In 2014, after spending more than 10 years in advertising, communications and law, Robert Galarza found himself back in his home state of California looking for a new challenge.

“Those were the ‘Wild West’ days of legalized cannabis,” Galarza recalls. Valuable strains were being pirated and grown on the black market, the original cultivators weren’t being paid their legitimate licensing fees and, too often, consumers were being duped into buying phony knock-offs that didn’t contain any of the specific strains advertised on the packaging, he relates.

The circumstances were particularly stressful for patients buying medical cannabis. “We know every cannabis strain interacts differently with the individual user’s endocannabinoid system,” says Galarza, pointing out that patients can experiment with a dozen or more strains before finding the one that offers the symptom relief they are seeking. “Uncertainty about the medical cannabis they were purchasing was becoming a huge problem for patients.”

Go north, young men

A self-described “entrepreneur-at-heart,” Galarza got into the cannabis software business after being introduced to his current business partner and close friend, Tommy Stephenson, who had previous experience in the cannabis tech and software industry in California and Washington.

From left: Robert Galarza, CEO of BLOCKStrain Technology Corp; Tommy Stephenson, chief technology officer.

In 2015, the duo brought their expertise north of the border to Vancouver, to serve the rapidly changing Canadian cannabis sector. “We already knew the ins and outs of the industry and all the challenges that come with an evolving industry,” says Galarza, so entering Canada seemed like a natural fit.

After working together on a “smart hub” solution designed to interconnect the disparate industry players, Galarza and Stephen decided to incorporate the emerging blockchain technology into a tracking platform that uses the genetic signatures of the various cannabis strains. Soon after, they launched BLOCKStrain Technology.

Blockchain, an online ledger system, had originally been created to facilitate the trading of Bitcoin, but software developers soon realized it could be used to track the movement of any valuable commodity, including cannabis.

“At its core, this immutable technology (blockchain) is a way to lock in and protect large amounts of data where its integrity and security may otherwise be at risk,” Galarza explains. Growers of all sizes can register the genetic profiles of their strains and track any movement of their product through the platform.

With some 150 licensed cultivators, processors and sellers, each with dozens of products distributed through, potentially, hundreds of pharmacies and retailers, the Canadian cannabis sector is generating millions of bits of data. BLOCKStrain’s “track and trace” software is designed to assemble all testing data generated along the supply chain and make it publicly available to the industry, laboratories, government regulators and even individual customers.

Beyond the genetic identity of each batch sample, the software can track where and when it was grown, any impurities and pesticides detected, its terpene profile, potency, CBD content, organic status and up to 400 other characteristics (the specific list depends on the tests being rendered by the testing partner). A customer can access all this information by scanning a special QR (Quick Response) code displayed on the distributor’s website. (Note, the Canadian cannabis packaging regulations do not permit the inclusion of a QR code on individual labels.)

Quality advanced by tracking, validation and accessibility

“The basic value proposition of every licensed producer is to produce quality cannabis,” says Galarza. “Our goal is to track the test data, validate the products generated and make that information available to customers to ensure they are getting what they pay for.” The new technology also allows growers and breeders to identify and secure the rights to their valuable intellectual property—the cannabis strains they are developing.

“We built this system to help protect against diversion—the infiltration of black or grey market cannabis—into the regulated system,” says Galarza. Before the Canadian legalization of recreational cannabis last October, some 95 percent of demand was being met by the black and grey markets, he says.

Blockchain, an online ledger system, had originally been created to facilitate the trading of Bitcoin, but software developers soon realized it could be used to track the movement of any valuable commodity, including cannabis. Eilon Paz/Bloomberg

“The government’s primary mandate has been to protect kids and eliminate illegal cannabis from the marketplace,” says Galarza. If you have access to the genetic profile of all the legally produced strains—and can track them through the distribution system—“it’s a very effective way of ensuring that the final product is legal,” he argues.

Since the formal launch of the company’s proprietary, cryptographically secure software platform in October, “we’ve made great traction with the top 25 percent of the market,” Galarza reports. “We feel we are ahead of the competition at this point, especially since we partner with and empower current track and trace systems. We are the first looking at ‘traceability’ from our genome-based perspective,” he claims.

Technology is available, so use it

Today, the company is busy integrating its software with whatever enterprise resource planning (ERP) systems companies are already using to control environmental conditions, manage inventory, schedule trucking and handle administrative and compliance details.

“Too many companies are still downloading forms and spending hours typing in data,” Galarza says. “Excel spreadsheets and entering data by hand isn’t good enough for an estimated US$70-billion global industry.”

BLOCKStrain claims its platform can streamline mandatory quality-control testing for legal cannabis. “We can help digitize this process, cutting the administrative time and expense in half,” Galarza maintains.

The company is also expanding its reach beyond the cultivators, labs, testing companies, distributors and retailers that comprise its primary market to other producers that may want to validate claims about the CBD/THC ingredients, potency and overall quality of their cannabis-based products.

In February, BLOCKStrain inked a deal with NXT Water LLC to integrate its blockchain technology into the launch of NXT’s AKESO Functional Fitness Water, a hemp-based CBD-infused beverage. “With this latest deal, the company is moving beyond typical cannabis cultivators and into other market segments that could experience rapid growth,” says Galarza.