Crypto Cannabis

in #blockchain6 years ago

Cryptocurrencies and the underlying technology (Blockchain) are improving the cannabis industry in many ways, allowing for financial and environmental sustainability. Cannabis has been illegal in the United States for around 100 years with some skeptical reasoning behind it. For example, a hearing on marijuana law in the 1930’s consisted of claims made on cannabis and its ability to cause African men to become violent and solicit sex from white women. The Marijuana Tax Act of 1937 was created, banning the use and sale of the drug. “Dr. William Woodward, legislative counsel for the A.M.A. objected to the bill on the grounds that the bill had been prepared in secret without giving proper time to prepare their opposition to the bill. He doubted their claims about marijuana addiction, violence, and overdosage; he further asserted that because the word Marijuana was largely unknown at the time, the medical profession did not realize they were losing cannabis. "Marijuana is not the correct term... Yet the burden of this bill is placed heavily on the doctors and pharmacists of this country." The legal cannabis movement is gaining ways of using cryptocurrencies for a stable banking system, and the blockchain technology for supply chain tracking in order to operate to prove the potential of the cannabis industry. With these systems in place, the industry is able to approach the large milestone of federal legalization, while improving the sustainability of the industry.

Although the cannabis industry has gone through hard times, the movement for legalization is approaching. The new bill that was introduced to office by Senator Chuck Schumer to remove cannabis from the federal list of controlled substances. The bill was combined with the house into the Marijuana Justice Act “which would go further than Schumer's bill by fully legalizing marijuana at the federal level and expunging convictions for marijuana use or possession.”3 This social acceptance will allow for growth in the industry.

First, there needs to be some background on the underlying technology, blockchain. This is necessary because although the technology was introduced in 2009, there are still many who are unfamiliar with the terminology. The blockchain is defined as “a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.” Although this is not easily explainable, blockchain will allow us to digitally track any type of transaction while providing unchangeable proof to a distributed general ledger. The technology can be implemented in multiple industries for many purposes.

The cannabis industry has a very large push to join the cryptocurrency industry in order to provide security for their profits.  Currently, the United States federal law states that cannabis is a schedule I drug. “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.”  The federal and state laws draw controversy in our country because, at the same time, there are thirty states that have laws that legalize cannabis in some way and eight states that have fully legalized cannabis for recreational use.  We currently have a centralized banking system and the federal law that is completely against the substance.  This creates a major barrier for the industry because the banks that do operate with these companies can be charged with money laundering.

The ability of these companies to have a secure system for their currency will allow the industry to establish financial sustainability. Business in the modern world consists of three legs when dealing with sustainability; financial, environmental, and social. All being very important, Co-founder of POSaBIt, a cannabis crypto company, John Baugher says “There’s no industry -- whether it’s the production and sale of cannabis or the production and sale of a cup of coffee -- that can operate safely, transparently or effectively without access to banks or other financial institutions and traditional services,” Problems with having a cash-only business or industry include, but are not limited too; tax collection for the government, the payment of employees, and the increased risk of assault. Securing the profits of the business is a key step in creating a successful financial industry, and the cannabis industry is using digital currencies in order to avoid conflict with banking restrictions. While cannabis is still federally illegal, the industry can adapt to a crypto market in order to fulfill their financial business duties.

 As mentioned, sustainability deals with more than just financials.  The blockchain technology can also be used in utility ways.  To begin, a publication from the well-known company, IBM.  On November 1st, 2017, they reported; Blockchain: An Irrefutable Chain of Custody Audit for the Seed to Sale of Cannabis in BC.  This goes into detail on how blockchain can be used inside the supply chain to provide accurate data for government regulations, business regulations, and consumer health.  “IBM suggests Blockchain is an ideal mechanism in which BC can transparently capture the history of cannabis through the entire supply chain, ultimately ensuring consumer safety while exerting regulatory control – from seed to sale.”  The government has many regulations on cannabis when dealing with growing, selling, and using the drug.  This makes cultivation licenses for experiments and studies very difficult to acquire and sustain.  Implementing a blockchain system in the cannabis supply chain will provide the industry with tamper-proof data to abide the DPA product safety recommendations; including testing for mold, pesticides, and potency.  The shared ledger is updated and validated in real time with each network participant.  This reveals exactly where a product is at any point in time allowing for high amounts of control, which is needed for the regulators.   This will allow for progression with the government regulation while providing consumer safety to expand the industry.

