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From Seed to Sale: What you need to know about blockchain’s role in cannabis supply chains

From Seed to Sale: What you need to know about blockchain’s role in cannabis supply chains:

By Robert Galarza, CEO, TruTrace Technologies


Most people know blockchain as the technology behind Bitcoin, by far the world’s most widely-held digital asset. Blockchain as a technology though actually has numerous applications beyond cryptocurrencies. Applications for blockchain technology have been proposed in nearly every sector of the economy, from reviving digital rights management to enforcing contracts to establishing transparency and trust in supply chains.

It’s that latter application that investors ought to be interested in when it comes to the growing legal cannabis business, which is predicted to hit $73.6 billion globally by 2027, particularly as we look at how cannabis can be administered by pharmacies. Compared to prescription and over-the-counter drugs, cannabis products are still mostly black boxes. If you’re lucky, you know the potency (e.g., the amount of THC) of a given product, usually within a poor range of accuracy. If you’re really lucky, you might know the species of cannabis — sativa, indica or hybrid — and the specific strain of cannabis you’re looking at.

But cannabis, like most crops with potential medicinal properties, is a complex plant, composed of numerous chemicals that can influence the effect that consumption has on the human body. These include but are not limited to the amount of cannabidiol, or CBD — the cannabinoid thought to produce the anxiolytic and analgesic effects associated with cannabis consumption — as well as terpenes, which are the non-cannabinoid, aromatic oils that are thought to contribute to the cannabis experience via a proposed mechanism called the “entourage effect.” The dozens of other non-THC or CBD cannabinoids found in cannabis are also likely to have an effect.

This lack of data about a given cannabis product contributes to the hesitancy among pharmacists to dispense cannabis, even where cannabis has been legalized. Responsible pharmacists want to be sure that the product they are dispensing to a patient is safe, that there are no doubts about its provenance, and that the chemical profile of the product will match the claims on the label. All of that is impossible without a reliable and transparent tracking system that establishes trust and accountability among all the parties in the supply chain. This security reinforces sound investments in the cannabis world.

Blockchain means transparency and safety

A blockchain, at its core, is just a ledger consisting of a series of records, or “blocks,” each containing a cryptographically-secure link to all previous blocks. In that sense, it’s not too different from the ledger that your bank uses to keep track of its customers’ accounts. What makes blockchain unique is that this ledger is entirely decentralized. How this works is that each account-holder holds a copy of the ledger on his or her computer. A consequence of this approach is that each transaction in the blockchain is authorized not by a single authority, as it is in the case of a credit card transaction, but by the mutual agreement of each party’s copy of the ledger.

It is this decentralized property of the blockchain that makes it so much more secure than traditional digital ledgers. Unlike the hacks of big corporations and financial institutions we all read about on a regular basis, there is no one master account in a blockchain to be breached. Sure, any single individual in the blockchain could have their credentials hacked. But it would be very difficult to hack enough people’s credentials to actually change the blockchain.

In addition to security, it is the irrevocability of each record in the blockchain that makes it so valuable for tracking supply chains. Properly implemented, there can be an inalterable record of each change of party of an item. Associate each of those records with a physical, RFID tag attached to the item and you have a record of each party’s promise that they received and then gave the product that can’t easily be repudiated. This confers a sense of responsibility for each party in the supply chain, establishing trust for the party receiving the item and accountability for the party handing it off.

From seed to sale

For those dispensing cannabis responsibly, it’s beneficial to understand every aspect of the flower, vapor, edible, beverage, or other cannabis product derived from the individual cannabis plant. Although dispensaries are typically required to be able to present all of that information to regulatory bodies, when dealing with medical cannabis, pharmacists want to be able to dispense a product with a reasonable degree of certainty that — allergies and paradoxical effects aside — it is likely to have the intended effect on the patient. And the only way you can do that is to be armed with the right information — and the knowledge to interpret it.

Using blockchain to track cannabis products from seed to sale makes it easy to address both of those concerns. With the right software, it’s simple to add any information you’d like to a blockchain. For instance, you could require growers to add a time, date, and RFID-stamped record to the blockchain containing key information regarding the plant’s chemistry and classification. If you wanted to go even further, you could require each party along the way to independently verify that information. Fraud, theft, or negligence in a supply chain like this would be very difficult to achieve.

Finally, it would be easy to add educational information. Just as many winemakers include tasting notes, chemical analyses, and other information relevant to sellers and buyers, cannabis growers and processors who want their products sold by pharmacists could start including key medical information in the blockchain associated with their products. Or pharmacies that want to ensure their staff are armed with the right information to guide patients could add that information to the blockchain themselves, making it accessible along with all the tracking and tracing information required for transparency and regulatory purposes.

There is no technology currently available that is better suited for these tasks than blockchain. Secure, transparent, and incredibly space- and time-efficient, blockchain is increasingly becoming the technology that businesses turn to for tracking products from their origin to their sale. Investors would do well to understand all aspects of cannabis, including pharmacological drug requirements, to get in on the growing legal cannabis business.

Robert Galarza is chief executive officer of TruTrace Technologies, the developer of the first integrated blockchain platform that registers and tracks intellectual property from genome to sale for the cannabis industry.

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