Is Cannabis to Healthcare as Bitcoin is to Finance?
Jesse Walden wrote about business empowerment through data in web2 platforms. Sadly, these platforms evolve/deteriorate from cooperative to extractive practices over time.
Thus unlike Web2, Web3 enables stakeholder capitalism. In a recent post, the World Economic Forum confirms that this form of capitalism offers benefits beyond shareholder capitalism and state capitalism, and is widely seen as the basis for a global economy that works for progress, people and the planet.
Wired explained Web3 as “…a decentralized online ecosystem based on the blockchain. Platforms and apps built on Web3 won’t be owned by a central gatekeeper, but rather by users, who will earn their ownership stake by helping to develop and maintain common assets, services and market places.”
Where is the transition from Web2 to Web3 most apparent?
Certainly on the heels of the 2008 recession, a new set of digital rails appeared without impacting much, if any, of the traditional financial establishment at the time. After more than a decade, the bitcoin block chain operating outside of and separate to commonly used banking infrastructure, continues to provide value to an increasing number of users. This is an example of a truly distributed network enabling stakeholder capitalism. The bitcoin blockchain is an organic entity growing from the contributions of people. ‘No one is home’ in terms of a central management team.
Perhaps unnoticed by most, distributed networks in healthcare may not be a distant future.
As bitcoin is to finance, so may be cannabis to healthcare…though clearly not as decentralized.
Cannabis as a household therapeutic for sleep, pain, anxiety and other ailments happens largely outside of traditional medicine just as the bitcoin blockchain operates outside of traditional financial rails. Participants use Web3 tech to deliver early forms of stakeholder capitalism to their communities. This approach improves both the finances of industry business models as well as ensuring therapeutic benefit is delivered in experience-based ways.
Let’s consider two key differentiators:
- New framework for debt financing: an OPEN credit model that assigns risk while protecting business trade secrets.
- Crowdsourced experience-based intelligence using the privacy and security of web3 tools.
New framework for debt financing
In 2018, the Small Business Administration (SBA) blocked banks from lending or banking the cannabis industry. This move meant that teams would have to scale their business using only equity capital and not a preferred balance of equity and debt capital as in other industries. The preferred corporate debt to equity is typically 4:3, but with the SBA ruling equity capital swelled to 5x the debt capital in cannabis.
Both Banks and private capital are sources of debt, but with banks out, why has private capital not expanded more? Debt in a market reflects the aggregate risk of loan failure but not in the cannabis industry. Lack of public debt access also blocks standard risk ranking mechanisms (Standard and Poor’s, Moody and Finch) and there is no loss protection guarantee with private loans.
Enter Chroma Signet, a Web3 product delivering credit risk analysis and supporting debt capital transactions in the Cannabis industry. This results in solving two main problems:
1. The cost of collecting corporate/business relevant data
2. The risk of sharing this data
How does it work? Chroma uses network finance to support debt capital. Banks typically see businesses as an island. Network finance assesses the credit worthiness of the supply chain and assesses risk of the branch (business) in a network. Chroma looks at both the borrower and their supply chain credit worthiness exposing both the upstream and downstream credit conditions to generate a full financial risk assessment.
How does this help?
Factoring is usually seller-led, with the seller offering a discount to the buyer for rapid pay. Chroma enables reverse factoring; a buyer-led transaction where a financier agrees to pay the seller’s invoice at an accelerated rate in exchange for a discount to avoid a 30–90 day delay. In this way, suppliers will accept a 95% payment via Chroma with the extra 5% showing up on the lender’s balance sheet once the full loan is paid.
The financial risk assessment algorithm is open for public inspection and improvement, while the specific identities of suppliers and customers remain cryptographically hidden. In this way, the industry can offer up improvements to the algorithm while not gaining access to the business secrets of competitors such as the identity of various suppliers and/or customers.
Since governments have mandated seed-to-sale data in this industry, ChromaSIGNET makes collecting the data easy with little need to normalize. The supply chain data, seed to sale, is valuable input to credit models but must be protected from inappropriate sharing with other parties. Chroma uses ZN-SNARK, a zero knowledge succinct non-interactive argument of knowledge encryption. Thus companies can submit private data to the credit model without risk of follow-on use of private content.
