Blockchain and Cannabis Industries Together can Clear Regulatory Hurdles
As the cannabis industry around the world begins what is sure to be a long road to finding compliance with governments and establishing security in both logistics and financial transactions, it could find support in another emerging industry that faces many of the same issues.
Blockchain Could Solve the Cannabis Cash ProblemCryptocurrency entrepreneurs have already created bridges to the cannabis world by creating at least a dozen cannabis-focused blockchain projects competing to provide the framework for the nascent industry to grow on. While the multi-billion dollar a year (in the US alone) cannabis industry offers blockchain and cryptocurrency companies a massive source of revenue.
Though cannabis is already legal in 30 of the 50 states in the US it is still classified by the federal government as a schedule 1 narcotic. Therefore, the cannabis industry remains a cash in hand business, despite the $10 billion dollars transacted in sales every year. Anyone involved in the business chain of a marijuana operation, from farmer to end user, is liable to federal prosecution leaving businesses with limited financial service options.
This undermines one of the main reasons for legalization, which is to eliminate the violent crimes that a cash-based business attracts. Howard Mann, who started as an internet gambling pioneer, saw this problem as an opportunity and launched Alternate Health Inc. As he recently explained to Green Entrepreneur,
“If the only way to do a legal transaction was in one specific blockchain currency, then all transactions in that currency are immediately trackable, traceable, and verifiable to the stakeholder in the State compliant cannabis transaction.”
Two Industries Seeking Security and ClarityMuch like cryptocurrencies, the regulations controlling the sale and transport of cannabis are still being solidified. In the US each state may have its own laws governing the industry from seed to sale. Blockchain technology companies can help cannabis companies meet regulatory requirements by offering immutable records showing the source of each plant in a harvest, where it is processed, how it is shipped and where it is distributed.
Jessica VerSteeg, former Miss Iowa and now founder of cannabis blockchain company Paragon, explained what her company offers;
“By adding that same data into smart-contracts, companies will no longer have to question the source of their products or supplies, the issue of trust evaporates and the customers are guaranteed to get what they paid for in the end.”
Working hand in hand the emerging cannabis and blockchain industries may be able to push their specific legal agendas forward more effectively. Blockchain technology which is recognized even by cryptocurrency naysayers as having the potential to be greater than the internet itself, in league with an embryonic cannabis industry that is already estimated in the multi-billions yearly with 30% annual growth expected, would be too much for any government to ignore.
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