A Vancouver company, BlockStrain, is using a trending technology solution to tackle some of the cannabis industry’s biggest issues.
From cryptocurrencies to crowdsourced data storage, blockchain seems to be one of the most widely discussed innovations out of the software space lately. Many believe the new technology could be the answer to issues plaguing the nascent legal cannabis market—a system already rife with supply bottlenecks, product recalls, and dodgy testing standards.
What is blockchain? Simply put, it is a user-generated immutable ledger that creates blocks of data in a chainlink formation—hence the name: “blockchain”. Once validated and entered, information is stored on a digital platform and can’t be altered—only built upon. Everyone privy to the information has a copy of data, can verify the authenticity of the records, and has to communally agree on changes—effectively eliminating the need for third-party trust organizations.
Robert Galarza, BlockStrain’s CEO and director, believes it is this type of digitized filing system that could set a new standard for transparency and accountability in an industry struggling to develop strong roots.
He and his business partner, Tommy Stephenson, co-founder and CTO of BlockStrain, have over two decades of experience working in technology development. Both grew up in South California, giving them a front row seat to the unfurling of one of the first State-wide legalization models. California began to make headway with medical cannabis reform in 1996, fully legalizing recreational-use early last year. After the two moved to Canada in 2015, it was the country’s push to federalize legally that inspired the new company.
“One thing we saw [with cannabis] in California was this consistent push to evolve…but the problem was that there was really zero accountability or integrity behind the infrastructure, technology, industry systems, and even the products,” says Galarza to the Georgia Straight.
“The difficulty is there are some unrealistic expectations about the industry because of the excitement surrounding legalization.”
That frenzied push for expansion has only been fuelled by Canada’s latest federal shifts—taking the global weed economy to unparalleled heights, but also exposing a number of infrastructural weaknesses.
The trouble with pulling an entire industry out of the shadows, and scaling it to meet the rapidly increasing consumer demand, is that some major systems still need to be put in place in order for it to function sustainably. In the meantime, product quality has dropped, consumer education is limited, and licensed producers (LP) are outsourcing to unregulated cultivators to meet provincial supply agreements.
“What it boiled down to was figuring out how we could use our enterprise background to build systems that can make certain parts of the industry more efficient,” Galarza says.
Genome sequencing and intellectual property
When Galarza first moved to Canada, he says the legal medical market consistent of less than ten producers licensed by Health Canada. Now, the federal government has issued nearly 150 production licences. He estimates that the country has over 52,000 craft growers, less than half of which are registered under the old medical cannabis cultivation program (Marijuana Medical Access Regulations). On top of that, every Canadian over the age of 18 can legally buy seeds and grow in privately-owned or landlord-permitted residences.
This surplus of cannabis farmers means not only are hundreds of existing chemovars (a scientific term for what are colloquially referred to as “strains”) are set to stock the shelves of retailers over the coming year, but thousands more will be created as a result of hybridization (cross-breeding) and innovation. And everyone is going to want to stake their claim.
With no unified record-keeping system, the market is full of chemovars that have been cross-bred, renamed, and rebranded to mimic cultural favourites like Sour Diesel or Northern Lights.
It make sense then as to why the first data point built into a weed blockchain would be it’s genetic building blocks—and Galarza says this translates directly to the protection of a grower's intellectual property.
“There’s a running joke that there isn’t really such thing as a real Blue Dream in California anymore,” he says.
“We knew strain names were bullshit,” he continues, adding that despite the legal market only existing for a few months, this issue is already exposing itself in the measurable inconsistency of many consumer's experiences.
“What licensed producers are having to do to fulfill their supply agreements is buy from other LPs. For example, some are buying strains named AK-47 grown in completely different conditions and genetic variations…then they’re just renaming and selling it as their own AK-47.”
A chemovar develops unique characteristics to its grow conditions, which means despite a purchasing products of the same name, a consumer could experience variations in the physical and psychological effect based on where and how it was cultivated. This lack of consistency creates a problem for patients who need reliable medication and recreational consumers who are trying to attain specific benefits.
“The cool thing about tech and science is that they tend to evolve together. As our evolution of supply chain tracking and visibility evolved, so has genomic science,” says Galarza.
