C-END is creating a transparent, end-to-end solution for buyers and sellers of both medical and adult-use cannabis. Cannabis Wealth spoke to CEO Erik Holling to find out how the company is applying blockchain technology to solve some of the industry’s most pressing problems.
With issues around tracking, trust and authenticity proving to be a barrier to the development of the cannabis industry, a solution is desperately needed.
Some of these issues encompass problems such as businesses complying with licence requirements, product contamination, wrong labeling/dosing issues, validation of safety tests, and counterfeit products – many of which can lead to product recalls. Additionally, in the US, it is not currently possible to transport cannabis products from one state to another – causing problems with supply shortages and wasted product.
The last decade has seen the rise in the utilisation of blockchain technology for addressing problems with data mutability, trust, authenticity and traceability of assets, for example. The utility of blockchain could be the ideal solution for these challenges that the cannabis industry faces.
C-END is applying the technology in its services in order for governments, consumers and ancillary businesses to trust the industry and facilitate its maturation.
The company is developing a track and traceable ecosystem where everyone on the platform would be trusted. Buyers and sellers around the world would be able to connect, governments would be able to trust businesses and the supply chain, and consumers would have the authority to feel comfortable with what they consume.
Creating a transparent and trustworthy ecosystem
Holling is a former Harvard Medical School professor whose work focused on premature babies. After moving to work in a family business and taking it global, Holling began running family offices, eventually working with a company for which he secured one of the first 10 vertical licenses for cannabis cultivation in New York.
At the same time, Holling became a politician, working with local governments across the US around cannabis regulation.
“The political work was fascinating to me. I was able to work with the New York State regulators to help its cannabis programme mature,” said Holling. “When we got bought out by Cresco Labs, I looked at the industry and I thought about what was wrong with it.”
The main issue was that the US industry was losing to the black market, said Holling, due to state-by-state restrictions, where businesses have to grow, produce, manufacture and sell, all within the same region.
“When you do that, you limit your supply chain and you limit the ability to make use of economical ways of supply chain theory. I looked at that and asked how do we change that? That’s when we created C-END,” Holling said.
Holling wanted to help businesses tell a story about where their products are coming from, the quality of those products and the investors and money behind them. C-END was established to source, certify and securely deliver cannabis products, and to connect producers, manufacturers and consumers across the legal global cannabis market.
The service also facilitates in-country production and regulatory support, and utilises government and industry relationships, optimized systems and custom blockchain technology.
The services encompass certification and physical audits, carrying out background checks into the money behind companies, as well as auditing standard operating procedures at facilities to ensure practices required to retain certificates are being followed. Additionally, the service provides testing of physical products, working with governments around regulation and providing data access.
“We wanted to create a streamlined way of moving cannabis product as a commodity as you see with every other commodity out there, where everyone knows exactly what’s going on,” said Holling.
“We have over 50 years of State Department experience and we have cannabis leaders, security leaders and connections all around the world to all of the drug enforcement agencies and policing agencies. So, each country that we work in and we move product through, we actually physically have staff in those countries.
“Those staff do audits in those countries. It is part of the whole equation – there needs to be somebody physically in those locations to create that trust and that transparency.”
Governments are looking for cannabis products to be tracked and traced across the supply chain to ensure they can pinpoint where a product is at any given time, and to ensure products are not coming from illegal sources.
The C-END blockchain service will be tracking and tracing cannabis products across the products’ entire lifecycle and will be able to detect fraudulent products. Additionally, consumers will have access to data about the product regarding what lighting has been used, how the plants are growing, the cleanliness of facilities and more.
C-END’s blockchain expert, David Green, commented: “For product testing, we are going to be working with labs that we know and trust. This way, we can deliver absolute testing results, so that when the buyer receives the product, it will absolutely match what was tested and it won’t be handpicked tests that people do in this industry.
“Even more important is the regulation that the government puts in place and what they’re looking for. Their biggest concern is making sure that the money is not coming from illegal sources. They want to make sure that the product is completely tracked and traced and they know where it is at all times.”
C-END is utilising the technology for the physical side of the process. For example, pallets that are being shipped around the world will have the company’s physical tamper tech which will integrate with the blockchain technology to prove that products haven’t been tampered with physically.
“We have GPS coordinates on everything. We have a scanning system that has certain milestones throughout the shipments process and that validates the product, which ensures it hasn’t been tampered with,” said Green.
“If we’re dealing with product in a shipping container – what is the likelihood of the inside of that shipping container getting over 100 degrees for a long period of time? We have systems in place that detect things like atmospheric conditions because the product will be destroyed if it were to reach certain temperatures or humidity levels. So, we have lots of fail-safes in place to go against that.”
All of this data will be collected by C-END and put onto the blockchain.
The benefit of using blockchain for this is that blockchain technology utilsies hashing algorithms to create cryptographic codes containing the data on each block, and linking each “event” on the chain to the previous block. This data is a permanent transaction history that cannot be tampered with, making auditing processes more trustworthy, quicker and less costly.
“You have to get proof of everything – of authorization and authentication – if you will, across the entire way. So, anytime we do anything within the C-END ecosystem, everyone has to sign off. Everything is heavily locked down to security, only highly authenticated people will have access,” said Green.
“The biggest thing about leveraging blockchain technology is its immutability – nobody can tamper with it and nobody can make it do something that 51 per cent of users don’t want to do.”
C-END will be using the Polygon blockchain, which is a proof of stake chain, meaning it uses less electricity than proof of work blockchains such as Ethereum. C-END is taking its environmental responsibility one step further, however, and will be using XCO2 tokens to offset the entire system’s carbon footprint.
The company will also be using a hybrid public/private chain approach to ensure that personal data stays safe, but at the same time, can enable governments and businesses access to the lifecycle of the product, product safety certifications and more.
“We will be using the public blockchain Polygon and we’re also going to be developing our own private blockchain internally for all Personal Identifying Information,” said Green. “As every block is written, we have a method that will create a message that we will then post to the public blockchain. We’re going to write that into Polygon in a smart contract, so those transactions will be recorded publicly.
“We want to protect customers’ information and data, which is why we will be internalising that onto our private chain. However, we also know that for governments, banks and insurance companies to really understand and know that everything has not been tampered with, and that the data is legitimate, we have to have something publicly auditable. This is why we’re writing to the public blockchain.”
Through this system, C-END is aiming to help buyers and sellers know that their product is safe, whilst telling people such as customs agents, various governments and shippers everything that they need to know. C-END hopes this approach will give relevant entities the confidence they need to trust cannabis commerce.
“Once we can find a way to allow governments to open their borders for international commerce, the entire market will benefit. Right now, everyone’s landlocked to their state or their country to where they can grow, deal and distribute,” said Green.
“What we’re able to do by being able to provide these assurances, is open up international commerce. More and more international commerce will take place within the cannabis industry.”
Holling added: “Ultimately, transparency is what leads politicians to feel more secure about promoting the industry in their countries. It allows the banks and the insurance companies to feel more confident.
“I don’t think cannabis has a choice. I think cannabis needs a solution that isn’t currently being used and the current modalities are not sufficient to create a true commodity and to make this a trusted resource and a trusted business.”
C-END will soon be carrying out a pilot project of its technology in Australia with a number of cannabis groups and government agencies.