How They're Using Blockchain in the Cannabis Supply Chain

Legal cannabis sparks new innovative ways to deal with the complex cannabis industry

Legalization has set the ball rolling for cannabis innovation globally. However, legalization has also spawned convoluted cannabis policies as policy makers jockey to regulate the very complex industry. Without an effectively regulated supply chain, legalization might not be enough to push the cannabis industry to its full potential.

However, experts have been harping about how blockchain technology can be harnessed to enhance traceability, transparency, visibility, compliance, and consistency in instituted delivery channels in the cannabis industry. This may ease the burden felt by policy makers and businesses alike, who are tackling ways to simplify the complex industry.

Blockchain has provided ingenious solutions for various issues in the supply chain of various industries, from agriculture to logistics, manufacturing, and beyond. These applications are providing clues that businesses, regulators, and advocates can use to explore ways in which blockchain technology can be used to advance the cannabis industry.

Blockchain can be deployed to track the life cycle of weed plants, individual consumption, compliance with regulations, transactions, and several other aspects of the cannabis industry.


Blockchain and cannabis. Source


The current state of the supply chain of the legal cannabis industry

Supply chain bottlenecks in the legal cannabis industry are currently undermining the structural and operational efficiency of companies. In the United States, for example, a unique problem makes it even worse -- the drug remains illegal under federal law, while legal in several states.

The constraints from federal prohibition laws still have far-reaching effects on the supply chain in legal states. These restrains include the exclusion of cannabis businesses from the regulated banking system, the ban on interstate commerce that undermines the balance between supply and demand across various parts of the country, and many others.

There are also the challenges from the grueling patchwork of legal requirements that apply to various aspects of the supply chain, from licensing to cultivation, product testing, product labeling, transportation, etc.

However, there’s been a recent crop of technological applications that are currently being deployed across several cannabis businesses to enhance supply chain management. Chief among these applications include those based on blockchain, IoT sensing and machine learning.

Blockchain can improve the following: 

  • Secure exchange of information and instant updates on task completions;
  • Supply chain visibility and traceability;
  • Execution of contract terms and business processes, and more.


Feasible ways blockchain can be deployed in the cannabis industry

There are a number of ideas on how blockchain technology can be applied to advance the cannabis industry. Recently, Canadian-based blockchain and crypto company, DMG Blockchain Solutions Inc (DMG), introduced a global supply chain management platform for legal cannabis industries across various parts of the world.

According to official statements, the company is collaborating with marijuana industry dealers, regulators, quality assurance labs, and distributors in the development of the blockchain platform.


Blockchain and cannabis. Source

Other notable ways in which blockchain technology is currently being integrated into the cannabis industry include:

  • Establishment of provenance: With the provenance tracking capabilities of blockchain already deployed in various industries, both suppliers and consumers can be assured of the entire the supply chain process, from farm to ultimate consumer, of every cannabis product.
  • Tracking individual consumption: With blockchain technology, dispensaries can easily monitor and limit sales to individual customers.

  • Taxation: Blockchain ledgers can be deployed to simplify and increase the accuracy of tax audits, and this will be highly appreciated by both tax collectors and the cannabis businesses alike. 

  • Finances: Blockchain payment processors serve as a suitable alternative for the regulated banking system which cannabis businesses have been effectively locked out of.


Final words

Any ideas that can ease the complex nature of the cannabis industry must be explored. Once illegal and frowned upon, cannabis is now the new trend, with increasing global support from unexpected demographics. As governments around the world tackle legalisation questions, businesses wait patiently to invest in the lucrative business. However, the complications are always there upon implementation of any such legal status, and so solutions are sought.

Introducing technology into the industry is an obvious step. Blockchain is a capable starting point that will likely ease some of the challenges faced by governments and businesses alike. With such technology available, businesses have opened up to investments on Blockchain applications that help ease the supply chain process. This isn’t only good news for the government and businesses, but also for the consumer who can be sure that their products have gone through every required step to ensure their quality and safety.