How Can The Blockchain Solve Problems In The Marijuana Industry?
The cannabis industry is booming, rather blooming (see what I did there?) considering the legalization of medical cannabis in over 29 states in the USA.
Undoubtedly, it appears like a profitable business without any hitches. With buds flying off the shelves in an unprecedented fashion, the cannabis industry looks enchanting, and most people can’t wait to get their own license. Right? Wrong.
Like every business, entrepreneurs in the cannabis industry also face many challenges. In fact, they face more hurdles than others. After all, bankers shy away from anything cannabis even if it’s legal. Not to mention the immense scrutiny entrepreneurs face when they kick-start a cannabis business.
Most cannabis enthusiasts probably don’t care too much about safety procedures. However, dispensary owners may lose their entire stash if they skimp in that area.
Even though cannabis is slowly being accepted, businesses that have anything to do with marijuana aren’t welcome easily, and that’s the biggest problem.
So, how do business owners overcome the many challenges if they want to dream of running a successful cannabis operation? Well, say hello to the blockchain. Just like it has solved problems related to other industries, cannabis is no exception. The blockchain can not only make your life easier if you own a business, but it can also improve your experience to a large extent.
But, just in case you’re clueless about the blockchain…
What Is The Blockchain?
The blockchain is exactly what it sounds like — a chain of blocks. In simple terms, it’s a ledger that records anything of value. The recorded data is immutable since it doesn’t belong to any individual, company or entity. Instead, it’s managed by thousands of computers. The data is secured to each other in a chain through the principles of cryptography.
Think of the blockchain as a democratic system where it’s impossible to manipulate the data. The information, of course, is available to anyone who needs it, but the data cannot be corrupted in any manner.
As you can see, the blockchain provides a transparent way of handling data, which is why it’s a hit in many industries including medical marijuana.
All this is fine and dandy, but how does it solve the problems related to the cannabis industry, you ask? Well, read along, and you’ll discover a lot more about the blockchain that’s nothing short of a miracle.
How Can The Blockchain Solve Problems Related To The Cannabis Industry?
Any entrepreneur will tell you the importance of capital before starting a business. With no capital, it’s almost impossible for businesses to survive, and that’s where the banks come in. You also have angel investors that trust the business with their money. Similarly, the cannabis industry is also dependant on banks and investors to expand their operations.
Most banks are eager to lend capital especially when the business holds a lot of promise. Even angel investors usually hunt for profitable operations that guarantee much more than their initial investment in the foreseeable future. However, it’s not so easy for cannabis businesses.
Although the legal cannabis industry is spreading like wildfire in most states, banks and investors are wary of their association. The business is still illegal in the eyes of the federal law even if the state recognizes it as a legal operation.
Thus, banks turn the other way when it has anything to do with marijuana and refuses to fund even profitable organizations with a proven track record.
What more, the banks also reject any type of association, forcing cannabis entrepreneurs to rely on cash transactions! It’s unbelievable, but many dispensaries are barred from depositing or withdrawing money from top banking institutions! They have no other option other than counting on cash-in-hand operations that’s incredibly tough considering the amount of money handled every day. Accounting becomes a major pain when high amounts of money are involved. Additionally, cash transactions hinder the trust a customer places on you, making your business seem illegitimate.
As an alternative, digital currencies offer amazing solutions to cannabis entrepreneurs. Your money is not only safe with the blockchain, but even funding isn’t such a big headache anymore. For instance, Potcoin — a digital cryptocurrency meant specifically for cannabis enthusiasts — helps businesses store cash in the form of coins.
Potcoin, and many other cryptocurrencies, also offer interest annually if the business owner chooses to stake his coins on the network. Not only does this mean more income, but the safety just cannot be ignored. The coins can also be liquefied whenever you choose, and since the value is directly proportional to the number of people using the currency, you stand to gain more income.
While companies usually run their IPOs, cryptocurrencies run ICOs — Initial Coin Offering — that works to rake in the funds. Many currencies also help small businesses secure loans. The capital flows seamlessly and instantly, making your life much easier if you’re into cannabis.
2. Reduces Black Market Activities
Although cannabis is legal in many states, it is still illegal in the eyes of federal law. This gives rise to shady dealings and even those growing marijuana could be tempted to sell their cannabis at a higher rate on the black market. Honestly, the absence of coordination between the market participants and lawmakers makes it easy for dealers selling their stash on the black market.
But, how does it happen, you ask?
For instance, let’s say that I reside in a state where marijuana is deemed legal. My medical marijuana sells at a good price, but my eyes pop out as soon as I take a look at its price on the black market. Some users are ready to pay more than $2000 for my plant! Incredibly, people are ready to pay more when it isn’t legal.
To increase profits, all I have to do is manipulate the records a bit to show that my cannabis harvests are less than originally presented. This manipulation allows me to make cash on the side and authorities are none the wiser.
However, if I had to use the blockchain to store records, manipulating the data would be impossible.
If it was mandatory to store all information regarding growing on the blockchain, it would not be possible to alter the data once it’s stored on the immutable blockchain. Thus, the blockchain helps the authorities and contributes to keeping the operation as legal as possible.
3. Helps To Track Everything
Medical marijuana is legal in many states, but there’s a limit to the amount of cannabis an individual can possess. Although there are no reported fatalities due to marijuana overdose, it isn’t an enjoyable sensation to be too “high”. The herb works best when consumed in limited dosages, which is why it’s important to keep a track of how much you purchase.
