Investors have been profoundly riveted by cannabis companies, despite disappointing earnings results. Industry growth has been phenomenal, although losses are widening. And many are also watching closely blockchain technology that has blockbuster potentials. So, which between the two has a brighter, sustainable future?
Both the cannabis and blockchain industries are practically evolving at the same pace. When you talk of blockchain, there’s no name that is more prominent than HIVE Blockchain Technologies (TSXV:HIVE). With regards to Canopy Growth (TSX:WEED)(NYSE:CGC), the name is synonymous with the cannabis sector.
Each stock is the acknowledged leader in their respective industries. Sooner than later, their businesses will be interwoven. Each one will need the other to build investor confidence and ensure long-term growth.
Brand name recognition helped Canopy Growth achieve a 282% revenue growth for its fiscal third quarter. The company also took a bigger slice of the sector’s pie due to significant acquisitions after the Cannabis Act became law. Investors seem ready to absorb the high losses and patiently wait for the bountiful harvest in due time.
But Canopy Growth and other cannabis producers are grappling with various issues. General regulatory uncertainties, quality assurance, maintenance, payment solutions, and transparency are preventing them from getting into the groove. This is where HIVE and blockchain technology comes into the picture.
The cannabis sector needs transparency
One is the major things the cannabis space is lacking is transparency. Blockchain technology can be a solution to the cannabis sector’s current issues. The number of companies embracing blockchain technology is growing. Among the well-known names are IBM, Maersk, Samsung, and Softbank.
The cannabis industry is facing ambiguous regulations across borders. By using the blockchain ledger, you can reduce, if not eliminate, any potential human-based confusion or deceitful practices. Auditing cannabis companies and monitoring their taxes would be hassle-free for governments and financial institutions.
A thriving industry like cannabis needs to create an effective vertical integration in the supply chain. Blockchain would enable Canopy Growth to better manage its supply chain while doing away with paper trails.
Strategic long-term investments
Let us not forget that the cryptocurrency revolution came about with the rise of blockchain technology. The global blockchain market is estimated to surpass the US$60 billion mark by 2024. That is too quick for an industry that’s still in the infancy phase.
By the end of 2025, the global legal marijuana market could reach US$146.4 billion. The financial metrics of Canopy Growth is bound to improve in more than a year or two. HIVE will be around to enhance efficiencies in nearly all industries. Thus, the future is very promising for both.
HIVE and Canopy Growth are the leaders in their respective industries and can influence investor sentiment. At present, the stocks appear to be on equal footing when it comes to sustainability and staying power. If you ask me, both are strategic long-term investments. But their collaboration can be the most potent ever.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.