From genome to sale, blockchain technology can protect the cannabis industry from itself.
For consumers to have true product choices in the budding cannabis space, growers and breeders need to protect their intellectual property through a modernized system. As it stands, the patent application process is arduous and outdated, posing as a barrier to cannabis market entrants.
From cannabis-laced lozenges to plant-breeding techniques and recipes for pot-infused beverages, dozens of cannabis-related patents have been issued in the US ― despite the fact that cannabis is still listed as a Schedule 1 drug. Patent law is complicated, and the discrepancy between US state and federal legalization laws, as well as Canadian laws, causes problems for growers.
The cannabis industry is projected to reach $63 billion by 2024. That’s plenty of opportunity for companies to profit from patented strains. As the cannabis industry shifts towards legalization, developing new strains of cannabis is one of the most appealing ways to generate revenue for growers and licensed cannabis companies.
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Protecting intellectual property
There are more than 1,400 individual strains of cannabis grown worldwide, and up to 500 known chemical compounds in a single cannabis plant, leaving a number of varieties still open to ‘discovery’.
For decades, growers of illegal cannabis strains have operated in a black market. Although patents are available for cannabis-based products, processes and techniques, growers can’t file a federal patent when they invent a new strain of cannabis since there is no federal legal basis to do so. Without a patent or a way to protect intellectual property, growers can’t prove ownership for a specific strain, and without a trusted record of the strain’s history, there is no way for consumers to verify what they are buying.
In Canada, as the regulated recreational market sits on the near horizon, regulators have stated their intention to establish an “efficient, accountable and transparent system for regulatory oversight of the supply chain.” Blockchain technology has proven that it can solve supply chain issues in other industries, and the same can be said about its impact on the cannabis industry.
“Growers don’t need to trust blockchain companies, or even one another. They just need to trust the technology,” says Robert Galarza, CEO of Canada-based BLOCKStrain Technology (TSXV:DNAX). “Blockchain is the prevailing technology that will provide protection of rights to growers and transparency to consumers.” BLOCKStrain is in the process of developing a blockchain-based platform that will house a database of cannabis strains. Using blockchain, this database will be able to immutably attribute a given strain to a specific grower as part of their intellectual property.
The need for validation and transparency
More than 5,000 craft cannabis growers exist in Canada and more than 50,000 exist in California. Say one of these craft growers partners with a licensed producer. The craft grower would provide plants to the licensed producer, who agrees to mass produce and distribute the new strain and pay the all-important licensing fee. But suppose the licensed producer develops its own strain not long after and stops paying the licensing fee, all the while claiming its new strain is different from the initial strain produced by the craft grower. In this scenario, there is no current way for the craft grower to prove that the producer didn’t appropriate the initial strain.
With its fixed and unalterable ledger, blockchain can identify the data, from genome to sale, needed to resolve future disputes like these.
Open and agnostic blockchain platforms that can record potentially billions of data points across the supply chain allow growers to protect and license their products. The technology also provides transparency of supply-chain logistics in real-time, without having to worry about larger companies stealing their genetics or failing to pay them licensing fees. Much the same way it has helped Walmart track its products, blockchain can track and validate a strain or product through its intuitive and automated system.
The current patent landscape
While patent applications are a complex and time-consuming process, companies at various stages of the cannabis life-cycle have been left with no alternative when it comes to protecting their intellectual property. Veritas Pharma (CSE:VRT,OTCMKTS:VRTHF), for instance, recently filed a patent with the US Patent and Trademark Office for its cannabis strain to enhance the actions of opioid analgesics; that is, to help potentially reduce the dose and side effects of clinically used opioids. Canntab Therapeutics (CSE:PILL) recently filed two new Canadian patent applications related to pharmaceutical cannabis. Canntab now has 13 patent applications in Canada, the US and internationally.
By incorporating blockchain as a solution for intellectual property protection and validation, the ongoing surge of innovation in the cannabis industry can continue to thrive, without such significant barriers to entry. With a surge of patent filings in anticipation of legalization, blockchain technology can stand to serve both craft growers and licensed producers well. Blockchain platforms emerging in the space will support these industry players by logging and immutably verifying these strains and products, leaving no question as to their ownership. As such, blockchain can act as a comprehensive database of strains and cannabis products, providing insight to licensed producers, consumers and regulators.
Bringing cannabis and blockchain together
Blockchain technology is being looked to as a “hail Mary” solution to many industries including banking, retail, supply chain and more. However, not all industries are as well suited or as ready to be disrupted by this complex technology. Since cannabis is still mostly illegal, issues exist that have yet to be solved. For instance, the ownership of property has historically been based on recorded evidence of legal ownership at a specific point in time.
In other words, parties record who owns what, and when. Since the cannabis industry is new and a standard has yet to be determined for the protection of rights and validating the supply chain, growers and consumers are left to hope that blockchain will be the technology that can help to establish fair standards moving forward.