Can blockchain provide the cannabis industry with credible traceability and validity?

Opinion: “With big business always comes a demand for more thorough records.”

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Decades of needless prohibition have done a number on recordkeeping within the cannabis industry.

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Coming out of a lengthy period where records ranged from haphazard to discouraged, industry leaders must adapt best practices in what has already become big business.

With big business always comes a demand for more thorough records, whether today for internal and tax accountability or tomorrow for investors, IPOs, mergers, acquisitions, and more. And while the transition from hidden or memorized information, to scattered spreadsheets and finally more onto comprehensive computer databases and exhaustive records has been a great leap forward for cannabis professionals, the value, sensitivity and variability of the product makes the validity and traceability of every single interaction an absolute must.

Enter blockchain. Developed to secure and confirm cryptographically secure financial transactions, blockchain is a revolutionary digital ledger system that has swiftly moved beyond the dark web and cryptocurrency to the light of mainstream recordkeeping for industries ranging from finance to entertainment.

Business leaders worldwide have started a move towards blockchain, which has become a gold standard for secure and verifiable recordkeeping. This new technology is built from the ground up to prove and protect the authenticity of every transaction it monitors, and is a perfect solution to tackle the problem of cannabis accountability. Armed with blockchain technology, cannabis executives can ensure their business transactions are always verified and their interactions unassailable, all without changing the way they do business.

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Blockchain is an online ledger that records data chronologically into a sequence (chain) of secure packets (blocks). Each block has its own complex hash to keep it safe from intrusion and tampering, and the ledger as a whole is reproduced in its entirety on the system of everyone involved in the operation. Any attempt to alter the data on any block is immediately brought to the attention of anyone with a copy of the ledger, making it impossible to tamper with records. These features combined together create an unparalleled structure for ensuring security, transparency, and traceability, giving all stakeholders equal visibility and authority over a shared project.

Blockchain is unique in that the data written within it is reproduced identically across the systems of everyone involved in a project, thereby creating peerless traceability that the cannabis industry needs as it moves into broader legalization around the world. Any new development in the blockchain is immediately known to everyone involved, with full visibility into who made what changes, and when. Thus every procedural step within a cannabis business, from seed to sale and beyond, could leave behind a clear and distinct record that is verifiable at all levels of the operation. Anyone looking to pull up the record of a particular step in a business endeavor of any length need only look in the blockchain and be assured the task is accurately recorded.

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Because blockchain is transparent and secure, it provides the cannabis industry with validity at every level. Tampering with records without getting caught becomes impossible, supercharging the security and trustworthiness of an industry that remained underground until just years ago, providing a quantum leap in the reliability that the industry needs in order to transition to prosperity beyond where it currently operates. Cannabis business leaders can operate in a broader commercial marketplace such as applying for loans or even consider going public with the confidence that their recordkeeping is above reproach.

Blockchain’s unique combination of validity and traceability opens up a whole world of possibilities for businesses, both in the cannabis industry and beyond. Entire product pipelines can be automated, and blockchain-powered Smart Contracts can provide automatic payments whenever a stakeholder does their part within the supply chain. And this is only one example of the unique way blockchain can make the cannabis industry more efficient and future-proof, using blockchain to ensure that everyone is equally informed of all developments and that all data is both accurately recorded and secured.

Robert Galarza is Chief Executive Officer of Toronto-based software company, TruTrace Technologies .

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