How Blockchain Is Disrupting The Cannabis Industry
Transparency in the supply chain is really what will benefit business owners
Blockchain and cannabis share one main thing in common: they are both disruptive trends that are shifting how business is done around the world, and especially in the United States. Where legal producers of cannabis are concerned, blockchain can absolutely turn an industry around that has been stumped by a surprisingly slow growth curve, toward more profits in the future. This does not just apply to the cultivators, retailers and producers will also be affected by the impact that blockchain can have on an industry.
What are the challenges in the cannabis industry?
Since the legalization of recreational cannabis across many states in the U.S. and Canada, the move from illegal to legal products hasn’t happened as quickly as expected. This has frustrated those who entered the market early expecting huge demand.
Depending on your view of the industry, it might not be surprising that most cannabis is still sold through illegal channels, with 80% of volume and 60% of value coming through illegal channels in Canada. There are a number of reasons why the growth of legal cannabis hasn’t been as fast as anticipated:
- Small number of retail stores
- Increased price of legal products
- Smaller selection of products
- Supply shortages in-store and online
- Apprehensiveness toward government-regulated product
As the cannabis industry grows and matures, a lot of these problems are being solved. Producers that are licensed increase their cultivation and this, coupled with the underwhelming growth of the legal cannabis industry, has led to an oversupply of cannabis. Commercializing the product, combined with the recent oversupply of product, is putting more pressure on legal suppliers to reduce the price of their product.
Perhaps most importantly, blockchain will provide encrypted traceability, which helps address other issues.
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