How Blockchain Technologies Are Changing the Cannabis Industry
The blockchain and cannabis industries are two of the newest and largest markets to emerge in our lifetime. Both blockchain technology and the cannabis industry have reached new highs in recent years, but both are facing difficulties in 2023. The blockchain industry remains largely unregulated and is currently recovering from several high-profile scandals. Still, the value and underlying utility of blockchain tools cannot be understated. Its true potential as an unchanging database has hardly been tapped into, particularly as it relates to data recording and security tools.
The cannabis industry has seen its own struggles, as a lack in federal progress has hurt industry funding and disrupted publicly traded companies. The lack of significant banking options, difficulty in payment processing, tax and financial burdens, and lack of regulatory clarity have required cannabis businesses to go above and beyond to simply survive.
But what if these two industries could help one another – could utilizing blockchain technology and tools in the cannabis industry help both fields reach their full potential?
A Digital Transformation
Despite the aforementioned struggles, the legal cannabis industry is expected to exceed $100 billion dollars by 2030 (Grand View Research, 2022) with the blockchain technology market potentially exceeding $130 billion dollars in the same time (Market Research Future, 2023).
Cannabis is not legal on the federal level, which leaves States that have legalized cannabis solely responsible for ensuring quality control and transparency. Further, a lack in oversight of these fractured markets often results in safety concerns, particularly as cannabis businesses typically transact on a cash basis, leaving them vulnerable to robberies and other frauds. Bad actors in the industry may also divert cannabis products from legal programs to the illicit market, avoiding the otherwise high taxes.
Blockchain usage in the cannabis industry has the potential to remedy a number of these issues. Blockchains are immutable ledgers that can allow for tracking across supply chains, helping to ensure proper quality controls and preventing legally produced cannabis from entering unregulated markets via detailed storage recording. Blockchain technology can even help alleviate some issues associated with payment processing, with the use of cryptocurrencies allowing for less cash transactions (which can help to prevent theft).
Better for Everyone
The cannabis markets can greatly benefit from blockchain data recording, as well as blockchain based monetary and security tools. The long-term success of blockchain technology will likely depend on its integration with other industries, which would allow for significant utilities across nearly all markets.
Already, cannabis businesses are integrating blockchain technology and tools to verify plant authenticity and lab results. Some businesses also utilize blockchain-powered cryptocurrencies specific to the cannabis industry, allowing for cash-less transactions. Further utilizing blockchain technology in the cannabis industry could help both industries take the next step towards realizing their respective potentials.
These emerging industries are still in their early stages, and collaboration between them could prove to be an incredibly fruitful endeavor down the line. The constantly evolving nature of both industries means that navigating appropriate rules can be quite difficult. In order to fully understand the legal liabilities of involving blockchain technology in the operation of a cannabis businesses, operators should seek appropriate attorneys for blockchain and cannabis related matters.
DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.