Marijuana Business Magazine September 2018

WHO’S ABOARD THE BLOCKCHAIN TRAIN? S everal businesses inside and outside the cannabis indus- try are adopting blockchain technology. Some are offering it as a seed-to-sale tracking solution, others as a payment- processing and banking solution, and still others as both. Here’s a sampling: In November 2017, tech titan IBM responded to British Columbia’s solicitation for legislation recommendations by proposing the Canadian province use blockchain technol- ogy as a seed-to-sale tracking system. Big Blue, based in Armonk, NewYork, has invested significant capital into its blockchain efforts. IBMwrote in its recommendation: “Block- chain is an ideal mechanism inwhich BC can transparently capture the history of cannabis through the entire supply chain, ultimately ensuring consumer safetywhile exerting regulatory control – from seed to sale.” In December 2017, MassRoots , a cannabis-focused technol- ogy company in Denver, created MassRoots Blockchain Technologies. The goal: explore how blockchain can be used in the cannabis industry and to develop seed-to-sale tracking software. According to a July 5 filingwith the Securi- ties and Exchange Commission, MassRoots hired NewYork City tech firm MEV to develop the software, which it hopes to unveil in late 2018 or early 2019. Cannabium , a CBD retail company headquartered in Van- couver, British Columbia, is using blockchain technology and cryptocurrency to sell, buy and trade CBD products. Cannabium created its own cryptocurrency to enable own- ers to buy CBD extracts. The CBD extracts are produced by One Colombia , a Colombia-based cannabis grower that partnered with Cannabium. A former vaporizermanufacturer turned diversified company offering distribution and packaging solutions for the can- nabis industry, mCig , also has gotten into the blockchain game. The Jacksonville, Florida-based company turned its tech subsidiary, GigeTech, into a blockchain-specific busi- ness renamed Obitx. The unit provides blockchain and cryptocurrency consulting services and develops blockchain software. Obitx has also partneredwith two cryptocurrency companies: KrypNetwork , which makes cryptocurrency ATMs, and Render Payment , a cryptocurrency payment- processing company. Vancouver, British Columbia-based Liberty Leaf Holdings , a publicly traded Canadian company that has stakes in two cultivation license applicants, has partneredwith boutique tech firm Blox Labs , based in Toronto, to develop Canna- Blox , a blockchain-based smart contract supply chain- management platform for the legalizedmarijuana industry. EmeraldHealthTherapeutics , a federally licensed producer inVictoria, British Columbia, and DMGBlockchain Solutions inVancouver, British Columbia, formed a partnership called • Deploying it for seed-to-sale tracking and recordkeeping, such as growers. Companies big and small are keen to combine blockchain and cannabis. Last November, for example, IBM urged the British Columbia government to use blockchain technology as a seed-to-sale tracking system for the Canadian prov- ince’s new recreational marijuana industry. Cannabium, a CBD retail company headquartered in Vancouver, British Columbia, is using blockchain technology and cryptocurrency to sell, buy and trade CBD products. Some marijuana retailers are using or looking into using cryptocurrency-based ATMmachines. And entrepreneurs are starting companies with the same inten- tion. Small wonder: A potentially disrup- tive technology like blockchain offers alluring opportunities. “Blockchain technology can be used in the cannabis space the same way it can be used in any industry,” said Kevin Fortin, a cryptography expert and patent attorney with the Hoban Law Group. Companies Eyeing Blockchain Blockchain is essentially a decen- tralized digital ledger of transactions. Each transaction, or “block,” is added to the ledger linearly, forming a chain of blocks. Before a block can be added to the chain, however, it must be veri- fied by existing participants within the blockchain. Roughly speaking, the two types of cannabis-related companies that currently leverage blockchain technology are those: • Using it for payment solutions and banking, such as retailers. If the hype behind blockchain is true, it should benefit growers as a seed-to-sale tracking technology, while retailers can use it as a payment-processing device and banking solution. Advocates contend blockchain technol- ogy could be used to: • Solve payment and banking conun- drums facing cannabis businesses by replacing conventional currency with cryptocurrency. • Help marijuana companies obtain loans from cryptocurrency financiers. • Improve recordkeeping: Blockchain records are immutable and harder to hack. • Provide seed-to-sale tracking – a common requirement among growers and retailers in legal U.S. marijuana markets. 82 • Marijuana Business Magazine • September 2018