Jessica McKeil   |   October 24, 2018

Blockchain for Global Supply Chain Management of Cannabis

The benefits of blockchain technology as applied to the global supply chain are threefold: traceability, efficiency, and compliance. It's why it makes inherent sense to apply blockchain technology to the many emerging cannabis markets around the globe.
Jessica McKeil is a cannabis writer based in British Columbia, Canada. She has a passion for cannabis tech and scientific breakthroughs, which has led her to work with some of the industry's biggest brands. She is the owner and lead-writer…

Cannabis is a highly controlled and regulated substance. As such all players within the cannabis sector, are required to provide a high level of traceability throughout the supply chain. To remain profitable and compliant in such an environment, anyone who touches the product needs to have an efficient reporting system and full transparency.

Canada is about to put many of these issues to the test. As the world’s largest country with a recreational cannabis program, more product than ever before is going to flow through the supply chain to reach the hands of the consumer. Consumers and regulators both want to guarantee product safety, and have total traceability from seed to sale. It's why DMG Blockchain Solutions Inc., have recently announced their intention to launch an innovative blockchain supported global supply chain platform.

DMG’s CEO Dan Reitzik has said, “Canada is being positioned to be the global supplier of cannabis, and our blockchain platform can help enable this by way of product traceability for rapid recalls, ensuring a legal source of product, enhancing product safety, as well as facilitating and automating legal and taxation compliance.” Reitzik is not exaggerating. Experts have predicted $4.32 billion in sales over the next year in Canada. The sheer amount of paperwork and data required for compliance, to follow a product from seed-to-sale, is going to be astronomical.

Improved Product Safety Through Blockchain Management

It shouldn’t be surprising to see blockchain technology move into the cannabis space. Blockchain has made significant inroads into the mainstream economy over the last few years, and it’s no longer solely associated with fringe cryptocurrencies. Even Walmart, arguably one of the most traditional retailers, has recently announced its intention to move all leafy green suppliers on to the blockchain supply management, as powered by IBM.

Leafy greens may seem a world away from cannabis, but just like the marijuana industry, seed-to-sale traceability ensures product quality and safety. Walmart expects to manage contamination issues, like the e.coli outbreaks which plague the leafy green suppliers, quickly and efficiently with blockchain.

Logically, considering the nature of cannabis and the contamination issues already afflicting the sector, blockchain could be used in much the same way. Instead of relying on manual and time-consuming recall procedures, as is mostly the case today, regulators could quickly and efficiently manage product recalls with full traceability with a blockchain database all the way through the supply chain.

Facilitate Automated Legal and Tax Compliance

The compliance burden on growers, producers, and retailers cannot be over exaggerated. Today, it takes countless man hours to track and report data on product movement, sales, and other areas of compliance for the many regional taxation and legal requirements. The burden of compliance starts as soon as the seed goes into the ground. Each seedling is tagged, typically with a barcode, and its status reported daily. This tagging system follows the product from cultivation all the way through processing until it lands into the hands of consumers.

DMG Solutions expects to provide significant improvements to efficiency over the entire supply chain, by moving this tagging and tracking system into the blockchain. It’s going to shift the burden of tracking, reporting, and data entry into a fully automated platform. DMG Solutions blockchain platform will soon provide consistent daily reporting without the labor requirements required today. Also, its worth noting that through blockchain automation, companies reduce their risk of compliance related issues.

DMG Solutions Working Towards Full Traceability and Transparency

The possibilities of migrating the global cannabis supply chain onto a blockchain platform are far-reaching. It goes far beyond information flow between the major players like the licensed producers and retail distributors. DMG Solutions is in negotiations with all major stakeholders, from those selling the product to government regulators and quality assurance labs. Their blockchain, supply chain management platform is expected to provide immediate product traceability, internal and external auditing systems, and full transaction automation.

As the cannabis economy evolves, so too will the regulatory requirements. Companies that remain on top of compliance, regulatory changes, and supply chain will gain the upper hand over their competitors. However, remaining compliant requires substantial investments, both in financial resources with employee hours. Blockchain solutions offer a way to stay on top through efficiency, traceability, and compliance - but without the mountains of manual reporting weighing the industry down today.


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