Best buds: 3 major ways blockchain can disrupt the legal cannabis industry

The legal cannabis industry in the United States alone is worth over $60 billion dollars, and many experts and analysts are interested in how blockchain can disrupt the legal cannabis industry. However, there are several factors to consider when it comes to growing and cultivating a plant that is still considered illegal on a federal level.

How do dispensaries and retailers ensure the marijuana they purchase is completely legal, especially when it’s clear that the illegal market still dominates the space? How can cannabis startups get access to banking and capital to scale their companies into the future? Will blockchain be critical to examining and updating the legal cannabis industry’s infrastructure?

We aim to answer some of those questions here. Why not? It’s 4/20. Here are three exciting ways blockchain can help disrupt the legal cannabis industry and address some of its most pressing issues. 

Traceability

One of the ways blockchain can change the world is because it can offer much-needed transparency concerning the supply chain. Many cannabis companies already use technology and software to make sure the cannabis they sell is safe, certified, and traceable. Traceability is already a major issue in an industry where cannabis is not legal nationwide, and in a world where there are already severe supply chain issues. 

There are new demands from marijuana consumers and traders that want to know they are trading cannabis legally and ethically. The blockchain can offer more trust and certification when it comes to particular marijuana strains, suppliers, and standards. 

Blockchain has already been used for increased traceability and transparency. Walmart, the largest employer in the country, has turned to blockchain technology to improve food safety. It’s not just about food or cannabis, either: Last year Adidas also adopted a blockchain solution for sustainability reasons. 

Security

One way cannabis companies are able to grow (pun intended) is by offering more in terms of security. What exactly do we mean by “security” in the legal cannabis industry? Well, blockchain can address the concept of security in more than one way. First, the blockchain can better protect customer data, since blockchain is much more difficult to hack than traditional networks.

Second, cannabis dispensaries have significant amounts of cash on hand. Blockchain can offer more security through more cannabis organizations and retailers accepting cryptocurrency. This can be an ideal solution in an industry where cash-only cannabis companies are targeted for robberies. 

Simply put, crypto can help address the safety and liability issues that arise from a cash-rich sector that is not federally legal. When a regulatory framework does become more concrete, blockchain technology can prove a cannabis shipment is safe, certified, and/or compliant. 

Banking/payment

Many cannabis organizations understand that more security and transparency is needed for federal regulation. Many payment providers are reluctant to offer their services to marijuana or even CBD companies, and it can affect the way that these companies operate, scale, and get funding. 

A DeFi ecosystem where traders lend and borrow to cannabis startups can help circumvent traditional financial institutions. The federal-state conflicts that emerge with cannabis make it so that many banks have abandoned the legal cannabis industry as a whole. 

It may be that the legal cannabis industry will be disrupted by DAOs, which offer new and innovative ways for organizations to consider banking, fundraising, and decentralization solutions. CannaDAO is an example of a cannabis-themed DAO hoping to be a decentralized platform that powers real-world cannabis growth operations.

Other ways blockchain can disrupt the legal cannabis industry?

There are several factors to consider with respect to blockchain and the legal cannabis industry. Even if consumers now rarely use cryptocurrency to pay for cannabis, blockchain can still play a critical role in funding and laying the foundation for innovative cannabis startups, companies, and projects. 

Will the vast majority of cannabis startups and companies begin accepting cryptocurrency, or will blockchain be primarily utilized for traceability or safety purposes, from “seed to sale?” If more dispensaries accept crypto, will it help marijuana businesses and their employees and/or customers feel safer?

The legal cannabis industry might be evolving, but it will likely face the same major issues involving traceability, safety, and banking. As long as blockchain can address all these problems, you can expect many blockchain-related cannabis industry solutions to emerge.