Have you noticed the word “blockchain” popping up all over the place the last several years? By the end of this article, you’ll have a complete understanding of what blockchain means for the CBD industry. Finally, we will dispel some of the mystery by helping you learn exactly what blockchain is and the practical implications of it.
Contents
1. What is Blockchain?
1.1 Learning about Nodes and Blockchain
1.2 The Benefits of Blockchain Technology
2. CBD, Blockchain Tracing, and Supply Chains
2.1 Blockchain and the Healthcare Industry
3. Blockchain for CBD Supply Chains
3.1 Better Transparency
3.2 Linking the Suppliers
3.3 Cost Savings
3.4 Accountability in the System
4. Final Thoughts on Blockchain Technology for CBD Supply Chains
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1. What is Blockchain?
Blockchain has the potential to be a highly disruptive technology. Many people have also claimed that the CBD industry is just as disruptive. While they may be disruptive in different ways, it is undeniable that both CBD and blockchain have entered the market rapidly. Both are becoming increasingly popular, and they each offer solutions for businesses and consumers.
Blockchain is considered to be a fast, secure, and transparent system that is used for peer-to-peer transactions and other purposes. It is used as a decentralized network to monitor the transfer of digital values and data. [1]
You can think of blockchain as a shared digital database that uses crowdsourcing to monitor and verify all changes and transactions. Basically, when a transaction is made, each computer on the network verifies and updates the change. [1]
This system is highly resistant to tampering since a change in one computer will not be reflected and verified by other computers in the network. The most familiar use of blockchain is for cryptocurrencies like bitcoin. The blockchain system can be used for these currencies due to the group-level verification process that offers a high degree of security. [1]
1.1 Learning about Nodes and Blockchain
Blockchain is a peer-to-peer-distributed data infrastructure. This means that there is no centralized source that holds all the data. Instead, every computer on the system holds the entire data set. These computers are then accessed by the system when a change or transaction is proposed. The other computers verify the transaction, and then the entire system is updated to reflect the change. [2]
Another way to think of the system is as a bunch of nodes on a network. These nodes all share a communication protocol, and they each store a copy of the blockchain data. When transactions are proposed, a consensus function is used to verify the change. If the change is approved by several other nodes in the network, a new block is created. This change is then updated throughout the network on all nodes. [2]
You can now see why they call this system blockchain, as each time a change is made, you create a new block. This creates a chain of blocks that can all be verified by any of the computers (nodes) on the network at any moment. This multi-layered and decentralized system maintains internal stability and prevents any fraudulent changes. [2]
1.2 The Benefits of Blockchain Technology
While the costs have started out rather high, blockchain is getting cheaper each and every year. The benefits of using blockchain have only increased year over year as well. Companies are now recognizing the numerous benefits that can arise from using blockchain technology.
Blockchain has myriad uses, including: [2]
- Decentralized currencies (cryptocurrencies)
- Self-executing digital contracts (smart contracts)
- Intelligent assets (smart property)
- Supply chain practices and policies
What’s the bottom line?
Combined, these benefits can help to reduce costs and increase security for businesses of all shapes and sizes. One of the major potential strengths of blockchain involves the creation of supply chains.
In the following section, we’ll learn all about how blockchain can be used to create supply chains. Finally, we’ll focus more on the benefits of blockchain as they relate to supply chains. After that, we’ll move on to the topic of CBD supply chains.
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2. CBD, Blockchain Tracing, and Supply Chains
Beyond currencies, many companies are adopting blockchain to monitor supply chains and other manufacturing and administrative tasks. The process stays the same, but the details change. In this context, the blockchain acts as a ledger to monitor transactions within the business. Changes to this ledger are verified by other computers on the system and then updated.
The benefits of using blockchain for supply chains include the following: [3] [2]
- Replaces slow manual processes
- Enhanced traceability and extended visibility
- Reductions in supply chain IT transaction costs
- Supply chain digitalization
- Supply chain disintermediation
- Improved data security
- Smart contracts
You can think of blockchain as a giant spreadsheet that can register types of assets and account for system transactions. Broadly speaking, blockchain can act as a registry and inventory system to help with the following: [2]
- Recording
- Tracing
- Monitoring
- Transacting assets
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However, we should note that there are issues with using blockchain for supply chains right now. [3]
- The unique value of using blockchain has not been proven by pilot runs
- There are other ways to provide transparency and traceability
- The costs to set up this system are uncertain
- A gap exists between current capacity and the needs of supply chains
2.1 Blockchain and the Healthcare Industry
It isn’t just the CBD industry that is looking at blockchain technologies. Throughout the entire healthcare industry, companies are attempting to implement this modern technology. (Click to Tweet)
The hope is attaining all the potential benefits while reducing the costs of implementing such a major system change.
This is crazy:
Blockchain is now used broadly by the healthcare industry. With the complex needs of the healthcare industry, they need systems that can keep up. Blockchain technology has been shown to be up to the challenge. The benefits of using blockchain include: [4]
- Secure patient data
- Streamlined efficiency
- Better supply chain management
- Enhanced drug traceability and safety
- Making breakthroughs in genomics
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3. Blockchain for CBD Supply Chains
Both CBD and blockchain rose in global popularity around the same time. Many readers have likely seen CBD companies proclaiming their use of blockchain. Like us, you may have wondered...
What does all this mean?
The CBD industry has also discovered the benefits of using blockchain for supply chains. With many unique pressures and needs, CBD companies have found that blockchain may just offer the best solutions. In the following sections, we’ll explore the benefits of using such a system for CBD companies.
