By Sherree DeCovny, Co-Founder and Research Principal
If ever there was an application for blockchain, it’s in the U.S. cannabis market. Some states have legalized it for medical use, some have legalized it for medical and recreational use, and others have not legalized it at all. Where it’s legal, the market is heavily regulated, but the regulations aren’t uniform across states.
The market’s inefficient because cannabis isn’t legal on a federal level, and there’s no interstate commerce. That means there’s an imbalance in supply and demand. Pricing varies significantly, and it isn’t necessarily transparent. There are major transportation and distribution challenges. The industry lacks standards. And since businesses have limited access to traditional banking services, they’re forced to rely on cash.
California was the first state to legalize medical marijuana in 1996, and recreational marijuana became legal in 2018. Jess Jessop, CEO of California Cannabis Market, explains the seed-to-sale supply chain in that state.
It starts with a group of clones or seedlings. The relevant strain information is entered into the , the state’s track and trace system, and the group is assigned a state-issued tag. Once the grower determines that the clones or seedlings are viable, they’re individually tagged and inherit the group.