The cannabis industry has gone from strength to strength over the past few years. Medical cannabis products have proven to be successful and have gained acceptance as an effective alternative to traditional medicinal treatment. A lot of countries are seeing the growing potential of the medical cannabis and have moved to legislate the industry. With the development and evolution of any industry, there are always issues and challenges which need to be addressed and the medical cannabis industry is no different. One of the main risks is the exposure to compliance and supply chain management. The industry is one which is laden with regulations at various stages of the supply chain process. To ensure regulatory compliance and to combat certain inefficiencies arising from existing logistical frameworks, companies are looking towards implementing more adequate tools, such as blockchain technology.
In recent years, there has been a lot of hype surrounding blockchain and how this disruptive technology can impact a number of industries. As the world has grown a bit more accustomed to the notion of blockchain, players in the cannabis sphere are starting to explore how they may embrace this disruptive technology to address challenges they are facing, particularly with respect to supply chain management. With cannabis and blockchain being two of the most talked about industries in the global economy, it is appropriate to discuss how they can come together to strengthen and add value to the supply chain of the medical cannabis companies. If we are to truly understand how these industries may work together, we need to look beyond the hype and see how they may inevitably depend on each other in the near future. Taking into account the strict legislative and regulatory control which companies operating in the cannabis industry face, it becomes apparent that the implementation of blockchain technology may assist to standardise the sector.
The adoption of blockchain technology can result in a number of benefits which positively impact the supply chain of the medical cannabis industry. This disruptive technology can provide for greater transparency and traceability solutions, providing both companies and end consumers with high visibility on a product. This technology can also help fight counterfeit products, by analysing the data stored on the blockchain to certify where the product was grown, if it was legally grown and who was responsible for growing it. Given that the technology allows for real-time tracking, all this information can be searched for and confirmed with great speed.
Further to this, compliance in the cannabis industry is also an important factor to consider and one which is applicable to each stage of the supply chain. Through the legislation and regulatory frameworks which have been set in various countries, governments are setting strict requirements and industry-wide standards which need to be complied with. Such regulations and standards typically relate to the types of products which may be manufactured and produced, packaging and labeling requirements as well as the prohibition on the use of certain ingredients, good production practices and the ability to track cannabis from seed to sale.
The adoption of blockchain is not only important from a regulatory and compliance point of view. There is also a strong case to be made with respect to the increased ethical considerations from consumers and how such ethical decision-making is having an impact on the purchasing behaviour of consumers. One may argue that consumers have grown to fervently care about the provenance of their products. They want to know not only the origins of their products, but also the journey their products have been on. The argument surrounding the provenance of products has come about as a result of the increasing considerations end consumers are giving to the ethical and sustainability ratings of their chosen products. Clients are demanding clarity and increased awareness of the products they purchase. This is also true in the cannabis industry. A recent survey carried out by Culinary Visions stated that only 45% of people trust the quality of products containing cannabis. With various types of cannabis strains, each having different properties which lead to different product options and quality, consumers want to be absolutely sure that they are getting what they paid for. They are therefore more likely to buy products they can trust and are ready to pay higher prices for premium products.
The introduction of blockchain in the cannabis industry may go a long way in playing an important role in traceability solutions. It will assist in strengthening supply chain efficiency, adherence to policy regulations whilst certifying the quality of the product. It may also offer solutions for the various issues companies and regulatory authorities are facing in the industry. All industry players stand to gain from the introduction of blockchain, as it equips governments, producers and consumers with comprehensive information in a secure medium.
The writer is a senior consultant at Seed, a research-driven internationally focussed, advisory firm based out of Malta, Europe.
sarah@seedconsultancy.com | www.seedconsultancy.com