Thai Weed as a Digital Asset
Thai weed and the blockchain; Web3; Weed and medical tourism; a business model for Thai weed; virtual cannabis farming; virtual cannabis dispensary
To globalize Thailand’s cannabis metaverse by making a business model, a ‘cannabis digital asset’, which will allow people to access recreational cannabis businesses via virtual reality technology.
The quote above is from a policy proposal put forward in April of this year -- one of two “recreational cannabis” policy suggestions from Thailand’s Vice Minister of Health. He offered this policy advice as the Chair of a panel tasked with developing strategies to revive medical tourism in Thailand.
A Real weed advocate in the Thai administration
According to Dr. Sophon Mekthon, five wellness and medical objectives were agreed upon during a recent meeting of the panel overseeing the nation’s development as an international medical hub.
It is important to note that “cannabis as a digital asset” is one of two proposals advocating ‘recreational cannabis”.
That’s two proposals out of five; the guidance from the Vice Minister of Health then, is that nearly 50% of resources allocated to bringing medical tourism back to life ought to be allocated to recreational cannabis projects. (You can find my breakdown of the other recreational cannabis proposal in last week’s newsletter, Thai Weed is Medicine.)
Pre-pandemic, medical tourism in Thailand took roughly 95 cents of every dollar that international tourists spent on medical treatment in Asia. Tourism is an effective growth engine for a middle-income country like Thailand; that is, until it isn’t.
Then hell opens and you fall in.
2020 GDP growth rate forecast by Asian Development Bank (by percentage)
Sources: Asian Development Bank (ADB)
Thailand’s outstanding economic decline during and since the pandemic lockdowns is a function of its reliance on tourist revenues. The economy is not coming back until the tourists do. The Vice Minister of Health is placing a big bet on recreational cannabis.
Thai cannabis and the blockchain
If you have little or no idea what cannabis as a digital asset means, it is not because you are dim or even mid-witted. So far, the idea has been found in science fiction scenarios only, where weed is either purchased with cryptocurrency in a virtual store or with cryptocurrency earned by farming on a virtual cannabis farm. Right now, still science fiction.
These yarns have been spun by computer software engineers who for years have been working to find ways to apply blockchain and cryptocurrency to real-life cannabis markets.
Here it might seem tempting to take a cynical view of this aspect of the panel’s recommendations -- to dismiss it as a mere tossing around of trendy buzzwords and high-tech mumbo-jumbo to give the appearance of doing something.
Before you pooh-pooh cannabis in Thailand as a digital asset however, I would invite you to consider a few contemporary facts about Thailand that give it a distinct advantage in the global race to digitized cannabis. Most people are unaware for instance, that Thailand has been in negotiations with two international computer software companies to integrate its cannabis sector into the decentralized and immutable ledger of blockchain since 2018.
How blockchain fits with cannabis in Thailand
Rafarma Pharmaceuticals, headquartered in Wyoming, has been given preliminary permission to use its proprietary blockchain software to manage regulatory control of the cannabis supply chain.
Rafarma’s utility blockchain software was completed and ready to be market-tested in the Thai cannabis sector in 2019. So far, the agreement does not mention real weed (recreational cannabis) but it doesn’t rule it out either.
The clarity of Dr. Sophon Mekthon real weed recommendations shows that he understands the importance of including dried cannabis flowers, in the fullness of their natural mixture of CBD and THC, in the blockchain supply chain management system. It would appear that he is well aware that the real cannabis revenues are in real weed.
In 2018, a deal between British blockchain firm FarmaTrust and supply chain advisors Peterson Projects and Solutions Asia was struck to facilitate new investment and job creation in Thailand. Again, blockchain technology is to be used to secure the supply chain for medicinal cannabis (as well as poppy straw for pharmaceutical opioids).
Meanwhile, Thai software engineers have been staking claims in the nascent blockchain industry more generally, focusing on blockchain solutions to all manner of agricultural challenges, working to reduce costs and increase transparency. Thailand has 70 million people with an Agriculture sector that employs around 30 percent of its total labor force. The authoritarian government has mandated both cannabis and blockchain technology as top economic priorities.
Digitizing cannabis means making the entire supply chain traceable on an immutable blockchain. Since the sector does not yet exist, the cost of transition to blockchain would be far lower than in any other cannabis sector currently experimenting with the idea. There is no legal legacy marketplace and no interests opposed to its implementation.
