Given that the Biden administration is planning to decriminalize some controlled substances, BeInCrypto has taken a deeper look into how the planned legislation can impact the operations of blockchain startups focused on the cannabis industry.
President-elect of the United States, Joe Biden’s policy on decriminalizing marijuana use has differed from the views of the previous administration. Biden said on the campaign trail that under his administration, he would pursue marijuana decriminalization and expungements for individuals with prior criminal convictions for cannabis.
He is in favor of medical cannabis legalization, and is rescheduling marijuana under federal law, allowing individual states to set their own local policies without federal intervention.
During the campaign trail at a town hall event in October, Biden said:
“I don’t believe anybody should be going to jail for drug use. We should decriminalize marijuana. Wipe out the record so you can actually say, in honesty, ‘have you ever been arrested for anything?’ You can say ‘no’ because we’re going to pass a law saying there is no background you have to reveal relative to the use of marijuana.”
He also added, as an alternative to incarceration, that people struggling with drug abuse should instead go “into mandatory rehabilitation.”
Requirements to cannabis growers and implementation of blockchain
The variety of applications in this new era of innovation and technological advancement with blockchain technology appears to have near limitless potential.
As with the essential nature of blockchain, cannabis pharmacies are benefiting from the power of blockchain to provide traceability of medical cannabis. Those include identification, seed-to-sale, the source of a strain, genetic cultivar information, among others. In other words, it’s perfectly compatible for supply chain management.
Furthermore, consumers need protection from unlicensed growers and distributors who ultimately steal market share by undermining the integrity of the legalized drug market, while government regulators try to acclimate to the new medicinal cannabis market demand.
Let’s put this into perspective. One of the reasons why the cannabis industry is turning to blockchain integration is because of the smart contract aspect of blockchain technology, which is responsible for controlling how the information is recorded and received on the public ledger.
All of the components associated with the automated smart contract system gathers digital signatures, inputs timestamps, tracks shipping and deliveries, triggers payments between parties, as well as any other action necessary in this process. It ostensibly enables accurate transactions, which also cancels out the possibility of human error which is rife in systems involving paper and manual laborers.
Similar to biotech and traditional drug companies, cannabis growers are required to adhere to strict manufacturing policies for safety and quality assurance. The benefits of blockchain in this industry are paramount, as it offers proof of standard operating procedures (SOP).
There are health precautions that have to be taken into consideration. Those are controlled pesticide use, meticulously measured nutrient solutions, climate controlled storage, and sanitation procedures. They must be observed in order to operate in compliance within the parameters of manufacturing guidelines.
A specific example of how this all comes together is, say, the manager of a plant and horticulture facility would need to verify and document a nutrient solution recipe, or the measure of how much pesticide was used. It’s needed because the process of cannabis cultivation is very delicate and tedious, and is reliant upon much consistency and diligent nurturing.
Therefore, blockchain empowers growers to validate the SOP process as they occur, because enabling them to monitor plant care throughout all the stages of its life cycle in order to accurately verify the outcome and authenticity of the plant.
Market growth, healthier economy, and new jobs to people
To further elaborate on the matter, BeInCrypto spoke to an industry source involved in the integration of cannabis driven blockchain, which enables consumers to buy and sell cannabis-based products anonymously.
They explained that blockchain is the best way to ensure that consumers are getting precisely the products they want. By attaching information such as certificates of authenticity, Terpine info, and other necessary information to the product, the industry can understand more about what people are consuming and why.
Such data also empowers growers, distributors and dispensaries by providing a platform for more direct feedback understanding their markets.
However, the company the source works for has yet to launch its initiatives on blockchain, simply because blockchain is still very new to the mainstream and the companies that have deployed the technology haven’t seen much progress thus far. Nonetheless, they projected that the next year there will be massive changes for both the company and industry on the whole.
BeInCrypto further asked what difficulties blockchain startups can encounter when adding other drugs to their product list. The source expounded on how companies will have to adapt to the changes and acclimate to the new way of doing things, which includes absolute transparency concerning their products, as long as those products are legal.
Speaking about what changes in the cannabis market their team expects given the drug decriminalization law is enacted, they suggested that this will affect the economy and give jobs to people. They expect to see many kraft growers who are devoted to the products they produce, emphasizing that these are the companies that they want to support and empower.
According to the source, once the law is enacted, they see the possibility of new opportunities for the company, with the ability to evolve, as new prospects change the landscape of the industry.
Furthermore, they believe in transparency and digital transformation of the industry, which includes documenting the data, empowering the smaller businesses, educating the consumer, as well as honest and legitimate studies on health benefits.
As with the advent and subsequent growth of the legalized cannabis industry, they predicted that the industry will branch out to accommodate other legalized drugs.
They said the real growth will begin, and the industry must first start from an honest and transparent environment to fully thrive. And while they and many people are not phased by the feelings of others towards their personal choices within a legal grey zone, there are many people who are.
