The recent rise of cannabis and blockchain technology is a profound signal that the times are changing. The landslide victories the cannabis legalization movement has amassed worldwide reflect a major attitudinal shift toward the therapeutic but highly polarizing plant. The prohibitionist stance that dominated cannabis legislation for the past several decades is giving way to the burgeoning acceptance that the war on drugs has been a total failure and that the medical efficacy of cannabis has scientific backing. Really, this isn’t news. Cannabis has been used for medicinal purposes for thousands of years. Legalizing cannabis is more like a return home than it is a revolution. The rise of the blockchain industry, on the other hand, is just one more example of how technology can transform society. Alone, each industry is leaving a print that may prove indelible. At their intersection, they are revolutionizing the way cannabis does business.
What is Blockchain?
Blockchain technology is a public but unchangeable ledger or a totally transparent record of transactions that cannot be changed. Rather than being saved in one location, the ledger is saved in a chain of blocks, files located on every computer running the specific blockchain software. Blockchain technology is the underlying infrastructure for cryptocurrency like Bitcoin. Everyone running the Bitcoin client has viewing access to the ledger, which means that they can see a permanent record of every single transaction made using Bitcoin since the beginning of Bitcoin.
Breaking it Down in Simple Terms
Blockchain? Bitcoin? It’s a lot to process. Here’s a simple illustration that might help. If you have a real joint, and you hand it over to your buddy, you know that it is no longer in your possession. You now have no joints and your friend has one. There’s no confusion there.
Now imagine that you have an electronic joint that represents your real joint (like how an electric purchase with a debit card represents a real exchange of money). If you email a copy of this electronic joint to your friend, kind of like an “IOU”, your friend might not believe the authenticity of that transaction. I mean, it could be a fake copy of the joint, right? Luckily for you and your friend, your electronic joint is directly connected to your real one and is tracked by blockchain technology. So you, your friend, your neighbor, your momma, your Uncle Joe, Becky with the good hair, everybody using the same blockchain powered software you are using to record this transaction has access to a ledger that shows that you had one joint, but you’ve given it away electronically.
If you try to give someone else another electronic joint, they won’t accept it because they will know you don’t have another one to give. And even if that person didn’t pick up on your trickery, someone else would. Remember, everyone has a copy of the ledger, and no one likes a cheater.
And that is a very basic explanation of how the technology works.
What Does Blockchain Have to Do with Cannabis?
There are two ways that blockchain technology has already made the cannabis industry better: through the development of new seed to sale tracking software and the increased accessibility of data for research.
Though protocols vary by state, seed-to-sale tracking is becoming the rule rather than the exception when it comes to cannabis regulation. It’s a good idea in theory—governments, businesses, and consumers are able to trace a cannabis product’s movements from its point of sale all the way back to its origins as a seed. This kind of software holds the entire industry accountable, and it protects the legal industry from black market infiltration. In practice, it hasn’t always been the most seamless requirement to implement, and one of the biggest problems has been security. The third-party companies that provide seed-to-sale tracking software are vulnerable to hacks that result in dangerous data leaks. MJ Freeway, for example, has lost multiple state contracts because of its seeming inability to protect its clients from cyber attack.
Blockchain is far more secure a platform for this kind of software. Blockchain does not store data in one vulnerable target, so it is much more difficult for hackers to decode its encryption. Additionally, the transparency of blockchain will make it much easier for states to check businesses across the supply chain for compliance. As a whole, that means the cannabis industry becomes a safer place to do business. That’ why major cannabis brands like Budbo, MassRoots, and Liberty Leaf Holdings have decided to incorporate blockchain technology into their business.
Finally, the use of blockchain will provide researchers (and anyone interested in taking a look at the ledger) with a vast database of reliable information from which to extrapolate. Given the nascence of the cannabis industry, the availability of this data for the academic world will help the rest of us understand more about an industry that is changing everything we think about recreation and medication.