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A technician inspects the backside of Bitcoin mining at Bitfarms in Saint Hyacinthe, Quebec on March 19, 2018.
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works based on the Blockchain technology without a central bank or single administrator. (Photo by Lars Hagberg /AFP/Getty Images)

industry | 01.01.2022

Canada Considers the Blockchain to Keep Its Cannabis Industry Secure

The Blockchain is already popular for buying illegal drugs on the dark web. Now, governments might start using this high-tech tracking system.

The Canadian government is considering using Blockchain—the tech behind cryptocurrency Bitcoin—to track its legal weed market.

When Canada’s legalization law, which was passed in June, officially goes into effect on October 17, the government will need a way to track legal cannabis from seed to dispensary to sale. In the United States, governments have used a number of crafty methods to track their weed—for example, in California the tracking is built into the tax scheme which charges every marijuana transaction in the state.

In Canada, the solution could be more high-tech.

“Blockchain was considered, along with several other options, as a potential solution to track movements of cannabis throughout the supply chain,” Health Canada told the CBC. The system is expected to “help prevent diversion of cannabis; that is, the movement of both legal cannabis to the illegal market and illegal cannabis to the legal market.”

However, the tracking system won’t be launched on Blockchain initially. Health Canada said the system, made famous by cryptocurrency Bitcoin, could be a tool for the future, once there is a more established government standard for using Blockchain.

Blockchain is a technology which uses computers to solve incredibly complex mathematical equations to create what are called blocks. These blocks of information become nearly impossible for a single hacker to modify and are decentralized, meaning the information on them is dispersed across a network rather than saved in one place.

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Cables feed into a cryptocurrency mining rig at a Bitfarms facility in Saint-Hyacinthe, Quebec, Canada, on Thursday, July 26, 2018. Bitcoin has rallied more than 30 percent in July, shrugging off security and regulatory concerns that have plagued the virtual currency for much of this year. (Photo by James MacDonald/Bloomberg via Getty Images)

For this reason, the tech is considered incredibly secure. That security is the reason the government wants to use it to store information that it will require the marijuana industry to keep, including how much cannabis is grown, sold and stolen.

The use of Blockchain in the drug trade is nothing new. In fact, electronic currency was created for the purposes of buying and selling illicit substances on the black market before it made its way to the portfolios of frat house day traders.

As marijuana has made its way out of the underground and banks remain reluctant to do business with the industry, Blockchain has followed it to the legal market.

Last December, the ‘Facebook of weed,’ MassRoots, announced the creation of MassRoots Blockchain Technologies, Inc., providing everything from record keeping to cashless transactions.

Other companies like MTRAC have also emerged to help the largely cash industry explore more secure alternatives, offering ATM-like machines which take cash for anonymous prepaid debit cards at dispensaries.

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