How Blockchain Can Finally Bring Security to the Cannabis Industry


You’ve no doubt heard talk about blockchain technology and cryptocurrency. You may even think it’s the same thing (it isn’t). But with Forbes equating blockchain to the foundation stone of a new industrial revolution, you can expect that this heavily encrypted system is shifting the way we do business on a global level. The cannabis industry with all of its unique challenges also stands to enjoy some unique solutions through adopting blockchain technology. We’ll be exploring all the benefits, but first let’s make sure we’re all on the same page on the differences between cryptocurrency and blockchain technology in relation to the cannabis industry.

Cryptocurrency and the Double-Edged Sword of Anonymity

While cryptocurrency and blockchain technology often work together in symbiosis, they are not the same thing. Cryptocurrency relies on blockchain to operate, but blockchain can exist independently of cryptocurrency. Since these terms are commonly referred to interchangeably, we’re going to take a look at cryptocurrency and the potential way it relates to the cannabis industry before returning to our primary focus: blockchain’s potential benefits for cannabis.

Cryptocurrency is a (typically) digital form of currency that’s validity and accountability is reinforced by a complex, encrypted system, making it virtually impossible to counterfeit… at least without leaving behind insurmountable proof of the crime. Bitcoin is the most well known of the myriad cryptocurrencies on the market and has been used by dispensaries and cannabusinesses for years as a way to circumvent a banking system that continues to deny them service based on the federal government’s continued resistance to legalization. Prior to the popularity of cryptocurrency, cannabis shops and dispensaries had to rely on a risky cash-only system, leading to loss of revenue through robberies, not to mention the need to hire armed security services with exorbitant rates.

Cryptocurrency picked up a bad reputation early on for its use in dark web transactions. The dark web, accessed through a torrent, allowed anonymous transactions, making it a beacon for the sale of anything from hard drugs to illegal firearms to things too obscene for this humble blog to mention. Purchasers still needed to know what they were doing to make a business transaction on the dark web with cryptocurrency and leave no trace of their identity, but the fact that it was even a possibility made it a point of scrutiny for law enforcement organizations. And while cryptocurrencies still carry that tarnished history, a more mainstream adoption of the digital currency has moved it a bit closer to its originally planned purposes. Some are even hypothesizing that the innovation of cryptocurrency will find it replacing the U.S. dollar within the next decade.

How Blockchain Technology Works

But as we said before, cryptocurrency and blockchain technology are two separate concepts. Blockchain doesn’t carry the same dark, exploited history of cryptocurrency. You know that cryptocurrency relies on blockchain for authenticity, but what exactly is it? Blockchain is a complexly encrypted digital ledger that accounts for physical assets moving through a supply chain. Once data is entered into the blockchain, it becomes locked and secure, meaning it cannot be falsified or counterfeited.

Interaction with the blockchain is made through a “smart contract”; a set of coded instructions that define the nature of a transaction within the supply chain. A variety of necessary tasks can be tracked and recorded through the smart contract, including tracking, inputting time stamps and collecting signatures. Once entered, this information cannot be altered, reinforcing the authenticity of the transaction while completely cutting out any margin of human error. Using a cause-and-effect style system, the smart contract can be utilized for payment transactions as well. You can most likely already see how this would be highly beneficial to facing the unique challenges of the cannabis industry, but we’re going to break it down anyway.

The Many Ways Blockchain is Useful for the Cannabis Industry

For years, we’ve been told that the federal government is on the verge of legalizing cannabis. Despite the overwhelming will of the people, the U.S. government has been dragging its heels in the face of the inevitable. Yet the people have spoken, and the inertia of legalization is too much to resist. Everyday, we get closer and closer, but with the federal government doing everything they possibly can to slow the process, businesses are left to carry this immense industry with little to no support. The banks refuse to touch cannabis until it’s at least declassified from its absurd Schedule 1 classification. Meanwhile, legitimate cannabusinesses are forced to dodge shady cultivators that skirt regulations and distributors that can take their money and run with little consequence, if any.

One of the most important features that blockchain technology can offer the cannabis industry is trust. Authenticity and accountability is easily achieved through the system’s unwavering adherence to standard operating procedures, often shortened to SOPs. Multiple parties are responsible for verifying and inputting data into the blockchain, creating a record that cannot be altered or edited. The entire cultivation process is supervised, recorded and tracked through the blockchain with time-stamped accountability.  

