Cannabis commerce is ready for disruption. Cash-heavy and with few options for banking, the industry is desperate for a solution. Cryptocurrency companies are scrambling to enter the space and blockchain payment platforms are sprouting up just as quickly to fill the need.
Cannabis is still classified as a Schedule 1 narcotic, which limits the extent to which traditional lending institutions can do business with cannabis companies. Cryptocurrency and blockchain could provide the decentralized solution the industry has been looking for and several startups are stepping up to become the first to corner the market on what is expected to be a $35 billion a year industry by 2022, according to GreenWave Advisors.
Blockchain would allow incorruptible data tracking from seed to sale, helping the industry to become more transparent, accountable, and much easier to regulate. The shared ledger would record transactions across a decentralized network of computers. That transparency will help lawmakers pass more weed-friendly legislation as there will be little concern about legal marijuana finding its way into the illegal market or illegal goods finding their way into the legal market.
In essence, blockchain-based supply management could end the marijuana black market. Blockchain data wouldn’t just provide logistical tracking, it could also track genetic data to provide consumer protection and ensure the label matches the strain.
Fortunately, the recently introduced “Strengthening the Tenth Amendment Through Entrusting States” (STATES) Act may provide relief for cannabis businesses. If passed, the Act would allow legal cannabis businesses to bank at national financial institutions. The move would alleviate concerns about cash theft, eliminate the necessity of cash warehouses, and eradicate the need for cannabis companies to pay their taxes in cash. Until the STATES Act is passed however, the industry still needs an alternative to ease their banking woes.
Blockchain could be the perfect solution. Tracking and scalability aside, blockchain would help the industry to gain legitimacy. There are several companies attempting to meet the demand, including BLOCKStrain Technology, a blockchain-based platform which registers and tracks cannabis-related intellectual property.
Also in the mix is female-led Paragon, a blockchain platform built specifically for the cannabis industry whose Paragon Coin is rapidly gaining in popularity. Alt Thirty Six is another startup hoping to provide marijuana retailers with a method for accepting digital currency and electronic payments by pairing with cannabis software company WebJoint.
Cannabis-based business is only continuing to expand nationwide and the need for reliable banking solutions will grow in tandem. Blockchain and cryptocurrency provide a traceable and transparent supply chain, ensuring black market goods aren’t incorporated into legitimate distribution channels and allowing for precision quality control from seed to sale.
With strategic planning, blockchain could be the most disruptive tech to enter the space since the advent of hydroponic irrigation. Or, it’s possible that marijuana on the blockchain is just another pipe dream in an already over-regulated industry.
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