Also, enforcing a limit on the quantities purchased reduces illicit dealings. It doesn’t too long for anybody to buy kilos of marijuana using his medical card to push it into the black market. And, it’s harder to track these individuals back to their unscrupulous networks.
According to a report published by the UN, at least 238 million people in the world enjoy marijuana! And the report was published in 2017, so the numbers have added up a lot more since then. With such high demand, the black market continues to thrive even as regulators push forward to make the herb legal for both recreational and medicinal purposes.
Believe it or not, but the illegal marijuana market sits at the top spot with over $141.8 billion in its kitty. You may argue about the harmless and medicinal nature of the herb, but it contributes a lot to criminal elements that do more harm than good. Drug dealers are always on the lookout to make money, and when an opportunity like this comes their way, they seize it to peddle their wares to as many people as possible. And that’s happening only because of the unorganized legal cannabis market. With their half-hazard systems of tracking users, quantities purchased, and also the amounts supplied by retailers, the black market does more business than the legal market.
The responsibility to track every individual’s purchase falls on the dispensaries, but it’s extremely tough to track everybody. Some dispensaries have tried “keeping an eye” literally on people walking in and out of the store, but it’s not an apt solution because it threatens to violate the user’s privacy. Even stores with ID scanners that prevent people from buying over the limit have failed in many cases. And, this is where the blockchain can help.
Consider the example of Parsl with a platform to create a supply chain for growers, users, and retailers. Like every other business, even the cannabis industry can benefit from a system of provenance the blockchain provides.
The Parsl token “Seed”, helps businesses move towards an efficient cashless ecosystem while reducing the need to conduct operations with hard cash. Parsl also provides a transparent history and allows retailers to track patients.
If the industry comes together and uses the blockchain, it will destroy the black market. It won’t happen overnight, but one can always hope. The blockchain will also provide more details about the herb purchased. The user will have exact information on how the herb was grown. Due to a transparent history of the product, you can rest assured that it is safe to consume. Incredibly, the users will also be aware of any quality issues.
Even Hempcoin — another cryptocurrency focusing on the cannabis supply chain — can help track everything from seed to sale. Growers cultivating medical marijuana at home will be accountable for the number of plants they grow. With such an efficient tracking system, states and dispensaries need not worry about overconsumption ever.
But, how can the blockchain keep a track of every user’s consumption without violating her privacy, you question? Well, the dudes at Tokes Platform have a solution for that as well.
Tokes Platform operates as a blockchain solution for anything related to cannabis. From the supply chain to banking and user management, it solves a host of problems. The company proposes to solve the problem of over-consumption by providing a database of consumers and also allows the state to set parameters on the amounts of cannabis that can be purchased every day.
Tokes Platform offers both the public and private key (like a password) to the user to verify his/her identity. Since you’re the only one with access to the keys, the data cannot be altered in any way. A simple application on your smartphone can verify your identity with a dispensary while keeping your information private.
The blockchain also shares data of consumers between organizations to prevent confusion. However, the best part is that it protects the personal data of the buyer that enables him to purchase anything without inhibitions. Of course, they will require you to fill in the KYC that’s mandatory for most organizations today, but considering that it allows you to buy cannabis without any hassle, it’s a step in the positive direction for sure.
4. Creates A Trustworthy Social Network
Social media is usually abuzz with posts of people boasting about their hangovers. Pictures of people with their equally inebriated friends are very common. But, imagine doing the same with cannabis. Can you fearlessly post a picture of yourself enjoying your favorite OG Kush? Perhaps you can, but considering that it’s not easy for cannabis businesses to advertise their businesses freely, it’s very tough for users to be vocal about the herb they consume. You can post that picture, but not without inviting judgment.
And, that’s when you’d love to engage in a social media network that allows you to do anything you want without any fear. You love the herb and enjoy connecting with someone likeminded, and there are many forums like 420 Mag, HighTimes and Massroots to connect one individual with another.
Even Reddit proves to be a great platform to talk about your experiences; however, you’ll never be able to freely engage without worrying about the risk it poses. You never know when a post made without inhibitions today can come to haunt you tomorrow. In short, you are NOT anonymous.
And that’s where you could use the blockchain. Sites like Smoke.io powered by the blockchain not only help users connect with each other, but you also get paid to post! Yes, you read that right. One can post pictures of their grow rooms filled with cannabis plants. The community is meant to help cannabis users come together in a unique fashion.
There are many who’d love to part with their right arm to grab deals when it comes to buds. Considering that cannabis is expensive, they would love to get discounts and even understand how the industry actually operates. However, since most social media networks don’t specify the rules for cannabis businesses, it creates a lot of confusion for both the users and retailers.
By using social media networks like Smoke.io, growers can connect to their audiences with just the click of a button. Users can post and mingle freely because the blockchain makes everything anonymous. Such networks can be utilized by dispensaries to prevent fraudulent black market dealings and promote the herb in a safer manner.
The blockchain technology is advancing rapidly with industries embracing its best features like never before. Thankfully, it offers great solutions to even cannabis users that had no hopes to purchase top-quality marijuana before. And when one fledging industry utilizes the technology of another, it increases business and revenues for none other than the government.