The data recorded into the blockchain can be used to support a business’s adherence to standards and regulations in the event of a lawsuit, adding another dimension of benefits to using blockchain technology. In an industry that gets no federal support, this kind of verifiable proof is crucial. Blockchain evidence is considered ironclad by the court system and offers the strongest legal protection a cannabis company can expect in the age before federal legalization.

Yet another impressive benefit of blockchain technology is its ability to accurately track shipment of physical goods through a GPS tracker. The GPS facilitates a seamless line of communication with the blockchain, updating it in real time and working with the technology’s cause-and-effect design.  

Using VeChain for Perishable Goods

VeChain is a blockchain platform showing particular promise for the cannabis industry. While it offers all of the benefits of blockchain technology, it places an emphasis on making global product distribution easier and more reliable. There’s no learning curve to surmount with VeChain since it takes a turnkey approach to blockchain systems, easily accessible through the VeChain Mobile Work App. This makes it an attractive access point for blockchain benefits for people who have little to no knowledge or experience of how blockchain technology works. VeChain works in conjunction with a system called ToolChain that allows users to manage their products and customer transactions from the point of manufacturing all the way to the sales point. ToolChain offers a variety of beneficial features for inventory verification and accountability including near-field communication (NFC) chips (ideal for digital labels), radio-frequency identification (RFID) chips, and a quick response (QR) code printer. This allows the VeChain blockchain to cryptographically confirm a product’s location during the shipping process so that there’s never any question of the product’s whereabouts.

VeChain also has plenty of experience with perishable goods. The company’s blockchain system was adopted in 2018 by DNV GL, an internationally accredited registrar and product verification organization. VeChain’s system has since then been used to support the Customer Confidence Index (CCI) which handles sensitive, perishable goods.

Thanks to the scrutinizing data collection of VeChain’s system, a consumer can access a wide range of information about the product including its shipping history, production details, harvesting, freshness, lab testing results, and sourcing, not to mention more basic information like weight. A simple scan of the printed QR code can allow a customer in a shop or dispensary to get a verifiable reading on all of the product’s stats directly from VeChain’s blockchain.



So, what keeps a producer from simply submitting false information to the blockchain? Besides the fact that the blockchain preserves an unfalsifiable record with a digital fingerprint and the significant fines incurred when caught, DNV GL partakes in a stringent auditing program that puts them in direct communication with producers along every step of the process. Updating the VeChain Mobile Work App is simple and can be accomplished by uploading a variety of data including traditional written data or more state-of-the-art media including photo and video.

How the Average Cannabis Consumer Benefits

We’ve all had that moment when we order a product and are left with that feeling that we didn’t quite get what we paid for. Maybe it was a piece of clothing that we didn’t get to try on, maybe it was a videogame (*cough* Cyberpunk 2077 *cough*), maybe it was just a burger, but it’s an undeniably horrible feeling. In an industry like cannabis, that kind of reaction can range from disappointment at weak potency to a hospital visit. Think we’re exaggerating? In 2017, a cancer patient was admitted to a Los Angeles hospital where he later died. The cause of death? Allegedly, a rare fungal infection derived from moldy cannabis. This avoidable tragedy stems from the inconsistency that blockchain technology aims to eradicate. And in a legal climate in which the federal government still refuses to honor the legitimacy of the cannabis industry, it’s an inconsistency that is unaffordable.

Blockchain technology will give cannabis consumers added peace of mind by holding the industry to the agreed upon standards while also providing a magnified window into the product’s history, including cultivation, harvesting, processing and logistics. All of this information is supported by timestamps, signatures, and documentation so that the cannabis consumer no longer needs to purchase with blind faith.

Though blockchain technology providers like VeChain are offering a turnkey approach to adopting a potentially revolutionary system, it’s still a bit more complex than the cannabis industry as a whole flipping a switch. Businesses will have to decide the best route forward for their personal situations on a case-by-case basis. But with cryptocurrency ATMs already popping up in dispensaries, we’ve at least seen businesses indirectly embracing blockchain technology while other cannabusinesses are already adopting blockchain systems more directly. If it really is the fourth industrial revolution as Forbes has famously claimed, you can bet we’ll be seeing the rise more obviously and more rapidly in the coming months.   

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