When it comes BlockStrain, a cultivator’s first step is to submits seeds and clones for full sequencing, microbial, and chemistry testing. The entire process—from the shipping order to real-time results—are then verified, validated, and locked to a blockchain. On top of that, the company literally provides their cultivators with a physical “strain vault” to store unique chemovars. They are also provided with a “DNA passport”—a mirrored digital copy of the vault.
We're excited to unveil BLOCKStrain's Strain Vault, the next big thing in strain registration and certification. https://t.co/ehmuBXkRVy— BLOCKStrain Tech (@blockstraintech) November 15, 2018
“They then can use that [vault] in their vendor and quality assurance agreements to stipulate they have access to the master record, and have an immutable test record to back up those claims,” says Stephenson while demonstrating BlockStrain's interface for a Straight reporter.
For some cultivators, this level of guarantee translates to literal value considering the difficulty patenting cannabis chemovars.
“We’ve got to create a system so that if someone creates something that is very unique or interesting it’s protected,” says Galarza.
“We’re not saying this is a platform that can identify the original strain for say OG Kush. What it really boils down to is with this technology a company can guarantee that the OG Kush they sold a customer six months ago is the same OG Kush they’re buying today. It comes down to transparency and consistency.”
Transparency and educating consumers
Each BlockStrain partner that follows the company’s full testing protocol is given a product seal containing a unique QR code: a barcode any customer can scan with their smartphone to cross-check the product.
At any time, a consumer can pull up a detailed report using Google Chrome’s QR scanner to view the chemovar’s entire history—from its microbial test to the temperature at which it was stored during transit.
In the current retail system, the responsibility is placed on the consumer to research existing LPs before buying their weed, many of which still aren’t posting test results.
While Health Canada does mandate product be tested for certain pesticides and pathogens, the existing federal regulations don’t press cannabis companies share tracking information and results for products legally sold in dispensaries and online.
Some companies, like Whistler Medical Marijauna Corporation have been posting things like detailed terpene breakdowns to educate consumer decisions for years. The majority of producers, however, don’t publish scientific data to back up claims of being organic, pesticide-free, or even the validity of the chemovar. To go one step further, things like grow conditions, transportation time, and storage information all play a role in the quality and effectiveness of a cannabis product—very rarely is that information shared with consumers.
“Before…in a dispensary you could see the product, open the jar, smell it, touch it, there was a lot of information you could get from just handling and looking at the cannabis,” says Galarza.
Now, beyond a dime-sized company logo on the product bottle, a chemovar name, and limited information about certain cannabinoid levels, there is very little differentiation to be made between products at retail checkpoints.
It’s not to say this was a particularly strong suit of the black market weed either—some of which was carted around in duffle bags and sold by third-parties using pseudonyms. But consumer trust and brand loyalty is something that the regulated industry is just starting to build, and with stringent limitations on advertising and no room on packages to tell a story, Galarza says BlockStrain can help educate consumer decisions.
“We get it, they [the federal government] want to make sure everything is sealed, no external toxins or compounds are getting in there, it has to be safe. But we have to provide consumers with more information than what’s on there now,” he says.
And the mechanism to do so doesn’t have to be as rigorous as it would seem. “Let’s just render all the testing information digital,” he suggests. “We make sure the testing was done through the right labs so LPs can’t doctor anything because, with all due respect, it’s business. They may be big companies but you can’t just assume everyone is going to be ethical. Capitalism is capitalism.”
Creating a government operating standard
While blockchain technology sounds like a common sense solution from a number of standpoints, getting the currently divided industry to all agree on an operating standard can be a challenge. Breeders are historically protective over their genetic information and consumers aren’t demanding this level of transparency, yet.
“Really, we want to push the government to allow for this seal to be on packaging,” says Galarza, adding that there is currently no room on labels for a verification code or access to a free database of testing information.
Currently, the only tracking mechanism in place for Health Canada focuses on the national supply only. On the tenth of each month, legal retailers of cannabis must submit sales and inventory data to their respective provincial authorities via the federal government’s Cannabis Tracking System (CTS). The database doesn't publish testing information, nor does it monitor product quality.
“First, we need a call amongst the producers who are saying they’ve created the best products in the world…let’s stand up and prove it,” says Galarza.
“It’s also time for us as consumers to stand up and say we deserve to know what we are buying. We deserve to know what we are putting in our bodies. We deserve to know the kind of medicine is out there.”