IBM – blockchain solution for cannabis supply chain problem?

With cannabis being legalised in Canada in July 2018 there is an issue about delivery of the drug while avoiding criminality and misuse in the supply chain. Tech company IBM has come up with a plan to ensure rock solid and immutable recording of every move a cannabis shipment would take as it moves from grower to consumer – blockchain.

Cannabis is being viewed in a similar way to alcohol and tobacco, and provinces will have to arrive at their own solutions regarding the secure supply chain. IBM has submitted the blockchain idea to British Colombia.

Blockchain is a concept originally developed to prevent fraud in the Bitcoin cryptocurrency. It is a mechanism where the entire history of a shipment can be captured as at each stage records are kept at each ‘block’ on the blockchain. Its use in the cannabis supply chain would ensure consumer safety and exert regulatory control from seed to sale.

In its submission to the BC authorities, IBM said: “Blockchain is a highly effective trust mechanism which uses a cryptographically – secure shared ledger to irrefutably track complex transactions among many known parties.”

Blockchain’s key attributes include the fact that the blockchain is distributed with no central system brokering transactions. Each party in the supply chain has its own ledger copy that shows all transactions. Truth is consequently shared by design.

Blockchain cannot be interfered with after the event due to highly secure cryptography. It is also transparent as all shared ledgers throughout the supply chain hold every transaction between the parties in the supply chain. This ensures consensus.

According to IBM, “Blockchain is rapidly becoming a world leading technology enabling the assured exchange of value in both digital and tangible assets, while protecting privacy and eliminating fraud. Its relevance to regulating cannabis is similar to its many chain of custody applications in areas such as pharmaceutical distribution and food chains.”

IBM highlighted three key benefits: It stated, “Blockchain can help the Provincial Government take control of sourcing, selling and pricing of products, therefore can reduce or eliminate black market sales completely. Blockchain can assist producers with real – time inventory management, greater projections of supply and demand, and also elicit trends of consumption through data analytics. Although the Government of BC hasn’t confirmed its what end user distribution model will be used, IBM anticipates that it is likely that government itself will play a role in that process. An interconnected Blockchain network can assist retailers identify supply/demand gaps ways to mitigate those gaps, providing feedback mechanisms to producers, and use data to create predictive insights.”
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