Will MassRoots jump to blockchain allow the cannabis industry to operate more efficiently? Or is it just a desperate move to save a fragile company?
DENVER, CO. – Isaac Dietrich, Hyler Fortier and Austin Hayslip discuss a business brochure during a staff meeting at MassRoots in Denver, CO on January 22, 2015. Photo By Craig F. Walker / The Denver Post
In a move that has the potential to change the way the cannabis industry operates, MassRoots, a cannabis social network also known as “the Facebook of weed,” has announced the creation of MassRoots Blockchain Technologies, Inc. The services provided by this new offshoot of MassRoots will span everything from record keeping for companies entering the legal cannabis industry to transactions between buyers and sellers of cannabis.
“We believe blockchain has the potential to enable the cannabis industry to operate more efficiently, accountably, and with a greater degree of transparency,” stated MassRoots Chief Executive Officer Isaac Dietrich. “MassRoots looks forward to being a pioneer in exploring blockchain-based solutions for the multi-billion dollar cannabis industry.”
Blockchain is the coding technology used to create cryptocurrencies like Bitcoin (BTC), which has been experiencing a recent legendary rise in value. On December 17th, it reached an exchange rate of nearly $20,000 for 1 Bitcoin, but it also took a tumble down to $12,000 just before the holiday weekend exemplifying how volatile cryptocurrencies can be.
Bitcoin and other cryptocurrencies can be acquired—or ‘mined’ as its called—by employing computers to solve extremely difficult math equations. It would take a human a lifetime to solve just one of these complex problems. Once an equation is solved, a very long number is produced and this number represents what is called a block. What gives the currency its relative stability is that it is difficult to modify these blocks once they have been created, what makes them unstable is the nature of money and its reliance on the general public’s faith in its value. In essence, the code is solid while the money’s value is not.
It’s these blocks which MassRoots intends to apply to record keeping and other services in a way that may not be as vulnerable as the highly speculative cryptocurrency market. Using these unalterable ‘blocks’ the new service would be able to provide everything from reliable record keeping and seed-to-sale tracking of cannabis products as well as the more well-known financial transactions that could connect buyers to sellers directly online. Dispensaries could even order directly from producers without the need for a middleman.
Originally developed as untraceable currencies for underground transactions in the illegal drug market, these currencies have come full circle to be relied on by the cannabis industry as an alternative to traditional banking. But the potential of blockchain itself extends beyond currencies into effective recordkeeping because of the nature of these blocks. To some degree they are like electronic DNA, permanent and incredibly difficult to alter.
The new service MassRoots aims to provide is quite ambitious given the unexplored potential of blockchain and the wide range of services it aims to provide. But, if executed properly, it could also prove to be a game changer in everything from transactions to ensuring that cannabis companies comply with regulations.
In 2014, MassRoots became one of the first cannabis companies to be publicly listed under the ticker symbol MSRT. With an estimated 900,000 users, it was one of the most promising canna-companies to bring marijuana out of the underground and into the mainstream. More recently, the company has hit some internal and financial roadblocks as it looked to expand beyond its role as a social networking platform.
In October, Dietrich, MassRoots’ 25-year-old founder, was ousted from his own company in what looked like a peaceful transition of power to the public. Behind closed doors, the board of directors conspired to fire Dietrich and replace him with Scott Kveton, the former head of Odava, another cannabis company, which MassRoots bought over the summer.
Kevton blamed Dietrich for the recent slump in MassRoots stock from $7 in April of 2015 to 11 cents in November 2017, and his October oust was meant to look like a resignation.
Two months later, the young ganjapreneur appealed directly to his shareholders and, on December 12, the board was forced to resign and Dietrich was reinstated as CEO.