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IBM Has a New Blockchain Idea: Tracking Marijuana Sales

November 7, 2017, 7:43 PM UTC

Companies are using the digital ledger technology popularized by bitcoin in banking, insurance, and contracts—but how about using a blockchain to track marijuana sales?

Canada is planning to legalize cannabis sales next year, with some regulation of distribution and retailing done at the province level, following the same model used for tobacco and liquor. So when the government of British Columbia asked for suggestions about everything from age minimums to retail store rules, IBM came up with an innovative idea: use a blockchain.

The idea, as IBM (IBM) laid out in a brief four-page submission, is to track pot supplies as they move up the supply chain from farm to distributor to retailer to consumers. The most well-known blockchain, typically a publicly-available digital document that uses encryption techniques to validate transactions, tracks the bitcoin economy and other cryptocurrencies like ethereum. But tech companies have been finding all sorts of new uses for the technology, such as Walmart’s (WMT) experimental blockchain tracking livestock and other farm products. And IBM has been at the forefront.

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Blockchain’s “relevance to regulating cannabis is similar to its many chain of custody applications in areas such as pharmaceutical distribution and food chains,” IBM wrote in its submission. “The core to those supply chains is the same, assuring health and safety of consumers, preventing fraud and counterfeiting while creating a foundation of transparency upon which to base regulation.”

A blockchain could help the government ensure that cannabis crops are legally grown, that appropriate taxes are collected and that black market sales are blocked. Consumers would know the exact origin of any products they purchased as well.

“This type of transparency would bring a new level of visibility and control to the provincial regulators and provide assurance to the multitude of cautious stakeholders regarding the way the management of a cannabis supply chain is rolled out within British Columbia,” IBM said.