How Blockchain Can Curb Illegal Cannabis Sales

by Mostafa Razzak

With states across the U.S. continuing to legalize recreational and medical cannabis use, cultivation, distribution, and consumption are on the rise. As this plant becomes more widely accepted and decriminalized, many new businesses are being created born of its trade.

This industry is on fire, generating billions of dollars in revenue for economies around the country. But, with such rapid growth, operational hiccups are to be expected. Moreover, as regulations vary from state to state, tracing and tracking cross-border commerce is complex.

Chris Roberts reports in Forbes how, how, “Audacious rule-breakers are gaming California’s supposedly strict ‘track-and-trace” system and are diverting ‘untold millions of pounds’ of legally grown cannabis to the illicit market across the country, a recent lawsuit alleges.”

In California, cannabis changes hands multiple times between grower and consumer. Roberts explains that this results in a ‘burner’ distributor — often a phony straw man operation — buying cannabis from a legitimate grower and paying state cultivation taxes, then selling the legal cannabis on the illicit market.

“In theory, the state could take a look at the ‘track-and-trace’ data and see exactly who is skirting rules. But breaking up this arrangement would crash the whole edifice,” according to Elliot Lewis, CEO of Catalyst Cannabis Company, which filed a lawsuit on Sept. 15 against California’s Department of Cannabis Control.

Why California Regulators Should Consider Blockchain for Cannabis Tracing

With blockchain, cannabis movement can be traced from growers to distributors to dispensaries to consumers who purchase their products. Blockchain records are immutable and cannot be changed. This would prevent illegal suppliers selling products under false pretenses and black-market dispensaries from illicitly sourcing product from cultivators out of state.

Distributed Ledgers provide an unparalleled level of transparency and trustworthiness in data tracking; immutable records would address READ MORE >>>>


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