Traceability would benefit both companies and consumers (tourists mostly), as everyone would know, beyond a shadow of a doubt:
Where the given cannabis seeds come from
What the plant strains are
What were the harvest time and date
What were the processing details and
What is the chain of custody of each cannabis product
The basic characteristics of the blockchain, i.e., that it provides a decentralized, public ledger would also mean:
More safety and quality of product
Protection against health hazards like toxic chemical contamination
Protection against contamination
Protection against corrupt practices in shipping and handling
If real weed is legalized and normalized and given the chance to ignite the medical tourist sector, breathing room could open for the true dark horse in the struggle back to normal status as an upper-middle-income economy: Direct Foreign Investment.
DFI: A digression
In 2021, venture capital poured over 30 billion dollars into Web3. I understand that the term itself has been misused, overused and even abandoned (by giants like Musk and Dorsey). Nevertheless, if we send it to the cleaners, it comes back as a handy tool; for example, we can see that it refers to that space that is sought after by venture capitalists.
This would be coupled with investment in traditional cultivation and export of cannabis, provided legal reforms include real weed.
Traditional Foreign Direct Investment to accompany Web3 investment
According to PitchBook Data, the cannabis industry saw close to $15.5B in deals across VC, private equity, M&A and IPOs in 2020. Large VCs are sitting on the sidelines waiting for US federal legal reform.
In March of last year for instance, Matt Hawkins, Co-Founder and Managing Partner at Entourage Effect Capital was upbeat about federal legalization in the very short term. That of course has not come to pass. Not by a long shot. It is an open question how long a company like Entourage Investments will limit its capital deployment to North America. Back in March of 2021, he said:
At the end of the day, if you’ve got tens of billions of dollars that are waiting to pour into companies listed on the CSC and up-listing to the NASDAQ or New York Stock Exchange, that’s only going to increase their market caps and give them more cash to acquire other companies. The trickle-down effect of that will be so great to the industry that I just don’t know how you can look the other way and say we don’t want it.
They have deployed comparatively small units of capital since 2019. And there are Asian outliers who would also set up shop in Thailand once real weed can be cultivated and exported, like Japan and Taiwan. There are VC holding companies in these countries/territories that have invested in CBD companies and are now waiting for the opportunity to expand into real weed. They can’t do it at home and are eager to deploy assets abroad. But I digress.
The real-world interface remains unsolved
The crypto bloodbath of mid-may 2022 meant something. Once again, current events provide lessons that the grown-ups tried in vain to teach. The irrational exuberance and general dismissal of risk of which so many retail investors were guilty has its parallel among computer engineers fixated on applications of cryptocurrency to cannabis use cases before the time was right.
The lesson here is that you cannot force use cases.
A virtual world is not the same as a world of make-believe. And both are different from the real world. When you try to go virtual too soon, you end up in the world of make-believe, where you can shop for weed in the metaverse and purchase the product right there, legless, with special cannabis crypto, and then have it appear at your real-life door.
Trouble is, these two worlds do not intersect in this way. As much as you may want it to work this way, it doesn’t work like this. And that’s because crypto for cannabis doesn’t work. Yet.
Another road to cannabis as a digital asset is to earn it by working for it on a farm. Granted, it takes investment upfront, but what farm doesn’t? Here again, the crypto part is where the virtual world breaks up into pointless fantasy. You run off the virtual road and onto the yellow brick road of la-la land.
And that’s why you probably don’t know what cannabis as a digital asset is. Because it does not exist. Yet.
In either case, it is the digital representation of cannabis that is the digital asset.
Virtual buds do not blaze. You can’t cook them or eat them. But you can store them for later. The reason that storing your digital weed could be a very good idea brings us back round to the real world.
The beginning middle and end of this cannabis-in-the-future story excited enough engineering brainiacs to artificially inseminate a newborn ecosystem with actual digital assets called cannabis coins. They learned. You can’t do that. Yet.
That means the business model for cannabis as a digital asset needs to have its wings clipped a bit. Let’s do that in a second.
In a short while, cannabis will be legalized and sold in the domestic marketplace. In the mid-term, the pragmatic and cost-saving applications of the decentralized finance ledger (blockchain) might be (if Thailand can coordinate the developers, the blockchain companies and the cannabis cultivators) optimized for tracing cannabis products across national and international supply chains. For now, that’s plenty.
