As the global cannabis industry continues to expand in ways previously unimaginable, there is a growing demand for transparency throughout the cultivation and distribution processes – complete seed to sale observability. A handful of startups around the world are tapping into this need by offering blockchain-based solutions for cannabis businesses.
For the last few years, blockchain has been touted as a new and innovative technology that could shake up a number of industries such as music and streaming, education, financial institutions and payments, healthcare, cryptocurrency, and cybersecurity. Although blockchain is still on the fringe of becoming the next big thing, it’s comparable to how the internet slowly creeped into our lives and eventually underwent a rapid evolution that reshaped modern society.
The cannabis market seems to be taking root the same way, very slowly at first but now it is a global phenomenon that cannot be stopped, regardless of its legal status. Unlike other industries, however, those working in cannabis face many unique challenges regarding regulatory changes, payment systems, and supply chains. Blockchain has been embraced as an innovative technology that can help revolutionize the way cannabis companies conduct operations and handle business.
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Challenges faced by the cannabis industry
Although 36 states already allow the use of medical and/or recreational cannabis, it remains federally illegal, which means industry stakeholders still face some unusual hurdles that people in other fields never even have to consider – supply chain issues, accepting payments, banking and business financing, tax structures, and constant regulatory changes are only a few of the many.
Let’s start with supply chain issues, which are different in the cannabis industry than others because legal cannabis businesses are stuck competing with the still-thriving illegal market. Take California, for instance, the largest cannabis market in the world which still has black/grey sales that often outpace the legal ones. With business owners bogged down by ridiculous regulations and sky-high licensing costs, it’s no surprise that unpermitted dispensaries and illegal grow-ops are still popping up all over the country.