Why Cannabis Companies Are Embracing Blockchain
Blockchain is mostly associated with cryptocurrencies like Bitcoin — but the technology could help transform cannabis
“Hey, look at the stock!” It was a Thursday in late September in the Colorado offices of Leafbuyer technologies, a small tech company focused on cannabis. Like most startups, it’s a little obsessed with its stock price, which it has a staffer assigned to monitor. This day, it was going wild.
Usually, about 200,000 to 300,000 shares of Leafbuyer’s stock are traded in a day. This day, there had been three million by noon. By close, it done $10 million worth of trades, ending up by more than 60 percent.
So what happened? That morning, the company had put out a release saying it would, eventually, be using blockchain, a trendy digital ledger system that conjures images of cryptocurrency millions and unbreakable security being put to use everywhere from real estate to immigration. It’s also, increasingly, being used by cannabis companies in a variety of ways. Hearing that Leafbuyer would be using it, markets had more or less immediately lost their collective mind.
Blockchain is a new, little-understood but much-discussed technology.
“When we do a press release, sometimes there’s no reaction,” says Kurt Rossner, the company’s CEO, an affable middle-aged serial entrepreneur with a tech background. “Obviously in this case, there was a significant reaction.”
Blockchain is a new, little-understood but much-discussed technology, which appeals to different people in different ways. Investors like that it’s part of the digital infrastructure that allows cryptocurrencies like Bitcoin to exist, and however irrationally associate any use of it with huge windfalls. Computer programmers and cryptography experts — the type of people who more or less don’t consider anything safe or trustworthy — actually do put their trust in blockchain. And business owners like that it’s a relatively easy-to-implement way to grab some forward-thinking tech hype.
The cannabis industry, like many others, is recently seeing an explosion of companies claiming to be implementing blockchain in one way or another. But even industry veterans are puzzled about what exactly that means.
“Blockchain is still a very early technology. People that are claiming to do it, I don’t really know what they’re doing or what’s going on,” says Rama Mayo, the co-founder of cannabis agency Green Street, a firm that’s booked celebrity cannabis endorsements for musicians like Snoop and The Game. “I have no idea what the applications for it [in cannabis] could be.” So why are cannabis companies embracing blockchain — and is it helping them find innovative ways of doing anything other than hyping themselves?
Blockchain technology is based on ideas that go back to the 1970s, when a computer scientist named Ralph Merkle invented a way to record a series of transactions that proves that each subsequent transaction is related to the previous one. These lists — called Hash Trees, or Merkle Trees — take up a very small amount of data, making them easy to store and transfer. And this information is public: anyone can look at this list and verify the transactions. As simple as it sounds, this really is the heart of blockchain: just a secure and public way to track transactions.
To Read The Rest Of This Article By Chris Chafin on Rolling Stone Magazine
Published: December 10, 2018
Founder & Interim Editor of L.A. Cannabis News