Web3 and cannabis in Thailand: a modification of the Indian Model
The Indian gov kept its distance from cryptocurrencies and introduced new harsh taxes to discourage the Indian people from investing in them. However, crypto cannot be completely separated from blockchain, as many in the government in India seem to believe. Yet they do have a point when they question the utility of Bitcoin and the other alternative crypto as payment alternatives. It’s not that crypto should be seen as a threat or that interest in it should be discouraged, but rather simply that it has yet to provide clear utility as a means of payment. For anything. Including weed.
The five cannabis coins that have managed to survive — PotCoin, CannabisCoin, HempCoin Paragon Coin and CannaCoin — continue to embarrass. Never mind waiting for them to be used as coins to truly buy some weed; they are just plain worthless as investments. Which means they’re just plain useless. Utterly.
India discourages crypto investing while it encourages blockchain. My take is that it’s better to let individuals go their way with crypto and not punish investment, but deploy assets into making Thailand the blockchain capital of global cannabis.
It’s time to accept that a cryptocurrency layer to the business model would not add utility at this point. Now, about that clipping of the wings of “Thailand’s cannabis metaverse” I mentioned earlier… .
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Biz Model Clip #1: Put the crypto purchases to one side.
Deal in fiat money for now (regular local currency). Forget cannabis crypto. Or better, learn from the shitshow it created: you can’t jam up an ecosystem with foreign objects just because it feels like the result would be cool. I agree with the consensus that Bitcoin will come around. But it has to do so organically.
You can still use crypto in the virtual world and make the switch to fiat in the real world. Right? Whether or not you can really and truly use crypto to purchase in the real world does impinge on the value of cannabis as a digital asset.
Ask yourself: Is it worth building a business model for cannabis as a digital asset? If so, why?
What matters is blockchain as a decentralized ledger, because that is the underlying technology that eliminates the need for trust, ensures transparency and extends global reach for cultivators, producers suppliers and most importantly consumers.
Biz Model Clip #2: Take the black box off your head: give the metaverse a rest
What needs to be worked out now is how to maintain touchpoints with cannabis inventory on a blockchain, to provide traceability — from seed to sitting in a bag.
We need to weave a twine, much like a Hemp twine in fact, with the digital world and the real world until the two become one. Cannabis users in Thailand can live in augmented reality and own their digital cannabis with Bitcoin virtually. All others in the other world, i.e., the real world, must pay cash.
Now imagine a future where all cannabis tourism is trace travel
There was and I guess still is an understanding among legacy cannabis users about train travel. It was/is regarded as the smartest way to travel with weed. Of course, planes were always out of the question. But cars and buses are much more unsafe for legacy weed users than many realize.
Look at it this way: trace travel replaces train travel as the best way to travel with weed. Consider how many places are still besmirched with painful and life-destroying punishments for failing to observe prohibitions against possessing a plant. We’re still talking about the vast majority of the world. And unlike train travel, trace travel crosses oceans. Instantaneously.
With trace travel, consumers know exactly what is purchased (its quantity and its quality), exactly how much it costs, and precisely where it will be waiting for them, safely, upon arrival.
Cannabis vacation prep in the near future
The psychological benefit for the consumer of leveraging the immutable nature of the blockchain should not be passed over quickly. Why not? Because one goal of the business model should be to reinvent the vacation itself, to eliminate what must be the oldest irony of travel for leisure, i.e., that vacationing is stressful. I think this is so simply because we aren’t very good at it if only because, in the scheme of world history, it’s a practice we just picked up. In closing, let’s take a peek into the future.
The 2 cannabis Web3 platforms: Play to earn cannabis games and virtual cannabis dispensaries
1. Visit the virtual dispensary
Shop in an international cannabis marketplace in a conversational interface, with product menus that pop up for the consumer anywhere in the world. Providers in Thailand will be able to answer inventory questions in a data-driven interface that will assist in the selection process and deliver to the final destination of the consumer before their arrival.
Click the image to get to the site.
2. Cultivate cannabis on your virtual farm. Purchase cannabis flowers in the form of NFTs.
Build up your farm, work with others and collect Seeds and earn ETH by trading strains. Educational and practical. It’s fully operational. Check for tutorials if you are a novice.
Click the image to go to the site.