Projects in Crypto & Cannabis: What’s Left to Solve

Two industries poised to converge at all-time-highs. How will they help each other? Who will they help?

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For internet natives and investors-alike, there are two industries that have been hard to miss over the past year plus. Between cryptocurrencies, a topic which spiked to maximum heights over this past year, and cannabis, the new darling for investors to discuss at lunch, it’s hard to not be excited about what a convergence of these two movements could yield for both worlds.

For cryptocurrencies and the blockchain, hitting the mainstream comes in the form of newcomers investing into the market, and a handful of coworkers asking what you know about Bitcoin. This year, the total market cap for cryptocurrencies hit an all-time-high at $800bn. In 2013, that market cap totaled just ~$1bn.

Lest we forget about the Long Island Blockchain news story at the end of 2017.

On the other side of the coin, cannabis investment has reached mainstream appeal thanks in part to government, and efforts by entrepreneurs and developers in the industry to push this newly legalized industry to new highs. Even Coca-Cola is eyeing a move into cannabis, and the stock traders are watching.

Bloomberg “ Coca-Cola Is Eyeing the Cannabis Market”

Where Blockchain Can Help Cannabis

If you’re the type to go long, and are OK with the risk, both crypto and cannabis are fertile for investment, especially as the two industries look to each other for innovation. When thinking on the convergence of cannabis and the blockchain, there’s a lot to consider. Let’s start by outlining the major issues facing the cannabis industry as it grows and grows, then see what projects are using the blockchain to help fill those chasms.

1. Traceability

From seed-to-consumption, the cannabis industry is currently plagued by patchwork solutions attempting to unencumber stakeholders in the industry. Straightforward tasks, such as recording manifests via Excel sheets and click-intensive systems, take an extensive amount of staff-hours to accomplish, often in the hundreds per month per company.

2. Compliance / Regulatory

The different, disjointed solutions presently available to all stakeholders in the industry each lack the necessary components as a one-stop-shop for regulatory compliance. Software solutions that cannot interoperate with each-other leave much to be desired when it comes to efficiently recording and accessing data, making compliance a multi-step processes, rather than a simple checkbox. Both enterprise and states feel the corner cuts.

3. Security

With so many moving pieces of data to track, traditional methods and even newer “legacy” cannabis systems lack the requisite security necessary to protect the underlying data generated at an industry and operation level, exposing stakeholders to significant liability. Data as it stands is prone to hacking and security breaches by malicious actors, leading to severe implications for the regulatory compliance of growers, transporters, and sellers. This recent example in Washington state illustrates the issue further.

4. Payments and Banking

Because of federal regulation ambiguity, most of cannabis, and namely dispensaries, mostly deal in cash because US banks are not allowed to work with marijuana-related enterprises, or any entity conducting business that is deemed illegal to the federal government.

Analysts say that over $9bn flowed into the cannabis industry last year — a lot of cash not to put in a bank. It attracts theft, losses and risk. It makes routine business practices like running payroll or filing taxes very difficult for legitimate, yet unbanked, businesses to perform.

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These gaps create a unique opportunity to provide a platform which incorporates all of the necessary elements for regulatory compliance and improved management for cannabis enterprises. Coincidentally, or maybe not at all, one of the truest use-cases for decentralization and blockchain technology is supply chain management, an innovation that would take cannabis to the next level.

The Crypto / Cannabusiness Landscape — Gaps and Bridges

According to CryptoSlate, at least 31 different cryptocurrency + cannabis projects are live on the blockchain. Most of these projects in some capacity attempt to solve one or a few of the aforementioned issues facing the canna industry at large.

A project that has been in the space for a while now: Meet CannaSOS. The Canadian-based team at CannaSOS set out to build a blockchain-powered social platform for cannabis buyers, sellers and advertisers to interact. The project rewards users for sharing reviews on strains or dispensaries with a proprietary token that can be exchanged for fiat or used within the CannaSOS ecosystem and their partners.

Overall, the CannaSOS platform barely attempts to solve the biggest problems currently facing the industry at large. The novelty of connecting stakeholders and rewarding users for reviews with proprietary crypto is not a sustainable future for either cannabis stakeholders or the crypto community.

This platform has a tremendously high hill to climb, a hill constructed by the biggest player in the space (and isn’t using the blockchain): Leafly.

When considering the growth of the industry, and how that growth didn’t necessarily match up with societal norms, Paragon initially solved a need for folks in the budding canna industry: shared workspace. Think We[ed]Work. Beyond work space, Paragon is setting out to build a suite of blockchain solutions for stakeholders in cannabis.

Paragon’s supply chain system is their first blockchain solution to be revealed to the public, and self-proclaimed by Paragon to be the core of their solution stack. From what is public-facing as of now, the Paragon team is working on a seed-to-sale solution that envelops data from a number of key players (e.g. dispensaries, growers, labs) in the space.

Their blockchain solution is powered by ParagonCoin ($PRG), which Paragon says will power and incentivize the community.

via the Paragon white paper

One of the first and most significant issues that the cannabis industry faced in the early days of legalization, and still today, is payments and banking. PotCoin entered as an early-comer in the space in 2014, and began promoting a cryptocurrency meant to become a payment and banking solution for the legal marijuana industry.

By creating a payment token specific to an industry, PotCoin is attempting to alleviate growing pains by consolidating payments to one universal token. Like $PRG, PotCoin wants their coin to be the one unit of currency that is synonymous with all cannabis-related blockchain transactions. It’s a Bitcoin clone with a cannabis name. Different than $PRG, PotCoin is currently only building a community around a payment token.

Part of the PotCoin model is to onboard merchants, which admittedly faces the same unfavorable adoption curve as cryptocurrency does at large. In other words, for PotCoin to be successful, a significant portion of merchants, as well as their customers, must understand how to use and hold cryptocurrencies like PotCoin.

The BudBo team is building a blockchain-heavy solution to underpin the entire marijuana industry globally.

BudBo is reminiscent of a medical EMR that a hospital might access. By introducing this concept early on to the industry, the BudBo team hopes to create a standard by which every legacy enterprise and newcomer into cannabis can follow.

Using smart contracts, BudBo will encrypt individual patients’ medical histories (related to MJ treatment) on the blockchain, track drop offs and pickups, and even record a database of THC/CBD test lab results.

The team at BudBo purports that their solution has regulatory compliance at the core of what they do, and the consideration is built into the blockchain architecture, making reporting much less time consuming.

What’s Left to Solve?

The aforementioned projects show us how the convergence of the blockchain and cannabis could birth a new friction-reducing solution for the entire cannabis industry. Most of the players entering cannabis right now are addressing cannabis’ problems from the outside. Technology is trying to influence cannabis, instead of key industry players coming forward and using technology to address the problems they deal with by the week, day, hour and minute.

We don’t believe that to be the answer to solve cannabis’ many growing pains and serviceable gaps. It will take key industry players, who are not new to cannabis, its history or its problems, to harness technology in a way that will yield the most positive benefits for the industry at large.

We’re ready to take on this challenge. Stay tuned.

PandaToken is coming.

-PT