Leveraging Blockchain to Enhance Traceability in the Cannabis Industry
Legalisation of cannabis has gained traction in several countries. In October, Canada became the first major economy to fully legalise marijuana, sparking celebrations as the country embarked on the controversial experiments with the drug policy. In the U.S., nine states have already legalised cannabis for recreational use, with medical marijuana being legal in another 30 states .
According to Pew Research Centre, a record 62% of the U.S. population is in favour of legalising cannabis reflecting a steady rise over the past decade. The expected growth in the cannabis industry is being driven by the realisation and increasing acceptance of its associated health benefits including managing diabetes, cancer, and chronic pains.
However, besides the health benefits for consumers and the likely profits, the cannabis-based start-ups are likely to obtain, the marijuana industry must be controlled and regulated. Regulation of the industry would ensure that users consume safe and high-quality cannabis products.
In a highly controlled and regulated environment, anyone who touches the product must have an efficient and transparent reporting system to remain profitable. Such a system requires efficient traceability mechanisms where cannabis firms participate in seed-to-sale tracking.
In the absence of a strict tracking system, the cannabis industry would be fraught with diminished quality products, increased fraud and recalls, and low sales. By its intrinsic properties, Blockchain can resolve challenges of transparency and traceability. Break-through Blockchain and IoT-enabled devices can allow a business to record every aspect of its transaction regarding supply chain on the Blockchain.
 ‘State Marijuana Laws in 2018 Map’, accessed 4 November 2018, http://www.governing.com/gov-data/safety-justice/state-marijuana-laws-map-medical-recreational.html.
 ‘62% of Americans Favor Legalizing Marijuana’, Pew Research Center (blog), accessed 4 November 2R018, http://www.pewresearch.org/fact-tank/2018/10/08/americans-support-marijuana-legalization/.
How Blockchain can revolutionise the Cannabis supply chain
The benefits of Blockchain as applied to the global cannabis supply chain are threefold: traceability, efficiency, and compliance. Here is how Blockchain enhances traceability, efficiency, and compliance for cannabis supply chain:
#1: Cannabis growers
Cannabis growers are in charge of cultivating, harvesting and delivery of the plant. They must record all aspects of the plant including its treatment and certification data. Currently, there is no standard approach and format of capturing and storing data since each farmer records his/her own data either in semi-automated format (spreadsheets) with others recording them manually.
With Blockchain, every cultivator can capture the details of his/her plant including its origination, species, and procedure for sowing on a shared, transparent, and immutable ledger. Once the plant matures, growers distribute the data to cannabis processors for further processing. Since this data is available to all the stakeholders in the supply chain, cannabis processors can make informed choices about the quality of the plant before processing.
#2: Cannabis processors
Cannabis processors take raw cannabis plant from farmers and produce an entirely new spectrum of products from it including topicals, concentrates, and edibles. Besides producing these products, processors must package the products in compliance with the prevailing regulations as well.
Because of lack of a standardised technological framework, processors are forced to record data about the plant either manually with some opting for spreadsheets. This is a cumbersome and opaque process which makes it difficult to ascertain the quality of the finished products.
With Blockchain, processors bid for the cannabis plant through smart contracts after receiving the crops from cultivators. Once the smart contract bid is accepted, processors process and store data regarding processed cannabis product on the same Blockchain. This data becomes crucial for lab testing firms, retailers, and consumers interested in ascertaining whether the product has adequately been processed or not.
#3: Lab testing firms
Accurate analysis of cannabis is necessary for a healthy cannabis industry where consumers’ safety is concerned. Lab testing firms are in charge of analysing the cannabis plants and products to ensure they are of high-quality. Essentially, these firms must ensure that cannabis products in circulation fully comply with regulatory bodies and are of high quality.
At present, there is no standard platform that these firms can use to record their findings with most of them relying on fragmented technologies. In instances where marijuana is not certified, it goes back to the farmer for the problem to be fixed or destroyed resulting in losses for the farmers and retailers.
In a Blockchain-based environment, lab testing firms inspect the product to ensure compliance is fulfilled and record their findings on the Blockchain making it easier for retailers and consumers to verify the product’s safety.
Retailers include delivery services, medical dispensaries, and other systems that can distribute the products to consumers. They are responsible for cannabis intake, inventory, and tracking to guarantee the success of their businesses and the safety of their consumers.
In some cases, retailers can package, label, dispense, or even test the cannabis product. This has resulted in increased low-quality products, increased fraudulent activities, and traceability breaches into the supply chain. With Blockchain, retailers bid for cannabis products via a smart contract. Moreover, once the bid is accepted, processors ship the product to the retailers and update the Blockchain.
Processors then hire shipping firms to distribute the product to retailers. Shipping the processed product is done via IoT-enabled trucks which record environmental conditions such as temperature on the Blockchain in real-time.
Consumers verify whether the product is safe for consumption or not. If the cultivator’s origination data, processing information, batch details, expiration dates, and shipping data is captured on the Blockchain, consumers can verify the location, transaction histories, and the quality of the product.
The widespread problem in the cannabis industry’s supply chain relates to traceability where it is difficult to ascertain whether the cannabis product is safe for human consumption or not. Blockchain has the potential to disrupt traceability problems by creating a shared, transparent, and immutable ledger where each stakeholder can verify whether the product conforms to regulatory standards or not.