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Can Blockchain Benefit the Cannabis Industry?

An analysis of the impact of blockchain on the cannabis industry

What is the Blockchain?

Many people associate the blockchain exclusively with cryptocurrencies but the applications for blockchain technology extend to every sector of the economy. Blockchain is essentially an operating system upon which businesses can conduct secure and traceable transactions throughout the entire supply chain. Even though purchases require digital tokens, most blockchain technology is currency agnostic (i.e., digital dollars or cryptocurrency can be used).

blockchain graphic

More specifically, blockchain is a shared immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.  This includes tangible assets like property and equipment or intangible assets such as intellectual property (IP) or branding. Virtually anything of value can be tracked and sold on a blockchain network, which reduces risks while decreasing costs for all parties involved.

Blockchain has the potential of revolutionizing the way that companies do business and could massively restructure the economy in the long term by eliminating intermediaries that currently facilitate transactions (e.g., banks, brokers, dealers, etc.).  The result may be a decentralized solution that connects buyers and sellers directly while providing greater control to each participant in the network.

Businesses run on information, which means there is always the need for increased accuracy and speed. Blockchain is ideal for delivering information because it provides immediate, shared, and transparent information stored on an immutable ledger that can be accessed only by permissioned network members. A blockchain network can track production, orders, distribution, and sales in real-time and since all participants share a single view of the truth without being able to alter previous “blocks”, there is greater confidence and trust in the entire supply chain.

A simplified explanation of blockchain technology is shown below:

Blockchain Elements

Each transaction is recorded as a “block” of data, which shows the movement of a tangible or intangible asset throughout the network. The data block could authenticate any information such as name of buyer, date and place of transaction, pricing, or physical characteristics such as temperature, contaminants, or color.

It is called blockchain because each block is connected to all the blocks that come before or after a transaction. These blocks form a chain of data as an asset moves from place to place or ownership changes hands and they confirm the exact time and sequence of transactions. Blocks are securely linked together to prevent an alteration of a previous block or the insertion of a block between two existing blocks. Each additional block strengthens the verification of the previous block and substantiates the entire blockchain. This secure and transparent process removes the possibility of tampering by a malicious actor while building a ledger of transactions that is trusted by all participants.

Benefits of Blockchain

  • Superior Efficiency: Businesses often waste effort on duplicate record-keeping and third-party validations. Record-keeping systems are also vulnerable to fraud and cyberattacks and limited transparency can slow data verification. Blockchain eliminates the need for duplicate records and each block is verified throughout the chain. The security of the blockchain network also eliminates the possibility of fraud or cyberattacks.
  • Increased Speed: The set of rules in smart contracts facilitates transactions and increases speed because all terms and conditions are stored on the blockchain and executed automatically.
  • Greater Trust: Due to the transparency and security of network transactions, participants trust that they are receiving accurate and timely data. If using a permissioned network, members can be confident that confidential blockchain records are shared only with network members who are provided access.
  • Better Security: Consensus on data accuracy is required from all network members, and all validated transactions are immutable after they are recorded. No one, not even a network administrator, can delete a transaction.

How Can Blockchain Benefit the Cannabis Industry?

In recent years, blockchain has become an increasingly popular technology solution for various industries, and cannabis is no exception. Since blockchain technology has allowed businesses to operate with lower costs and greater efficiency, it is gradually becoming an integral part of the cannabis industry.

Blockchain benefits cannabis companies by enabling them to increase transparency and trust throughout the supply chain and it is an efficient method for tracking and tracing products from seed to sale. Blockchain is also revolutionizing product safety and quality control, which helps with regulatory compliance. Additionally, blockchain technology can help cannabis companies reduce costs by streamlining payments and data storage and can help the industry combat counterfeiting and fraud.

Blockchain technology is still in its early stages in the cannabis industry, but insiders are excited about its potential to transform the industry. Specific benefits for the cannabis industry are summarized below.

  • Better Sourcing: Blockchain gives buyers/suppliers insight into the origin and characteristics of a cannabis product including the specific testing results of a strain, product characteristics (sativa, indica, hybrid), THC/CBD content, consumer experience (happy, relaxed, etc.) and contaminant prevalence.  Blockchain can also help dispensaries, distributors, and manufacturers source unique strains and protect cultivators’ investments in the development of proprietary genetics.
  • Increased Transparency: The blockchain-based solutions could also result in a greater level of transparency within the industry, as buyers and sellers can easily audit supply chain activities. The complete transparency of the network provides assurance of the origin and quality of the products. Additionally, blockchain could also enable better tracking solutions for data associated with regulatory compliance and quality control.
  • Security and Privacy: By providing instantaneous transactions and verifiable storage of data and transactions, blockchain technology provides a cost-effective solution for the cannabis industry to secure payments and manage customer data while still ensuring both security and privacy. Additionally, since blockchain is based on distributed digital ledgers, this provides an additional layer of security and encryption, which can prevent fraud and other malicious activities from occurring.
  • Regulatory Compliance: The legalized cannabis industry is highly regulated and could benefit from a transparent and secure system for tracking production and distribution. Blockchain technology could provide a record of product movement from farm to dispensary, helping to boost safety and regulatory compliance.
  • Customer Service: Blockchain could also facilitate innovative customer service solutions for the cannabis industry. For instance, smart contracts could be used with blockchain technology to enable point-of-sale transactions, which could further facilitate the customer experience. Blockchain-based loyalty programs and other customer incentives can also be utilized with the help of blockchain solutions.
  • IP Protection: Blockchain is being used in the cannabis industry to protect IP and unique strains. Through the use of smart contracts and digital tokens, growers and producers are able to protect their IP and ensure that only authorized users have access to their strains. These smart contracts can also record and track purchases and sales of cannabis, secure and store genetic information, and provide evidence of ownership.

Current Blockchain Applications in the Cannabis Industry

Mile High Labs, a producer and supplier of CBD products, partnered with to create a blockchain-tracked supply chain for the cannabis industry. Beyond supply chains, Mile High Labs is also interested in using blockchain ledger technology for regulation and compliance.

IBM has also proposed blockchain technology as a way for governments to control the source and sale of cannabis.


Ultimately, the future prospects of blockchain technology in the cannabis industry are quite promising. With the ability to provide efficiently secure and transparent data solutions, the cannabis industry could be well-positioned to become more open and transparent moving forward, while still protecting customer privacy and information.

With further research and development, the cannabis industry could also benefit from further advancements in blockchain technology to further improve the customer experience and allow for more secure and efficient payment solutions.

If you are starting a blockchain-related business, contact us to see how we can help with your business plan and financial forecast.

Devin has over 25 years of experience in marketing and senior management of emerging growth companies, startups, and global consumer products companies. She has advised companies in numerous industries including cannabis and CBD; e-commerce and social media; fashion apparel, footwear, and accessories; music and entertainment; and various consumer products and services.

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