The Government of Canada plans to legalize non-medical marijuana by mid-2018 under the Cannabis Act, and governments across the country are focused on how to effectively sell and track marijuana. The government of British Columbia asked for recommendations to find effective ways to regulate the production and sale of cannabis in the province.

IBM Corp. came in with an interesting proposal.

The tech giant recommended that the B.C. government to use blockchain to track marijuana in the supply chain once recreational cannabis becomes legal.

Why Blockchain?

Blockchain technology creates a shared digital ledger where transactions can be tracked in real time. It is a highly effective tool which uses a cryptographically-secure shared ledger to track complex transactions amongst many known or unknown parties.

Instead of using a bank to broker transactions, each party in the business network is provided its own ledger through the blockchain, showing all transactions, building transparency into the platform by design.

Given the government’s need for transparency and auditability in cannabis sales, blockchain’s design could be a perfect fit.

IBM Preaches the Benefits of Blockchain

IBM delivered a report that explains that blockchain could help the government decrease black market sales by tracking where and how cannabis is sourced, sold and priced, from seed to sale.

IBM made these comments in its submission as part of the B.C. government’s public consultation on cannabis regulation, ahead of Ottawa’s July 2018 deadline to make recreational marijuana legal. By allowing the government to capture the history of the cannabis supply chain through blockchain, it ensures customer safety.

It will also be easier in a blockchain-powered system to control quality and track down the source of poor-quality product, IBM added in it’s report: “This type of transparency would bring a new level of visibility and control to the provincial regulators and provide assurance to the multitude of cautious stakeholders regarding the way the management of a cannabis supply chain is rolled out within British Columbia.”

Benefits for Government

Blockchain can help the provincial government increase tax revenues and decrease black market sales of cannabis by tracking the sourcing, selling, and pricing of products.

Benefits for Consumers

For consumers, blockchain offers quality control and safety. With the transparency of blockchain, consumers can feel safe knowing the product they are buying is not laced with anything else and was made in a safe environment.

Benefits for Producers and Retailers

Blockchain can assist producers with real-time inventory management, greater projections of supply and demand, and also determine real time trends of consumption through blockchain data.

Retailers can identify supply and demand gaps as well as ways to mitigate those gaps, providing feedback mechanisms to producers, and use data to create predictive insights.

Opportunities for Entrepreneurs and Programmers

For entrepreneurs and programmers, creating a blockchain-based sales and inventory system can use off-the-shelf infrastructure, such as Ethereum for decentralized processing, that can be sold to retailers and producers to help them gain a technological advantage.

As blockchain continues to grow in its applications, it was only a matter of time before large technology firms suggested blockchain for government uses. While marijuana may not be a traditional use case, there’s a lot of potential to leverage the best parts of blockchain technology to help make controlled substances safer for everyone.

Image credit: Wikimedia Commons

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