Is Canada preparing to track marijuana supply on a smart blockchain system?

After giving the green light to the recreational use of marijuana, the Canadian government wants a flawless tracking system without compromising the user's privacy.

Marijuana will be legal in Canada from 17th October, but already the government is pondering ways to track weed from seed to sale, and tech experts believe blockchain is the answer.

The Cannabis Act by which Canada will become the second country around the globe to have legalised recreational use of marijuana – Uruguay is the first – authorises Health Canada to implement a national tracking system to protect the integrity of the market.

In fact, the government is demanding implementation of a tracking system to “help prevent diversion of cannabis: that is, the movement of both legal cannabis to the illegal market and illegal cannabis to the legal market”, according to a Health Canada spokesperson in a CBC (Canadian Broadcasting Company) article.

The new law will require authorised weed companies to file monthly reports on how much cannabis they grew, harvested, sold, destroyed, lost to theft and used for research purposes.

“Relevant security measures have been taken, and requisite precautions have been implemented to safeguard cannabis-related data,” as well as protect the privacy and anonymity of consumers, the spokesperson explains.

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“Blockchain was considered, along with several other options, as a potential solution to track movements of cannabis throughout the supply chain,” Health Canada says.

Moreover, although the federal government agreed to some extent that blockchain would be an excellent solution to keep track of what it expects to be a $7 billion industry, the tracking system will not be launched on open ledger technology at first. Officials say blockchain needs to be regulated before considering implementation.

Point Chain CEO Mark Lozzi says in the CBC article that blockchain is “critical in this industry”. His firm develops blockchains for cannabis businesses and banks handling cannabis-related accounts.

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With blockchain, “the regulators won’t be looking for a needle in a haystack” when searching for data breaches or signs of hacking because the revolutionary technology makes these problems quickly identifiable.

“We’re going to be a lot more secure than anything that is not on the blockchain,” Lozzi concludes.

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