Most businesses keep meticulous records of their inventory and sales, tracking how much and which varieties of product they move and at which times. This is even more true for industries like alcohol and cannabis, which need to demonstrate to regulators that they are following all necessary laws related to how they sell controlled substances. Last year, cannabis legalization took large steps forward as California, Nevada, and Massachusetts all voted to legalize recreational marijuana, creating even larger markets of cannabis sellers who needed to be able to track their product. Blockchain offers a new approach to solving this problem, offering states and retailers a means of tracking cannabis from seed to smoke, so to speak. 420 Blockchain is a business bringing the blockchain to the cannabis industry in a way that helps consumers, industry figures, and regulators.
“Cannabis is so fragmented; it is a fragmented industry,” says Mike Kramer, 420 Blockchain’s CEO, who got his introduction to the industry through Red Sand Financial, which lent to the cannabis industry. “In lending I would see some operations that were run like businesses and some where I didn’t understand how they were even functioning.”
One the crucial differences between the two types was their record keeping. Professional grow operations were able to track the progress of their harvest, the eventual yields, and other information including variety and THC levels. 420 Blockchain was founded to try to help a fragmented industry become complete, offering companies a means of tracking their product through its growth and sale.
The use of the blockchain programming creates a record that cannot be illicitly modified. From a consumer standpoint, the 420 Blockchain app allows them to track where the varieties they enjoyed were grown in hopes of finding something similar. It also prevents supply leakage from a business perspective, meaning that tax revenue does not escape.
Today, the nascent cannabis industry is plagued by holdovers from the drug’s illicit years. While many businesses are striving to run professional outlets, others are shoddy in their recordkeeping. In the long run, this hurts the entire industry by eroding its air of professionalism.
“Most people did not get into the cannabis business to become a legal drug dealer,” he said. “Most people got in because they saw a need and an opportunity, just like I did.”
The American retail industry is collecting increasing amounts of information about consumers: what they like, where they like to shop, and how other demographic characteristics can help retailers tailor sales. Kramer says that 420 Blockchain’s technology can help dispensaries do something similar by better tracking information about their own sales.
“We don’t really have true data,” Kramer says about the industry today. Using blockchain technology, a potential consumer can fill out a survey about how they use marijuana which would help match them to strains that they might enjoy, similar to someone getting suggestions for wine varieties they might like. Meanwhile, the information submitted could be shared with growers and retailers to help them better tailor their product, as well as to researchers looking to better understand the industry.
Because of the longstanding stigma against recreational marijuana use, much about the industry is poorly understood today. As more states vote to loosen their regulations on the drug, more data will come out. However, getting a good picture of the industry will require innovations in how the plant and its sales are documented.
In part, for this reason, 420 Blockchain’s technology is also of interest to regulators. Last week, Kramer met with a dozen lawmakers in the Congressional Cannabis Caucus. They wished to discuss methods to track the growing cannabis industry for the purposes of ensuring that sales were legal and tax revenues were properly calculated. He says that he plans a return trip to Washington in the future and also is planning meetings with state regulators who are interested in the technology.
Although the cannabis industry is still in its early stages, Kramer is optimistic about the future of both legal cannabis and his company.
“My personal belief is that we’re not going backwards,” Kramer says. “A year ago we were beating our heads against the wall trying to get people to understand the idea of blockchain. I think there are so many people in that same realm with cannabis…For 70 years, 80 years, we were told that cannabis is a drug and hippies used it and we never took the time to research it and see all the beneficial sides.”
Article bu Erin Mundahl, Inside Sources