Things are looking up for cannabis. Big pharma has been studying the drug's medicinal qualities. Wall Street investors are putting money into it. And Nevada politicians are looking for ways to provide banking services for marijuana dispensaries.
Some in the budding (pun intended) blockchain industry are excited to join the legal cannabis circle. But until last week, that was a state-by-state strategy, as recreational cannabis is illegal in most places. However, with Canada legalizing the recreational use of marijuana nationwide on October 17, things have ramped up. The same day, a Canadian cryptocurrency mining company, DMG Blockchain Solutions Inc., announced its intentions to develop a blockchain-powered global supply chain to track the quality of cannabis.
It says it wants to develop the blockchain platform so the cannabis industry can track product and ensure it came from a legal source, enhance product quality, and aid in rapid recalls of defective product.
What makes DMG, known primarily for mining, think it can succeed? In an interview with ETHNews, CEO Dan Reitzik stressed that mining is just part of what it does and that it was embarking upon the effort in collaboration with recognized players. We asked Reitzik about the cannabis supply chain, how it will work, and what other industries may benefit from it. The conversation has been edited for length and clarity.
ETHNews: Why has DMG decided to participate in the cannabis industry?
Reitzik: We have all of the relationships because we are located primarily in Canada. We know pretty much all the CEOs of all the licensed producers. It just made sense. Everybody talks about blockchain this and blockchain that and how it is going to revolutionize all sorts of industries. I think it might, eventually, but it is going to take decades. People will say it's going to change the way the stock market works. Yeah, it will, but there are already systems in place that work pretty well. You've got legacy systems that people are not that keen to change and integrate new technology into what they are already doing. Whereas the cannabis space is brand new. So, they are just waiting for a solution. It's not like there are legacy systems that have been used in the cannabis space. We only just legalized for recreation two days ago. So that is why it's the perfect industry. I do think that real estate transactions are going to be blockchain-based eventually, but it's going to take a decade or two. But cannabis we can do right away.
ETHNews: How is DMG going to develop a global cannabis supply chain when cannabis is illegal in most countries?
Reitzik: Canada is being set up as the supplier to the world. We have [approximately 120] licensed producers, some of which have [massive] facilities. But it's way more supply than the Canadian market will ever need. So, Canada is being set up as the global supplier for cannabis. Do you really think that Italy is going to set up a massive infrastructure when they decide to let their citizens have cannabis, whether it's medical or recreational? I don't think so. I think they'll just say, "Forget it, we'll buy from Canada." And, if the products they are importing have the DMG Blockchain seal of approval, that government knows perfectly well where that product came from, they know they don't have any issues with the product supporting the black market, and they know that in the event of a problem, with the traceability, they can do a recall in seconds rather than weeks.
ETHNews: How is DMG going to profit from this platform?
Reitzik: The way we plan to monetize this platform is, if you are a producer and you want your product to be basically tracked on this blockchain and to ensure that consumers know that your particular grams were grown on this day, they were cured on this day, they were tested on this day, they were shipped on this day, [they will be] charged a few cents per gram to track their products.
I also see this same type of platform evolving to track other pharmaceuticals. The supply chain of opioids, for example, is a huge problem right now. Where opioids are going, who's buying them, who's prescribing them, so eventually I think we'll take this into the pharmaceutical business. But, the cannabis business is going to be absolutely massive over the next couple of years, and we want every gram that is moved around the world and consumed to be tracked and traced by our platform.
ETHNews: Will the platform be used to track other marijuana products, such as edibles, concentrates, and CBD products?
Reitzik: Yes, anything that is cannabis or cannabis derivatives, our plan is to track those. The plan is to track oils, [but] oils are a little different because you are basically tracking many different plants, many flowers that have gone into the production of that oil. So that's a bridge we have not yet figured out how to cross. We can track a flowered gram no problem, and we can track batches of oil, but we won't be able to track right to the source of where that product came from for that oil.
ETHNews: What else should we know about DMG and the platform?
Reitzik: As a company, I think it's important to stress that we're a diversified company. We have, obviously, massive amounts of industrial mining. We're not as at risk to the fluctuations of price of bitcoin because we essentially do hosting … We're building what should be a model blockchain for supply chain management. We are not building it on our own; we are building it with a Fortune 100 company as a collaboration. We also have a forensics division that keeps the transparency of DMG in place. Two of our executives are certified fraud examiners, for example. This is not your average mining company; this is a very diversified company.