The Benefits That Blockchain Technology Could Offer the CBD Industry

The CBD industry has seen an enormous boom in the last few years and will continue to do so, especially since the 2018 Farm Bill was passed. The scene of the CBD industry is filled with entrepreneurs looking to get in at the ground level, investors looking to do the same, eager and interested consumers, passionate activists and heated politicians on both sides of the legalization issue.

Major strides have been in the cannabis industry in general, and especially so on the CBD side of things. But things like industry transparency, payment processing, and quality assurance have not been regulated well in the past years and continue to create problems for CBD entrepreneurs.

There is another fairly new industry that could be a benefit in helping to clear some of the fog surrounding these issues, and that is blockchain technology.

According to Don & Alex Tapscott, authors of Blockchain Revolution, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Blockchain technology, simply put, is a time-stamped series of unchangeable data records that are managed by a cluster of computers, not owned by any single entity. Each of these “blocks” of data are secured and bound to each other using cryptographic principles. 

Why would this be so beneficial in the CBD industry specifically, though? 

The very nature of blockchain technology is democratized, meaning it has no central authority. It’s a shared and immutable ledger, and the contained information is open for anyone to see. 

This means that blockchain is transparent and everyone involved is accountable for their actions. 

Here are some more specific benefits that blockchain technology could offer the CBD industry.

1) Overall Transparency

Blockchain technology in the CBD world could bring transparency to every aspect of a business.

Since the blockchain ledger is unchanging, it greatly reduces or eliminates any potential human-based confusion or deceit. This would also help clear the monetary and legal side of things by making it extremely easy for financial institutions and governments to audit cannabis companies and keep track of taxes that are due.

Blockchain technology is particularly important in the cannabis space where businesses face unclear border regulations. Blockchain would give these businesses tangible proof of the point of origin of their products and whether any products are moving across national or state lines. 

2) Payment Processing

Accepting payments is very likely one of the biggest issues for the CBD industry.

Although CBD is federally legal since the 2018 Farm Bill was passed, federal law still poses some cumbersome restrictions for how CBD-based companies can accept and store payments. According to the Credit Union Times, out of the 11,000 banks in the United States, only 300 of them work with cannabis business owners.

This lack of financial options is causing many CBD business owners to operate from a cash-only standpoint, which not only a potential inconvenience for their customers but can also be high-risk for the business owner. Accounting at high volumes can become legally dangerous for cash-only businesses. Regulators have to sift through unclear financial records and end up with a foggy view of tax liabilities, which–understandably–contributes to hesitations for more lenient regulatory policies.

Blockchain technology could help solve this problem in that cryptocurrencies are decentralized and unregulated for the most part. Blockchain could help enable CBD businesses to accept secure, cashless, and fast payments that can convert into cash or be sent anywhere around the world at competitive speeds. It would also allow for much easier accounting and legal transactions like knowing how much to pay in taxes.

3) Quality Assurance

Blockchain can also help businesses manage their supply chains in real-time. No more needing to worry about lagging paper trails or loss of products.

It’s likely that CBD will touch many different businesses from farm to when it gets to an authorized dispensary; this can create multiple potential costly points of failure. CBD businesses using blockchain can pinpoint any inefficiencies in the process and are able to fix them promptly and effectively.

On top of this, by utilizing blockchain in their supply-chain, CBD businesses will be able to provide their customers with a complete picture of their purchase’s journey, starting from when it was a seed to the many different parties that touched it before the product ended up in their shopping cart.

CBD businesses will also be able to fully guarantee that their products contain exactly the amount of CBD and/or THC that they advertised. A supply chain supported by flawless math caters to a better overall customer experience.


Blockchain technology is still a relatively new concept, but it’s rapidly becoming utilized as an effective business tool. 

From processing payments to tracking an entire supply chain from seed to end-product, the CBD industry has plenty of areas that could be benefitted by blockchain technology.


This piece was written for and can be found at Smooth CBD.

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