Skip to content Skip to sidebar Skip to footer

The legal cannabis industry in the United States is crippled by issues with traditional finance and supply chain transparency. Can crypto come to the rescue?

Cannabis, meet crypto

The U.S. cannabis industry, which is expected to be worth some $40 billion by 2030, faces legal and regulatory challenges, including lack of access to traditional banks and supply chain transparency. Can crypto help?

The utility of blockchain technology to address data mutability, trust, authenticity, and asset traceability could be the ideal solution for these challenges facing the cannabis industry.

Under US federal law, marijuana is still a Schedule 1 controlled substance, creating financial and operational hurdles for state law-abiding operators in the expanding cannabis landscape.

Traditional Federal Reserve-backed banks continue to close their doors to state-licensed cannabis companies, refusing to touch funds that have moved through operations that are still technically illegal under federal law. Cannabis startups face higher risks associated with all-cash operations. Moreover, they do not have access to traditional bank loans to develop their business. Smaller credit unions have sprung up — followed by long waiting lists — but now that the SAFE Banking Act has been dropped from Congress’s annual defense spending bill, any hope for immediate progress in the national horizon has been annihilated.

On the transparency front, legal cannabis consumers still don’t know where the products come from, how they are produced, and who grows them.

Here are some real-world blockchain and crypto use cases for the cannabis industry, with the exception of marijuana-based cryptocurrencies that have been around since 2014, like PotCoin, CannabisCoin, DopeCoin, HempCoin, and CannaCoin.

Global Cannabis Capital for Investment

The Luxembourg company Global Cannabis Capital (GCC), which operates in Latin America, is the first tokenized cannabis ecosystem issuing security tokens to increase investments.

The token offerings could expand the funding sources available to the pot industry, which cannot borrow money from banks due to the US federal marijuana ban. Funding so far has come mainly from venture capital, wealthy individuals and individual shareholders rather than institutional investors.

Last year, GCC’s incubator unit, Cannabis Company Builder, raised $500,000 in seed capital from investors including pharmaceutical company and delivery apps entrepreneur Ruben Sosenke.

CEND for transparency

Another illustration is a Polygon blockchain company called Cannabis Without Borders (CEND) that creates a seamless, end-to-end solution for buyers and sellers of medical and adult cannabis. The crypto company currently works with more than 30 countries in North America, Europe, Latin America, and the Asia-Pacific region.

CEND sources, certifies and safely delivers cannabis products to connect growers, manufacturers and consumers to the global legal cannabis market. The service also facilitates in-country production and regulatory support and utilizes government and industry relations, optimized systems, and custom blockchain technology.

“We wanted to create a streamlined way to move the cannabis product as a commodity, like you see with all other merchandise, where everyone knows exactly what’s going on,” said CEND’s CEO. Erik Holling says Cannabis Wealth.

These blockchain services can be used to track and trace cannabis products throughout their life cycle and will be able to detect fraudulent items. Additional data available to consumers could include lighting used, plant growth, facility cleanliness, etc.

Speaking on regulatory issues, Holling said: “At the end of the day, transparency is what makes politicians feel safer to promote the industry in their country. It allows banks and insurance companies to feel more confident.”

Source link

Leave a comment