Potential Use Cases of Blockchain in Cannabis
The Cannabis industry has continually faced an uphill battle when it comes to banking regulations. Due to the fact that the cannabis plant is still federally illegal in the United States, while many states have legalized the medicinal and recreational use of the cannabis plant- this has created a system at odds with itself.
The very idea of cryptocurrency in and of itself could be a solution to the banking troubles cannabis businesses experience. Satoshi's original white paper on Bitcoin described it as a digital peer-to-peer cash system. Many cryptocurrency early adopters describe their desire to leave the traditional banking system and replace it with something finite such as Bitcoin. Looking at the cannabis industry as an example of a sector of the economy which could benefit from leaving the traditional banking system behind, a system which has at-large left the cannabis industry behind. Even the state-compliant cannabis businesses cannot access banking services such as payroll, depositing cash to a secure location, or writing a simple check because they operate a federally illicit operation. With this, Bitcoin and other digital assets could work as a store of value which is arguably more secure than cash.
Although in theory, this is a great idea, the reality is both cryptocurrency and cannabis are seen to many regulators as the new and unchartered territory. With this, many licensed cannabis companies which could benefit from cryptocurrency simply do not want to risk it from a regulatory standpoint. Furthermore, the early reputation of bitcoin being a drug dealer's choice of currency has given the public relations issue a whole new meaning with regards to the recently prohibited cannabis industry. Perhaps one day the industry will be able to safely transition to a peer-to-peer digital cash system such as Bitcoin but that seems somewhat far away. For the time being, both the cannabis and cryptocurrency industries must both pass the test of time and leave their nascent state as emerging markets before they can combine closer together.
Supply Chain Tracking
Another exciting and perhaps more realistic type of merger between the cannabis and cryptocurrency industries would be a supply chain tracking software. The use case here is being explored by a variety of companies currently since cannabis is a great sector to deploy this type of application into. First, the system could benefit from the adoption of nodes supplying the decentralized tracking system a way to operate since all cannabis entities today have tracking software they are required to use by law. Furthermore, the network transactions could then be processed in a cost-efficient manner while the businesses themselves operate the system. Finally, the immutability of the blockchain could help secure the patient records of medical marijuana patients.
A drawback to this type of system which can be seen from many decentralized networks is the fact that there are no system administrators to fix mistakes in the system. This could be solved with a model of some private blockchains currently in operation though. With this type of model, there would require some form of transaction fee to keep the network operational, updated, and prevent any bugs from bringing the system to a standstill. All and all a great use case of a cannabis industry blockchain solution which we could see put into operational form by the end of next year.