s evident that the cannabis industry is set to become one of the strongest pillars of global economies. This explains why various legislatures are legalizing marijuana both for recreational and medical use.
But the major strides in the industry have not been without pain points. From the ever-changing regulatory rules, unreliable payment solutions, to inefficient supply chain management – all these create uncertainty within the industry. As a result, the industry hasn’t been successful at drawing in steady investors.
As blockchain continues to find use in various industries, the technology will prove to be even more useful in the cannabis market to help entrepreneurs mitigate some of the problems plaguing the industry.
Here are some of the solutions blockchain can offer
In states where marijuana is legal, there is a maximum limit that consumers can buy at any given time. The limit is set to curb the resale of marijuana in the black market by making it costly to buy marijuana in bulk. But, there are loopholes in this rule whereby a consumer can buy the maximum daily limit of marijuana in one dispensary, and then head to another to buy some more.
When this happens, a retail dispensary risks going out of business as the state can revoke its license. Moreover, the extra amount of marijuana purchased ends up being resold in the black market, resulting in a loss of revenue in terms of taxes.
By using blockchain to record and verify purchases, marijuana dispensaries can ensure that their customers don’t exceed the purchase limit set by the local government. These records are tamper-proof and transparent for all retailers to see, especially those operating in the same blockchain network. The technology can be integrated into consumer verification IDs and inventory management systems to prevent retail operators from acting in non-compliance.
For medical marijuana users, the quality of CBD products is highly appreciated in order to reap the full benefits of the hemp plant. Unfortunately, quality control bodies such as the Food and Drug Administration (FDA) consider CBD products as a supplement. As such, they don’t scrutinize the labels to authenticate the quality of these products.
To guarantee quality at all times, cannabis businesses can use blockchain to store all the information of a hemp plant right from its seedling stage to a saleable product. This includes the laboratory results indicating the correct concentration of THC and CBD in a product. Such levels of transparency go a long way in winning consumers’ trust.
Big corporations such as CVS pharmacy, Walgreens, and Walmart who are strict on the quality of CBD products, can also leverage blockchain to ascertain if a product is up to standard. Doing so will make it difficult to corrupt the quality of a product and eliminate the tedious paperwork involved in the process.
Given the dynamic nature of the laws regulating the cannabis industry, most banks shy away from providing services to the industry players. For starters, the lack of banking services has forced the industry to operate as a cash-only business. As is often the case, businesses operating on fiat currency only are highly susceptible to theft and fraud. Also, as sales increase, accounting for the high volume of cash becomes hectic, creating inaccurate financial statements that lead to taxation hurdles.
In this case, cryptocurrencies can be used as a payment method, ensuring fast, secure, and affordable transactions among industry stakeholders. All the payments will be recorded in a secure and distributed ledger system that helps in auditing as well as maintaining tax liability.
Legalization of Marijuana
So far, only a handful of nations have legalized marijuana. Considering the proven medical benefits of the hemp plant, it’s unfortunate that some countries still criminalize pot. But, there is a likelihood that some would be open to legalizing weed as long as its use is regulated by law.
The integration of blockchain technology into the cannabis industry will make it easy for everyone in the supply chain to abide by all the regulations put in place. The authorities will be in a position to curb illegal marijuana businesses as well as limit its use to prevent abuse. So, marijuana will be sold to the right people for the right use, contributing to its legalization.
Decentralize Electronic Medical Record
Electronic Medical Records (EMRs) promise efficiency in the health sector as long as they are properly integrated into the system. But it can be concluded that the health sector hasn’t achieved much success in leveraging EMR to offer medical services. A good example is the cannabis industry where some individuals have acquired marijuana medical cards by forging fake health records
These individuals cause an increase in the demand for marijuana due to their impulse buying practices. Consequently, those who have legitimate medical conditions end up paying more for medical marijuana and may even fail to get some.
Blockchain-based EMRs can help ensure that medical marijuana cards are given to those who rightfully deserve them. As an immutable and distributed ledger system, any patient’s data is permanently recorded, such that it would be impossible for unauthorized persons to distort it. The record can also be shared across various hospitals to help doctors and marijuana retailers determine the patients who truly need medical marijuana.
Use Cases of Blockchain in Cannabis
Currently, there are already more than ten blockchains uniquely designed for the cannabis industry. Some of them even offer their own cryptocurrency to help meet the banking needs of the cannabis industry.
This network is committed to enhancing transparency from seed to sale tracking, as well as coming up with regulatory solutions in the cannabis industry. The network even has an in-house laboratory that works to ensure quality is maintained. Its crypto coin, Paragon Coin, can be used to make payments within the industry supply chain.
Potcoin is mainly focused on offering financial services to the marijuana industry. It allows the transfer of funds via a digital wallet, from customers, businesses to suppliers.
CanaSos is a social network platform that helps consumers locate nearby retailers and discover new CBD products and marijuana strains. The users can review marijuana products, answer questions, and earn points that can be redeemed for PerkCoins. The coins can be used to buy marijuana or withdrawn for fiat currency.
The cannabis industry is a relatively new market that is yet to be widely accepted in all parts of the world. The same can be said about blockchain, which makes the two a perfect match for each other. As the marijuana market expands, blockchain is well poised to solve the current problems limiting the industry’s growth and even the unprecedented ones on the horizon.