Could Cannatech See Better Outcomes with the Use of Blockchain Technology?
A dedicated writer and digital evangelist.
In the space of just a few short years, the market for cannabidiol (CBD) and associated products has exploded. It's a truly global phenomenon, with the industry posting substantial year-over-year gains
in the United States, Europe, and every other corner of the globe. To the outside observer, the industry's growth has seemed almost too good to be true.
Upon closer inspection, though, the reason for the explosive growth becomes all too clear. It's the fact that the industry has been permitted to grow unchecked in a light-to-no-regulation environment. In the US, the only real restriction on the sale of CBD products is that they must contain less than .3% tetrahydrocannabinol (THC)
. In the EU, the limit is even stricter, coming in at .2% THC content
For those unfamiliar with the term, THC is the compound found in cannabis that produces the well-known psychotropic effect – the high that marijuana users seek. That's the reason for the limits on the compound in CBD products, and that's also where the industry's now running into some headwinds.
That's because, in the rush to cash in on the booming CBD trade, the industry evolved few institutionalized controls on product quality. Countless products have ended up on store shelves that have since been revealed to have serious issues. Some have been shown to include little to no actual CBD. Others contain THC levels well above the legal limits
. In either case, substandard products can rob customers of the benefits of CBD
or even have long-term health consequences. In short, the kind of problems that could short-circuit the booming industry – unless someone finds a solution.
And a solution is just what may be evolving, in the form of several blockchain and cryptocurrency-related projects. Here's a look at three of them and how they may help the CBD industry continue to grow.
The Problem at Hand
To make sure that customers are getting what they're paying for and to prevent running afoul of THC restrictions, many CBD businesses rely on private labs to perform content testing on their products. The most reputable companies publish complete lab test results for everything they sell. In that case, buyers can contact the lab directly to verify the veracity of the company's claims.
Even with this option available to them, there's still no shortage of CBD companies that make false claims and even provide falsified lab results. Every year, scores of companies receive warnings from the FDA
about the claims they're making and the alleged testing they use to back them up. The problem is that it's still too easy for a scofflaw to abuse customers' trust – and there's plenty of money to be made doing it. That's the exact problem that the following blockchain projects hope to solve.
CBD Lab Chain
For CBD purveyors to provide user-verifiable product lab reports, they normally have to rely on the labs they use to vouch for individual reports on demand. To reduce the burden on them, CBD Lab Chain
has created a purpose-built blockchain that allows sellers and labs to come together in a single, encrypted, and trustless system to use as a test result repository.
In practice, a CBD company would register their products on the blockchain as they're sent to a lab for testing. Once the lab has a result to report, that data would be added to the same record, forming an immutable data trail. The blockchain itself could then be used to power a user-query system allowing any buyer to retrieve the test results of their purchased products on-demand. In that way, the labs (who aren't set up to answer such queries) can do their job, and sellers have a system their customers can trust to provide them with accurate testing data.
A much earlier entrant to the CBD-blockchain space is HempCoin
. Launched way back in 2014, it was initially envisioned to be an industry-specific payment solution that allowed growers, sellers, and customers to transact business using a single cryptocurrency solution. That was significant because, at the time, US banks had to abide by strict reporting requirements to do business with hemp producers and related companies.
In the years since, HempCoin has evolved into an all-in-one blockchain platform that can handle all phases of the hemp trade. Growers can use it to store farm-to-retail testing and provenance data, track and manage sales to retail CBD outlets, and even manage the financial aspects of their business. The idea is to manage the challenges of the global CBD industry beginning with hemp farmers and working outwards. If longevity is any measure of success, it seems they're making steady progress toward doing that.
Even though the global CBD industry is now big business, it's still underserved when it comes to the kinds of business infrastructure that other established industries enjoy. That's where Cobidol
hopes to make a big splash. Billed as "The OS of the CBD industry", it aims to be a complete business toolkit that CBD businesses can use to grow into industry heavyweights. Their blockchain project is as massive as it is impressive.
They offer a complete blockchain-based digital advertising network known as the Cannabis Advertising Network (CAN). They have a farm-to-consumer data solution known as Spectra. They provide CBD businesses with a digital and on-site payment gateway solution known as Cobipay, complete with traditional credit card processing. And in a sign that they're interested in the long-term growth of the industry, they have also created Cobicapital, a CBD-focused business funding platform to help CBD business owners finance their operations' growth. It's an everything-to-everyone approach designed to power the whole booming CBD industry.
Reason for Optimism
Taken together, the options offered by the three CBD-blockchain companies covered here could represent major breakthroughs for the CBD industry around the globe. They offer ways to meet regulatory requirements, provide verifiable product data to customers, and even to market and grow a CBD business. For an industry that's now facing a bumpy road to the future that threatens to spoil the stratospheric growth seen so far, they prove that blockchain might be just what the doctor ordered to provide a realistic way forward.
The author has no vested interest in any of the projects or companies mentioned in this article.
Featured image licensed via contributor's Adobe Stock account by Panuwat. Content images via Pexels.
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