This approach flips the model of national credit agents S&P, Moody’s and Fitch, large participants in the financial crisis of 2008. The black box approach to algorithms can result in generating substantially more risk than expected. Without access to the assessment strategy, investors have little way of determining when opportunity risk exceeds their comfort level.
This point bears repeating; unlike our national credit assessment agents, Chroma hides the data but keeps the credit models that consume data and assign risk open for ongoing assessment and improvement. As more and more businesses depend upon the power of networks, using this OPEN credit assessment model is likely to become commonplace.
Crowdsourced experience-based intelligence
It may sound aspirational that the experiences of scores of individuals could be safely connected in such a way that no experience goes to waste. No longer do the yoga routines that protect against migraines simply evaporate. Instead, these experiences are collected and digitized thus making them safely explorable among the thousands of other co-occurrences that might matter. Managing a flood of moving parts and identifying potentially relevant co-occurrences is simple work for machine-based artificial intelligence. With Web3 approaches, the human health experience of many can collaborate to inform groups and individuals regarding the benefits or lack thereof of certain therapeutic options.
Since CBD, cannabidiol products do not fit within traditional therapeutics, secure funding for large rigorous randomized controlled trials remains problematic. Natural products are difficult to patent and without a route to intellectual property rights, reliable business models leading to hefty profits are not an option. There must be another way.
Teasing out what works for which symptoms in which individuals is not an easy task. There is likely to be significant variation in personal response to various plant products over time. Interestingly gender differences in responses have been reported.
Closing the loop = What is it? + How well does it work?
A seed-to-sale value chain that also includes therapeutic utility across diverse cohorts over time relies on a stakeholder capitalism support system.
Smart Cannabis provides this add-on infrastructure. Private, secure and certifiable customer experiences remain the driving force for successful business growth in the cannabis market. Customers are rewarded for sharing their experiences with tokens and cash back options.
Corrin has difficulty sleeping due to chronic back pain. He’s used opioids and sedatives in the past but finds the withdrawal difficult. His on-line support group suggested he try a CBD/THC combination. It took several nights before Corrin was convinced that this new product was helping. He uploaded his experience daily to keep track of his own progress and hopefully help others that might be struggling with similar pain. Now eight months later, Corrin continues to find benefit from this and other recommended natural products. He is hopeful that opioids and prescription sedatives will be a rare and last resort option for outlier episodes of breakthrough pain.
Imagine Corrin uses his SSI to log into his Smart Cannabis app and scans the barcode of the product he uses. This provides a genetic mapping of the product, a complete list of ingredients, with seed to sale providence data. He then adds his before and after symptom data, possible aggravating or alleviating factors with his dose and timing data. The platform rewards Corrin with tokens and discounts for future purchases. In this way, Corrin can track his specific use of natural products for his own benefit while contributing to the experience-based evidence pool that benefits all participants.
This cooperative stakeholder capitalism model ensures that businesses have dynamic, real-world access to what is working at the level of the consumer. By using federated learning approaches, the specifics of Corrin’s experience can remain on his own devices while analytic tools access pre-approved portions of data to feed algorithms searching for clinically relevant correlations. In this way, businesses uncover what works, which products may be superior to others as well as which products may be redundant or missing from their offering. Technology provides detailed, blinded, and unbiased research to businesses seeking to detect which products perform well while uncovering new customer segments that are more likely to expand their market.
Individual biology is unfathomably complex.
Using machines alone to simulate this complexity remains problematic as may be evidenced by the recent fire sale of IBM Watson assets. Furthermore, people have buying power, machines do not. Populating the planet with people brimming with vigorous health and robust buying power supports all economies. With Web3 we can leverage new ways of collaborating with built-in privacy protecting elements while reaping the business benefits of doing so.
As customers deliberately support businesses by privately sharing their experiences, they are ensuring industry continues to advance in a safe and evidence-based manner. Over time, therapeutic recommendations will become increasingly personalized as each individual benefits from those that went before.
Web3 supported stakeholder capitalism provides a path to unprecedented more reliable intelligence and in turn, greater wealth co-creation.
These are indeed early days. There remains much to be sorted out. Let’s roll up our sleeves and make it happen.
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