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Rhode Island Seeks Blockchain Tech To Help Government Track Medical Marijuana

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Rhode Island is hoping that blockchain technology can enhance the state’s efforts to track the medical marijuana industry and identify bad actors, according to a notice published on Monday.

In a request for proposals, the state asked blockchain companies to submit concepts that would help Rhode Island leverage blockchain—a system that records cryptocurrency transactions—for various ventures, including its medical cannabis program.

“Rhode Island aims to be a leader in government efficiency and innovation and we believe exploring the possibilities of blockchain technology is a step toward modernization in government,” Liz Tanner, director of the Department of Business Regulation, said in a press release. “This will encourage blockchain businesses to demonstrate their value to government entities, and I encourage blockchain-based businesses to consider Rhode Island to test blockchain technology within government.”

The notice stipulated that the state is interested in developing technology that could help it increase “visibility into the Medical Marijuana industry from seed to sale, reducing potential fraud and abuse.”

Additionally, blockchain could assist various governmental agencies in “crafting an authoritative record of chain-of-custody for criminal investigative evidence” when it comes to cannabis enforcement, the notice states.

“This is really the first step to see what’s out there and if blockchain technology can help improve government processes in the future,” state CIO Bijay Kumar said. “I am excited to see the possibilities and to learn more about how this new technology is helping other public and private entities reach new levels of innovation in business, security and other areas.”

Developing technologies to track state-legal marijuana markets has become especially important considering that financial institutions have been reluctant to service such businesses out of fear of being penalized by federal regulators.

While there are congressional efforts underway to ameliorate the issue, uncertainty abounds. A House subcommittee included language to safeguard marijuana businesses from federal punishment in an appropriations bill on Sunday.

“It’s good to see the state exploring ways to make the medical marijuana program more efficient,” Jared Moffat, Rhode Island political director for the Marijuana Policy Project, told Marijuana Moment. “Legal marijuana is a rapidly evolving terrain, and we need government regulators looking at new technologies and innovative solutions.”

The request for proposals doesn’t specifically address the banking issue, but it does seem to be related. Blockchain could offer the government an alternative pathway to monitor transactions in the cannabis market through an encryption-based program.

In a related recent development, the payment processor service Square said that it has launched a pilot program designed to give CBD businesses access to credit card processing services—something that has created headaches for companies marketing products that were federally legalized under the 2018 Farm Bill.

Lawmakers Work New Angles To Pass Marijuana Banking Legislation

Photo courtesy of Philip Steffan.

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Kyle Jaeger is Marijuana Moment's Sacramento-based senior editor. His work has also appeared in High Times, VICE and attn.

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