They expect to see more consumption and as demand rises, and it will give birth to many new companies. Their job as an open source tool is to help those companies grow while promoting the sharing of knowledge and education.
The source added that in all of these budding industries, they believe that the first companies that sign up for this inevitable change will see significant growth. As they have seen in other markets, shareholders will appreciate their innovation, transparency, dedication to their customers, and being among the very first to pioneer a healthier economy.
BeInCrypto asked the source what their opinion was on the legalization of drugs in the US such as small amounts of substances like heroin, cocaine, methamphetamine or LSD in Oregon.
They said that people need to teach the youth to be more balanced and responsible with their minds and bodies. Chemicals can be used as a tool. However, tools can be both destructive and productive. It all comes down to education and usage.
The situation from a regulatory and enforcement attorney perspective
BeInCrypto also spoke to Braden Perry, a regulatory and enforcement attorney and digital currency council certified professional. Perry is involved in a number of fields encompassing novel and emerging technology, with his firm also counsels clients in legal marijuana operations.
Currently, Perry is instrumental in assisting companies in the implementation of technology, including blockchain, and he represents individuals or entities in front of a large variety of federal and state government agencies. “I’m focusing only on marijuana and will stay away from other narcotics as they are still currently illegal,” said Perry.
Similar to remarks made by the source mentioned above, Perry said that blockchain in the marijuana industry, just like blockchain itself, is still in its beginning stages, “but on the peak of rapid expansion.” He continued by saying:
“Legal marijuana businesses that see the potential and are proactive in its adoption will likely be the frontrunners in innovation and ahead of the curve when the benefits are fully realized. There is an opportunity for efficiencies in transparency and cost-cutting, and a few high-profile applications are taking hold. When the regulatory landscape evolves with the technology, more marijuana businesses will likely follow.”
With the drug decriminalization law coming into effect, and laws already passed in five states on the state level, Perry offered a prediction which he based on current trends. He said:
“Supply chain solutions and tracking will likely be the biggest trends in blockchain. Solutions will be able to make the tedious plant tracking from field to supplier efficient and much less burdensome. It will also assist in verifying brands and quality. Also, the use of private blockchains within organizations will change how companies deal with logistics.”
But blockchain adoption faces a challenge due to the uncertainty of how regulators will treat these changes in their policy, coupled with virtual currency technology. Perry explained that all federal regulatory agencies seem to have something to say about blockchain and its issues, but none have assumed any leading role in the matter.
“For example, the Internal Revenue Service has classified virtual currency as property, and the Commodity Futures Trading Commission has said they are commodities. The Securities and Exchange Commission has implemented a securities structure surrounding ICOs, and no agency has labeled virtual currency as an actual currency. This is true with blockchain. Until the regulatory structure is clear, many companies will be hesitant to use the technology to innovate their business processes,” said Perry.
BeInCrypto asked his thoughts on whether or not the cannabis business industry would change once the new law is put into motion. Perry elaborated that “most marijuana companies would benefit from some aspect of blockchain technology, from the supply of products, fair pricing, efficient supply, and improved product tracking.” He added:
“It will also enable marijuana producers to do real-time management of their production and storage. From seed procurement to harvest to sale can be recorded on a blockchain, which assists producers and consumers in quantifying, monitoring, and controlling the agriculture process.”
In his closing thoughts, Perry emphasized that the potential blockchain has to offer is vast, and that the legal cannabis industry seeking to innovate and have a proactive stance in its uses will likely reap benefits which may transcend the scope of the imagination.
“As the regulatory framework progresses with innovation, companies will benefit. But that regulatory framework will likely lag the innovation, and frustrate those willing to adopt new technology,“ Perry stated.
Cannabis projects’ stocks soar after election
It has been harrowing for investors trying to benefit from the cannabis sector. However with Biden’s new drug decriminalization policies on the approach, this sentiment is about to change, as new potentials unfold.
As the presidential elections were under way on Nov. 3, five states passed new laws legalizing cannabis, and defined the scope of the decriminalization. These states included Mississippi, South Dakota, Montana, Arizona, and New Jersey.
This means that the Biden administration does not plan to impede on the states that want to independently enlarge their cannabis laws. This has come at an opportune time because states have become in need of taxes.
As the election concluded, Canopy Growth and Tilray stocks swelled as much as 20 per cent and 50 per cent, respectively, as Aurora Cannabis skyrocketed as high as 128 per cent. And all three were still maintaining significant increases post-election, at press time.
According to Palm Beach Research Group, cannabis sales and tax revenues have reached an unprecedented high. For example, California sales have averaged 53 per cent more than the previous year, and Oregon reported a 58 per cent rise in sales from last year. Colorado, on the other hand, is bound to see their sales hit a historic record breaking $2 billion in revenue, making it four years sooner than predicted.
As incredible as these figures are, this seems to be a really just the beginning. A report published by the Prohibition Partners predicts the worldwide cannabis market will explode to $103.9 billion by 2024.