Canadian Blockchain Company Sees Opportunity in Newly Legalized Cannabis


Like Walmart with pork from China and Maersk with shipping containers, DMG Blockchain Solutions (DMG) is hoping to be the first global supply chain company to manage cannabis products on the blockchain, initially in Canada — and then around the world.

Canada’s legalization of cannabis came into effect today on October 17, 2018, and Vancouver-based DMG Blockchain Solutions is poised to launch its platform built on the Hyperledger permissioned blockchain to provide what it calls “legal and safe” marijuana.

DMG Blockchain Solutions CEO Dan Reitzik told Bitcoin Magazine in an interview:

“The legal cannabis industry is brand new and, as such, producers, distributors, retailers and regulators are waiting for a solution and don’t have years of experience with existing technology.”

In an effort to ensure that individual information and privacy will be protected, DMG is using the Hyperledger permissioned blockchain in conjunction with its own proprietary technology.

“This is one of the reasons we have partnered with a globally known, respected and trusted technology partner, as they have the experience integrating platforms with existing systems and software,” said Reitzik.

Medical marijuana has been legal in Canada for medical purposes since 2011, and, to this end, existing cannabis regulation calls for tight licensing and compliance measures. As pot goes recreational in the country, DMG’s solutions will leverage blockchain technology to enforce and streamline these processes.

This mainly involves verifying and tracking products — anything from cannabis, including edibles, oils and other derivatives — using a combination of the blockchain’s immutable distributed ledger and monitoring hardware. Keeping tabs on the flow of products with more certainty than existing systems will make it easier for companies to demonstrate that they’re falling in line with regulatory mandates, as federal departments responsible for regulating and taxing cannabis will have access to the DMG platform.

“[Companies] have been approved by the Canadian Government to cultivate and sell product, and our intention is to have ALL industry participants on this blockchain … [the government] will want assurances that product is from legal sources (elimination of black market) and that the products are safe for consumers. This is why all stakeholders will want to participate on our blockchain — to access these markets,” Reitzik said.

Canada: Fertile Market for Growing Cannabis Demand

According to DMG, cannabis represents a $23 billion industry in Canada alone. Some reports estimate that the global cannabis market could exceed $500 billion.

“Canada is being positioned to be the global supplier of cannabis, and our blockchain platform can help enable this by way of product traceability for rapid recalls, ensuring a legal source of product, and enhancing product safety, as well as facilitating and automating legal and taxation compliance,” DMG noted in a public statement.

“Canada has set up a network of more than 100 Licensed Producers (LPs), some of which have market caps in excess of $5 billion,” claimed Reitzik.

DMG is currently in discussions with cannabis industry players, including major licensed producers, quality assurance labs, retail distributors and government regulators.

The Blockchain Prescription

DMG’s goal is to have a global platform that will provide immediate product traceability, as well as the ability to automate transactions and information flow among licensed producers, licensed distributors, regulators, retailers, shippers, and reporting and auditing systems.

To DMG, there are many clearcut benefits to using a permissioned blockchain to manage cannabis logistics.

It can integrate the licensed accreditation of producers, distributors, retailers, shippers, as well as manage reporting and auditing systems. For an industry that is still federally illegal in the neighboring U.S., such rigid control mechanisms are essential to keeping product flow within regulatory confines and preventing it from illegally jumping across the border.

Within the supply chain itself, smart contracts will detect events such as defective products and product recalls, which will allow distributors and retailers to react to issues in real time.

For all other operations, interfaces are being developed between the blockchain and traditional systems to facilitate faster and more efficient information flow. The same systems will ensure that employee and client onboarding is frictionless and fast and that cooperation between industry entities is painless and efficient.

“This global blockchain initiative is a collaboration among industry stakeholders and is being tailored to meet industry players’ specific requirements. DMG intends to onboard significant industry participants as it launches its cannabis supply chain solution,” said Reitzik.

“This project is not simply DMG building a platform, it is a collaboration between many industry participants. Just as there’s one global blockchain that manages bitcoin globally, we intend for this to be the single blockchain to manage the entire supply chain for cannabis globally,” added Reitzik.



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