DMG Blockchain (DMGI.V) blockchain solution for cannabis industry woes avoids real problem

DMG Blockchain (DMG.V) released their Wazabi project, a blockchain-based platform intended to even out supply-side kinks in the global cannabis industry’s ecosystem, and provide transparency.

The Canadian cannabis industry has a real problem with accountability. We’re specifically talking about CannTrust (TRST.T), the ironically named cannabis LP that set up false-walls to cover for their illegal grow-operation. But there have been others, including Bonify, which won the cannabis-asshole trophy back in 2018 for introducing black market weed to the marketplace.

But there’s always the issues associated with global cannabis and the byzantine labyrinth of international barriers and hidden deals in countries that make a cottage industry out of bribery and obfuscation. Wazabi’s blockchain technology expects to provide the kind of transparency and trust that would bring accountability to an industry sorely in need, and it would work if humans weren’t so duplicitous.

Here’s Dan Reitzik, DMG’s CEO on what he thinks his technology is going to do:

“With our cognitive platform, parties provide information with their digital signature so you know the information is from the respective parties. In a supply chain with two or more parties this becomes extremely effective in providing transparency and trust while also reducing system integration costs. This revolutionary modern industry architecture serves as a baseline to help resolve many of the cannabis industry’s challenges and create new business process opportunities beyond the traditional supply chain processes.”

Here’s why it won’t work.

The major problem associated with the use of blockchain technologies to implement so-called trust-less operating is that it discounts ingenuity. The quickest way to avoid getting caught using a blockchain technology when trying to hide, say, a CannTrust inspired hidden grow-op, is to NOT put it on the blockchain in the first place.

Convergence of technologies

The reason why blockchain (specifically, Bitcoin’s blockchain) works so well to eliminate trust between operators is because (when dealing with cryptocurrency) everything begins and ends on the blockchain. The ecosystem is designed to be completely internal, with no external additions—such as a cannabis manifest. Block rewards are meted out, and the next block is opened with all the information of the former blocks imprinted on it. But what doesn’t go on the blockchain won’t be represented on the blockchain. If someone doesn’t put the result of their illegal grow-room onto the blockchain, then nobody is going to know about it, making the technology superfluous.

Before we get into what it does offer, we need to explain what it is.

Wazabi uses a Hyperledger Fabric blockchain, which combines the standard features of a permissioned blockchain in that it’s immutable and decentralized, and therefore provides transparency and trust to optimize the supply chain if all the inputs into the blockchain are honest. Every block is visible at every length of the supply and distribution chain, and information cannot be subtracted, only added. That means if someone adds some shady black market cannabis, anyone (including supplier, distributor, merchant or end-user) will be able to see it and trace it back to its source.

The problems it’s built to solve:

  • Lack of trust and transparency across the ecosystem;
  • Fragmented non-interoperable technologies;
  • Lack of timely market insight for optimal customer experience;
  • Lag in regulatory compliance validation is insufficient for consumer safety;
  • Inability for purchasers to consistently acquire the same products for repeatable results or SLA (Service Level) agreements.

What it would help improve is an amalgamation of the supply and distribution side services by streamlining them, putting them into one app. That’s everything in the process from seed to sale, ERP, logistics, shipping, and warehousing all on one accessible computer program, which can accelerate systems integration across the entire ecosystem.

Once fully developed and beta-testing has been completed, revenues are expected from charging producers a few cents per gram for Wazabi certification, from commissions earned on products sold wholesale through the Wazabi marketplaces, as well as from product forecasting and data analytics.

So, no. This technology won’t be revolutionizing the cannabis industry anytime soon. The only companies which would agree to use this kind of system for its built-in accountability features are those which won’t need it, and those which will use it to act as a smokescreen for their own illegal activities knowing that no regulatory body will take a closer look at a company that doesn’t need to be trusted.

Don’t buy the hype.

—Joseph Morton

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: