Headline: What is Mile High Labs and how do they use blockchain?

Body: 

What is Mile High Labs and how are they using blockchain for compliance?

Body:  OK, time for complete honesty.   I was attracted to this topic most quickly by the title.  But, as I thought about it a  little, it made a lot of sense that blockchain might be used in this application.   Mile High Labs is based in Colorado, where pot is legal, and this company was formed to help growers track their products from seedling to plant to dispensary to customer.  Given that marijuana is so tightly controlled in most states, it seems clear that there should be some sort of evidence that certain products were grown, dispensed and enjoyed in a jurisdiction where it was legal to do so.  Customers would feel better knowing where the products came from.   Banks would be more likely to make loans to farmers and dispensaries if the provenance of the products could be proven.  Regulators could feel better that they made a good decision (and justify it to taxpayers) if there were some way to prove where the product came from and was used.  Everybody would benefit. 

Are they serious?

Most of the time, yes.   But, some of the language used in the articles mentioned have some very entertaining turns of phrase.    I thought I might just quote one piece

Supply chain transparency provides yet another example of blockchain applications in the cannabis industry alongside financial services, which are currently difficult to come by for cannabis enterprises. According to a joint (no pun intended) press release, the budding cannabis industry leaves many consumers for want of information on how their products were grown, transported and handled.

OK, back to business

When you’re in the grocery store, do you ever wonder  the difference between “organic” produce and the “non-organic” produce?  Many times, I have stood in the grocery store and looked at 2 displays of bananas.    One had a large sign that says, “Organic” and these bananas are significantly higher in price.    The ones to the right are not labeled organic.   Both look identical to me, and a taste test came to the same result.  Some people would probably appreciate knowing where the bananas were grown, picked, their  shipping history, and how long they had been at the store, among other details.  (I don’t, but some people do.)  And there is some logic behind their demand for more information about their fruit; If your body is a temple, you want to make sure that only true believers are admitted.     If this is true of bananas, what if somebody is contemplating the rather expensive purchase of an herb that will temporarily change their neurology?   I can easily imagine the desire to understand the purity of this product, even more than bananas, which normally do not change your neurology (If they do, I suspect monkey business.)

Are there other firms doing this work?

Of course there are, God Bless capitalism.  Within the U.S. alone, there are at least 2 others trying to do the same thing.   One is TruTrace Technologies and the other is Paragon in Los Angeles.  At the bottom of the globe, there is an Australian company, Parsl, doing nearly the same thing.

Does the blockchain record information related to purity?

Yes, the results of many state-mandated lab tests are encoded into the blockchain.  Those lab tests speak to the processes and ingredients found in every batch of cannabis from every grower, producer, and dispensary. The cannabis has to be tested for heavy metals, pesticides, mold, and other contaminants, combined with potency and terpene levels.   In an ideal system, all of this information could be encoded into a QR code and scanned by the customer.  This technique was originated by the TruTrace company with their StrainSecure technology, applied to “cannabis water.”  A consumer can walk into the dispensary, scan the code, and learn everything about the product.  

Are there problems to be solved?

Certainly there are problems yet to be solved.  Apparently one issue is that the product information should be accessible 24/7,  and apparently uptime can be less than 100%.  Regulators not keen on legalization of pot have often seized on this perceived weakness.  As we speak, ‘Rhode Island is thinking of legalization and sent out an RFP to companies who maintain blockchains related to marijuana.   In that debate, uptime percentage was a major point of contention.

There is a second problem, too.  Standardization of dosage, knowledge of duration of effect and side effects, etc. are linked to a drug’s NDC number within the U.S.   Cannabis-products have no   similar index to help patients understand what to expect from their experiences.

In my research, I came across a Press Release from Mile High Labs announcing their new Innovation Lab.   Each of the problems I have already identified facing the industry were addressed within the body of the release.  The gist is that Mile High Labs is looking for up to 10 partners to take on all of these problems together, in a collaborative manner.

The Verdict

“The novel consumer products that will define the next phase of this industry are waiting to be made, and the Mile High Innovation Lab exists to bring these innovations to life,” adds Hilley. “I’m excited to see what magic we create together.”  This encapsulates the need for blockchain to reasonably regulate this market.    There is great enthusiasm for the growing and dispensing of these products, largely because of the “magic” they impart to the user.   But, to do so safely, we must have a system to inform the consumer of exactly what they are purchasing and putting into their body.    Given that the uptime problem mentioned before can be solved, it seems to me that blockchain represents a good compromise.  It would allow us to reap the many very real benefits of cannabis, but do so with complete transparency.  I think that this solution is pretty spliffy.  

REFERENCES

Huobi Adds TRON Derivatives Trading – Crypto Briefing

Can Blockchain Solve Some Of The Aches Of The Cannabis Industry? (yahoo.com)

Cannabidiol (CBD) Logistics Service Market Size, Share, Growth Statistics, Latest Trends, and Forecast 2030 – MarketWatch

Mile High Labs and Brightfield Group Launch Innovation Platform to Fuel Next Generation of Novel Consumer Products — Mile High Labs

Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.