Currently, the cannabis industry is undergoing pressure on their environmental suitability. Potguide reports that energy consumption, water usage, and waste management are the three most important aspects when working towards a green industry.  The industry has been growing exponentially as more states continue to change their laws.  The growth also increases the environmental negatives.  Both indoor and outdoor cultivation of the plant requires constant and consistent lighting, meaning energy is being used at all times of growth.  Also, one thing needed for plant growth is a large supply of water.   “ Depending on the source, we can estimate that a total of 2-6 gallons of water per plant, per day, are needed for cultivation – about twice as much as a wine-grape vineyard.”11 With no signs of slowing down, the industry needs to adopt changes to the system in order to prevent the current environmental problems from following the trend.

Fortunately, the same technology already providing so much change to the industry can once again be used to improve sustainability.  Companies are exploring the new ways in order to implement blockchain into the current systems.  For example, Smartcool Systems is a service company providing their clients with energy efficient cooling systems.  They have recently announced that they will be moving into the blockchain application for cannabis growers in North America.  Ted Konyi, the CEO of the company, stated “The use of BlockChain requires a tremendous amount of computational power driving electrical consumption. Smartcool can significantly affect the energy consumption for keeping the computers cool. As such, it can benefit the consumers financially and improve their environmental footprint."  With estimates that about 40% of total energy costs associated with running a cannabis facility being used for cooling.

Also, the company SinglePoint has begun development of a cannabis recycling blockchain system. They reported “Through a combination of recycling and reusing this waste to create new products and the integration of blockchain technology, former waste that has been turned into a new product can then be tracked through its full life cycle. This will provide a transparent ledger and give insight to state authorities and other entities who require cannabis industry waste to be disposed of properly.” These companies are working to minimize the current environmental sustainability problems faced in the cannabis industry.

In conclusion, the blockchain technology and digital currencies can be implemented in order to improve the sustainability of the cannabis industry. In the long run, the blockchain system is sustainable and will provide many changes to our world. The cannabis industries steps to success include creating financial stability and carrying out the government regulations can be executed with blockchain solutions. At the same time, environmental sustainability now plays a large factor in an evaluation of a company. Companies are working to use blockchain for environmental growth. In all, the technology will provide need change to the industry to provide overall sustainability.

Sources:

  1. http://www.drugpolicy.org/blog/how-did-marijuana-become-illegal-first-place
  2. http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Marihuana_Tax_Act_of_1937.html
  3. http://www.businessinsider.com/marijuana-justice-act-marijuana-legalization-bill-introduced-in-house-2018-1
  4. https://www.investopedia.com/terms/b/blockchain.asp
  5. https://www.dea.gov/druginfo/ds.shtml
  6. http://www.governing.com/gov-data/state-marijuana-laws-map-medical-recreational.html
  7. https://www.economist.com/blogs/economist-explains/2018/01/economist-explains-5
  8. https://www.bloomberg.com/news/articles/2017-06-13/pot-entrepreneurs-look-to-bitcoin-as-big-banks-stay-on-sidelines
  9. https://www.economist.com/blogs/economist-explains/2018/01/economist-explains-5
  10. https://engage.gov.bc.ca/app/uploads/sites/217/2017/11/IBM-Canada.pdf
  11. http://www.drugpolicy.org/issues/marijuana-legalization-and-regulation
  12. https://www.bloomberg.com/news/articles/2017-11-07/ibm-touts-blockchain-to-track-pot-industry-from-seed-to-sale
  13. https://www.huffingtonpost.com/entry/marijuana-and-blockchain_us_5a4c04f6e4b06cd2bd03e308
  14. https://www.coloradopotguide.com/colorado-marijuana-blog/article/cannabis-sustainability-how-marijuana-can-go-greener/
  15. http://www.smartcool.net/news/press-releases/371-smartcools-proven-technologies-lowers-energy-consumption-and-costs-for-cryptocurrency-blockchain-a-cannabis-growers
  16. https://ir.singlepoint.com/press-releases/detail/128/singlepoint-to-announce-details-of-pioneering-zero-waste

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