Can blockchain provide the financing and proof-of-provenance the CBD business needs?
A Romanian cannabis cooperative focused on the production of cannabidiol turned to blockchain as a way to overcome the challenges of running a legal business in a grey area of the law.
While the health benefits of cannabidiol — better known as CBD — are becoming more widely accepted and understood, the possession, production, and transportation of cannabis remains illegal in many parts of the eurozone. As a result, service providers ranging from banks to trucking companies shy away from what is still considered a “shady market” according to The Coop Network. “As a result, the industry is not able to operate in a transparent way.”
That causes all sorts of problems, among them several that blockchain technology is eminently suited to tackle — notably financial services and the proof of provenance of a quality product.
Which is one of the reasons that the nine-month-old group — legally incorporated as the GEOMA DAO COOP — created its own blockchain. The Coop Network Blockchain is a fork of the proof-of-stake NXT Blockchain, according to the group’s whitepaper.
The Coop Network Blockchain provides transparency while protecting the privacy of the attention-shy partners and customers, as well as the farm-to-shelf proof of a “superior product” that can counteract the cover the legally grey nature of the industry provides to shoddy operators.
Another is that the decentralized nature of blockchain appealed to the group. As its whitepaper notes, by setting up as a co-operative in Romania, the GDC chose a “form of incorporation which comes near to a decentralized autonomous organization” — something the group’s middle name suggests it was well aware of. Indeed, its operating principles include voluntary and open membership; democratic member control; members' economic participation; autonomy and independence; education, training, and information; cooperation among co-operatives; and concern for community. It is practically a “legal DAO.”
Blockchain philosophy
Practically speaking, the use of blockchain technology has pushed the coop to expanding beyond medicinal cannabis. It currently has five enterprises under its umbrella.
One is a lending union — a service Romanian law allows coops to provide. Its services include a number of functions core to decentralized finance — DeFi —such as staking, lending, under-collateralized and asset-collateralized borrowing, and an insurance pool.
More insights from The Coop Network here
While financial services are needed by the growing coop’s members, suppliers, and customers, the group saw no reason to limit the union’s services to internal uses. The three remaining businesses under the GDC include vertical farming, healthcare and telemedicine, and, of course, blockchain development.
The Coop Network Blockchain has two tokens, starting with its utility and governance token, GMD. That follows the general PoS model of each token providing the possibility of being selected to create a new block, so more tokens provides a better chance. However, the block rewards are not new GMD, but the transaction fees held within the block. A partnership with the Changelly and Changelly PRO exchanges will help in getting GMD out to the public.
The second is COOP, an NFT security token that can only be bought and sold within the coop, and only after anti-money-laundering (AML) and know-your-customer (KYC) legal checks have been performed.
Into the light
Along with the transparent-but-private blockchain’s supply chain inventory tracking and provenance benefits — being used by companies ranging from Walmart to France’s Carrefour supermarkets — GDC’s long-term goal is to “open up the restrained business attitude of the current market” toward the cannabis business, in order to win the trust of consumers, regulators, and financial institutions.
That is a key reason for the Coop Network Blockchain’s stricter-than-usual governance requirements and broad decision-by-vote system. Aside from the AML and KYC requirements of COOP coin ownership, it is required of all members of the GDC’s governing council, who undergo substantial pre-election background checks. In addition, a social council stands between the management of all Coop businesses and the employees.
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