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3.1 Better Transparency
If it is not clear by now, a major trademark of blockchain technology is transparency. In fact, the entire supply chain is recorded and visible at all times. Furthermore, transaction records are resistant to tampering and are nearly impossible to falsify. [5]
There is nothing quite like looking for a CBD product and encountering a transparent system. As consumers, we love getting to see which seeds were used, who grew the hemp plants, and what steps were taken to create the CBD product we are considering. And let’s not forget the comfort that comes with getting to see the third-party laboratory test results proving purity and potency.
All of the products sold here at SOL*CBD come with third-party laboratory tests to demonstrate our transparency. You can easily find these reports on our product pages, such as for our 3600mg CBD tincture.
WATCH: SOL*CBD 3600mg Cannabidiol (CBD) Tincture
Want to know the best part?
Blockchain can be used to create entire systems for the buying and selling of CBD products. Finally, the use of smart contracts can help provide additional assurances when making deals with other businesses. [5]
3.2 Linking the Suppliers
Another great characteristic of blockchain is its ability to create a single ecosystem. This ecosystem could contain the entire supply chain used for the CBD industry. As a sort of business cluster, this system can be used to organize day-to-day business operations. [5]
With numerous factors involved in buying and selling, a blockchain system could monitor it all. Companies would be able to connect breeders, growers, packagers, producers, delivery services, and more into one ecosystem. [5]
Furthermore, the use of blockchain in the CBD industry can help provide proof of product quality. For the CBD industry, this includes growing organic hemp containing natural ingredients and proving verified third-party laboratory results. [5] (Click to Tweet)
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Combined, this can help CBD businesses ensure that they are producing and selling high-quality CBD products. Moreover, it can help you share these data with customers and business associates. [5]
Finally, you can use this central source of data to produce marketing and sales data. By exploring patterns and monitoring trends, businesses can stay at the forefront of the CBD industry. [5]
3.3 Cost Savings
Blockchain technology, if used appropriately, can also help companies save money. By streamlining supply chain processes and reducing inefficiencies, companies can benefit greatly. In the future, we expect to see even further cost savings from using blockchain, but time is needed to advance these systems further.
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The CBD industry is one that faces many additional challenges when it comes to banking and taxes. The use of a blockchain can help overcome some of the services that are lacking within the industry (Click to Tweet). When it comes to banking and card services, any cost savings found can have a significant impact. [5]
But here’s the kicker.
For these savings to occur, companies need to manage the costs of a blockchain system. Unfortunately, the fact is that blockchain systems are not cheap to implement. Companies that are considering using blockchain must analyze all the costs and benefits to determine whether it is right for them.
3.4 Accountability in the System
As one example of the benefits of using blockchain for the CBD supply chain, we turn to the Netherlands. There are websites with free online CBD search tools that consumers can use to trace CBD products from seed to shelf. One such system was created by the Cannabinoid Association of the Netherlands (CAN), a group of Dutch CBD producers. This system demonstrates the accountability that blockchain can offer. [6]
Consumers can use such a system to verify every link along a supply chain. This allows them to trace products through every step of the manufacturing process, starting with the seeds. They can trust the results knowing they are verified by the blockchain technology. Talk about maximizing transparency and accountability! [6]
Many producers in California have also been pushing for the use of blockchain technology. They feel that blockchain can be used to create and enforce legal standards around CBD. (Click to Tweet)
As far as the government is concerned, the use of blockchain supply chains is one way to increase tax revenue. This is because producers will have less opportunity to avoid tax payments. Consumers will also benefit from enhanced accountability in the system. [6]
RELATED: Is CBD Oil Legal in Your State?
4. Final Thoughts on Blockchain Technology for CBD Supply Chains
As we’ve learned together, blockchain technology takes advantage of decentralized networks to offer unmatched transparency and reliability. Through the use of multilayered verification processes, the entire system maintains integrity and security.
Here’s the deal:
The CBD industry is one of many that is adopting the use of blockchain technology. More specifically, the use of blockchain to create CBD supply chains has offered numerous benefits.
As we discovered, using blockchain for supply chains can streamline transactions, add transparency and security, and produce cost savings. Finally, by connecting suppliers under one system, the CBD industry has found a way to support claims around the high-quality products made. (Click to Tweet)
RELATED: Tips for Sourcing High-Quality CBD Oil
While the costs of creating a blockchain system may seem high, they are getting cheaper every year. By considering the benefits and costs of implementing a blockchain CBD supply chain, companies can determine whether now is the time to act. As many businesses have learned over time, being slow to adopt new technologies can be a business killer. Avoid this potential threat by ensuring that your company takes the time to consider blockchain for your CBD supply chain.
Sources:
- https://www.bitdegree.org/crypto/tutorials/blockchain-explained
- http://orca.cf.ac.uk/115569/1/_system_appendPDF_proof_hi.pdf
- https://www.mckinsey.com/business-functions/operations/our-insights/blockchain-technology-for-supply-chainsa-must-or-a-maybe#
- https://builtin.com/blockchain/blockchain-healthcare-applications-companies
- https://www.cannabistech.com/articles/cbd-blockchain-a-unique-relationship-no-one-saw-coming/
- https://cointelegraph.com/news/blockchain-tracing-the-cannabidiol-supply-chains-will-help-define-legal-standards?utm_source=SocialAnimal&utm_medium=referral
