Traceability brings Trust to the Cannabis industry

Published
, 7 minute read

Quick summary: The increasing legalization across various regions has seen a spurt in the growth of this cannabis industry. Traceability in the cannabis supply chain will be different because of its mandated requirement of provenance and seed to sale transparency. Blockchain technology will be a gamechanger for the Cannabis Supply Chain.

Cannabis market is one of the fastest growing markets in the last few years. The Cannabis legislation is rolling out and this would mean governments would impose stringent rules and regulations to ensure companies are operating efficiently and protecting consumers from unsafe and harmful products. This will trigger the need for comprehensive and reliable cannabis traceability solutions from seed to sale in place. The goal will be to enable producers to achieve quality and compliance to regulatory requirements and safety to the end consumer. 

Cannabis Market 

According to Fortune business insights, the global cannabis industry is projected to reach $197.74 billion by 2028, representing a CAGR of 32.04% over the time period 2021-2028. The increasing legalization across various regions has seen a spurt in the growth of this cannabis industry. A lot has also been attributed to the increasing awareness among consumers about its health benefits and medical use. North America due to increased legalization dominates in the growth of this industry both for medical and recreational purpose. 

According to Pew Research centre, a record of 62% of US population is in favour of legalizing cannabis. 

According to the US Cannabis Report the US legal Cannabis market is estimated to reach $35 billion by 2025 with a drop of the illegal market by 15%.” 

Besides the health benefits for consumers, the marijuana industry must be controlled and regulated. The consumers must be assured of a regulated and quality product. 

Cannabis Supply Chain 

Though the stages are simple, each step has its complexity. 

Cultivation 

This stage has intense regulations and almost everybody wants to be growers. Seedlings and seeds are used as commodities as well as crops are harvested 

Extraction 

This stage is a little complicated because people are discovering the molecular composition of the active compounds in marijuana. Due to legalization, scientific and  academic institutions  are researching on drug discovery and  development from marijuana. The specific compounds are being tested for medicinal values  and toxicity. 

Testing 

This is a crucial stage where testing is carried out under stringent conditions to adhere to standards to ensure public safety. 

Distribution 

Distribution is via third party distribution channels. There are freight trucks, shipping and air cargo lines delivering goods across states. The distribution channel is specialized as it needs to conform to safety and quality standards. 

Retail 

This constitutes the end consumers who buy from brick-and-mortar stores or online. This again may be governed by strict regulations and ethical practices. 

Challenges in the Cannabis Supply Chain 

As the cannabis industry ramps up due to legalization, there are many challenges to be addressed in the cannabis supply chain 

  • Adherence to safety standards 
  • Recalls can be a threat to profitability and reputation of the company 
  • Chemical and Pathogenic contamination 
  • Regulatory requirements like audits and quality checks 
  • Mismanaged inventory and paper trail for records and certificates 
  • Fraud and the spurious market leading to unsafe products 
  • Demand and Supply market 
  • Transportation and disruption in Logistics. 
  • Tax laws need to treat it as a legitimate business 
  • Licensing regulations for growers 

Technology interventions are necessary to address the supply challenges. End to end traceability solutions would bring in more transparency and regularity in the supply chain.

Importance of Traceability in the Cannabis Supply Chain 

Traceability solutions helps cultivators, processors, distributors and retailers to manage their operations on a single platform, thereby conforming to standards and being compliant. A robust seed to sale tracking system is essential to maximize production at reduced costs and also satisfy the regulatory standards.’ 

The farm management solutions in the first mile helps to track the sowing and growth stages of the product. The agronomy and sustainable practices ensure quality yield with optimum usage of input resources. The management of environmental conditions, water consumption, nutrients and pesticide use help to deliver a quality yield. The harvest management guarantees productive yields thereby saving costs. 

The post-harvest processing and the operations down the supply chain is critical to achieve operational efficiency at reduce costs. The ERP functionality in traceability systems ensures streamlining of these activities with better inventory management. The real-time capture of data along with batch management and sales reporting adds to the market value of the product. The quality control integrations ensure regulatory compliance. 

Along with the cannabis plant, there is a need to track its derivatives, ingredients, packing material used during production. Tracking at every stage identifies hazards and in event of recalls, precise mass-balance calculations are required to account for every gram of the product. 

Blockchain, a game changer for the Cannabis Supply Chain 

The need for transparency and trust in the cannabis supply chain together with the supply chain partners and consumers wanting to know about the practices and products has triggered the need for blockchain traceability solutions

Unlike the traditional databases, the blockchain ledger is decentralized. The information entered by trusted partners and synchronized by their consensus is stored across multiple locations, ensuring data integrity. These immutable records provide a single source of truth enabling audit trails and regulatory compliance. The real-time capture of data ensures visibility and addresses challenges due to recalls. The digital time stamped identity of the product validates authenticity of the product building trustworthy consumer brands. Blockchain offers security, transparency and redundancy to prevent discrepancies.

How does Blockchain help  

  • Cannabis growers 

Cannabis growers need to record all the stages of cultivating, harvesting and delivery of the plant including its treatment and certification. The blockchain ledgers capture all the details staring from the origin, growth procedures and practices and this data is shared on a transparent platform. The processors in the supply chain have access to this data and  are able to make informed  decisions about the  quality of the plant before processing. The manual, error-prone practices are totally eliminated ensuring transparency in the digital data. 

  • Cannabis processors 

These processors need to process the plants into other products and also need to comply to quality and packaging practices as per regulatory standards. Blockchain helps processors to streamline their workflows and ensure adherence to quality checks and certifications to prove compliance. The certifiers, retailers and consumers  are assured of an authentic product 

  • Consumers 

Consumes need to be convinced about the quality and authenticity of the product. Blockchain traceability gives a digital identity to the product and the QR code can recreate the product journey right from the seed to the  shelf, assuring product safety and building trustworthy brands. 

Though the adoption to blockchain is slow in this market, as the supply chains go complex and cannabis matures, it will become the future for this cannabis supply chain.  

As per the industry research, legal cannabis is nearly a $7 billion business in US, and this cannot be a cash market. With transparency and security blockchain will soon find its way into cashless payments and NFTs. 

TraceX blockchain solutions provide end to end traceability in the supply chain assuring transparency and trust. The cloud-based SaaS platform ensures credibility and conformance to laid out standards, providing the competitive edge. 

The emerging cannabis industry is facing hurdles on its path to legalization and acceptance, but there lies a huge prospective industry ahead and blockchain solutions will definitely transform the cannabis supply chain. Traceability in the cannabis supply chain will be different because of its mandated requirement of provenance and seed to sale transparency.

While several agriculture supply chains are reverse engineering the process of transparency to increase safety, cannabis aka hemp is getting it right the first time. Weed on the chain will indeed be an industry’s gain! 

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