The world witnessed unprecedented power grabs and supply chains disruptions over the past 18 months. The almost perfect alignment between big government, big banks, and corporations should be a serious cause for concern across our entire industry, and beyond. These moves represent no less than the most serious threats to our freedom and survival as businesses, probably even as individuals. Strainly stands for decentralization, resilience, and biodiversity, hence why bitcoin has always been a natural fit. Bitcoin ultimately protects biodiversity.
Concentration of power and money had started long before the COVID hysteria took over the world. Corporatization of the cannabis industry has been our main concern even before legalization happened. We all knew, deep inside that the cannabis space had this potential to become the ugliest manifestation of Big AG, big tobacco, and big pharma, all at once. It’s happening right before our very eyes and a lot of us feel helpless about this trend. While many in the industry have struggled to obtain the most basic financial services any legal business is entitled to, a parallel financial system emerged and is now representing a very serious alternative to the broken legacy system. Let’s dissect a bit what are our options and how they support our dream vision for the industry and medicinal plants.
The Broken Legacy System
The legacy system is the fiat system. A central bank-managed, credit-based scheme that creates money out of thin air, unfairly distributed across the economy, mainly towards insiders, while the plebes receive crumbs to survive on and pay interests to their masters. The purchasing power of the dollar has drastically decreased since the end of the gold standard in 1971. That’s the case for all other fiat currencies (Euros, Canadian and Australian Dollars, British Pounds, etc.). Consumers and businesses alike take ever more credit to get ahead and acquire the assets they need to prosper or sometimes, sadly, to simply satisfy advertising-induced cravings. Sustaining a grow-op in these conditions is a real challenge. Add the regulatory burden and you’ve got a perfect recipe for family business destruction.
You may be wondering how monetary policy, plant breeding, and plant patents relate. Well, this fiat system fosters an annuitant system, where concentration of power and resources becomes the norm and where artificial moats prevent any new competitor from entering the market to provide better options to society. The fiat system goes hand in hand with the proprietary logic. In order to pay their debt back or deliver expected returns to investors, innovators need to acquire exclusive rights over biology (e.g. plant varieties) to grab unjustified and unreasonable margins for long periods of time over a newly bred varietal. At scale, this system incentivizes breeders to limit access to their cultivars and prevent any other breeder from improving the genetic pool, and ultimately destroys biodiversity by creating single points of failure in the preservation effort. It also fosters predatory practices on farmers and growers who face hefty fines and penalties for inadvertently breaching patents when growing such proprietary varietals. Ask corn and cotton farmers.
It seems the more central banks print money, the more concentrated markets become and the least innovation hits the market. In the context of plant breeding, biodiversity is inversely correlated to money supply. In such a context, breeders who manage to navigate this space and get paid in USD or any other fiat currency see their purchasing power melt like an ice cube in the sun. Moreover, despite these prevalent predatory proprietary practices, debt levels are at an all-time high — balance sheets are historically out-of-balance. Our governments, most zombie corporations, and many households will never repay debt. The house of cards will harm many in its fall, mostly the most humble players, such as family businesses.
The cannabis industry has been consolidating at a concerning pace in the past few years. Canada and California are far from the legalization dream many of us had. Legacy farms are being forced out of the market and low quality corporate boof floods the market. This is what happens in a fiat-based market: a race to the bottom. But there should be room for high-quality craft products. Such products are difficult to bring to market in a fiat-based system that requires ever more economies of scale. Instead of consolidating the industry based on capital expenditure into artificial moats such as plant patents, a bitcoin-centric industry would fairly reward craft producers for the quality they bring to market, not their moats.
If you are a human-scale player and want to make a living from your passion for the plant, what are the best tools at hand? You should already know that open-source breeding is the most-suited IP strategy for small breeders. You don’t want to fight the patent war with your limited means; they’ll wipe you out at their deep-pocket game. But how can you win the open-source game using unfit fiat money? Well, you no longer have to use their fiat money.
The New Paradigm: Sound Money
Sound money is salable across space, time, and scale, it adequately stores value for their hard-working holders, and it protects their anonymity. Sound money is the opposite of fiat money. It’s not created out of thin air. It’s workers’ money, not annuitant’s. It’s a fair reward for creating value for others. It’s the adequate money for rewarding breeders who improve and maintain the genetic pool that benefits patients and consumers. It’s scarce money that creates the conditions of abundance and biodiversity. But how?
Imagine being paid for your work in a currency that appreciates in time and preserves the value of your work, in other words, of the energy you expended to grow plants, select phenotypes, breed new seeds, select, and package them. Imagine that this currency protects your identity while allowing you to transact with people anywhere in the world, without asking permission from anyone. That’s quite a revolution for growers and breeders who have been denied banking services and had to rely on cash to settle transactions, with all the risks pertaining to it.
Bitcoin is trustless, permissionless, and instant transaction settlement between parties. Bitcoin is limited in quantity. It’s in the open-source protocol, enforced by the decentralized community of bitcoin users. There will never be more than 21 million bitcoin, for the entire world, ever. In that respect, it’s the opposite of fiat money. Instead of creating inflation through the central bank’s printed money, it deflates prices as it appreciates in time. While fiat money encourages you to spend instead of saving, because your savings will buy less next year than they buy this year, sound money rewards your patience and frugality. Fiat money fosters high time preference, in other words craving for immediate gratification, while sound money fosters low time preference by rewarding hard working breeders or growers with delayed gratification. Bitcoin will buy you more next year than today. Save to make your dreams come true, don’t settle for cravings.
It becomes clear that using such sound money allows breeders and growers to live off of their passion, what they do best. Breeders shouldn’t have to play the litigation game to enforce patents and defend their annuities to keep up with inflation. Those who resorted to doing so usually regret it when they realize they can’t win at Big Ag’s game. The rules of the proprietary game are written by and for corporate America (or corporate Canada . . . ). Small- and medium-sized businesses cannot win this game in the long run because patent enforcement requires substantial cash-flows. Engaging in the plant patent game is a sure way to sell out down the road, or simply being pushed out of the market by bigger fishes.
Any entrepreneur thriving for financial autonomy and ultimately for freedom wants to convert their expanded energy into the most durable storage medium: bitcoin. With bitcoin, the incentive to confiscate biodiversity to maximize annuities in order to compensate for the loss of value of fiat money disappears. With bitcoin, breeders and growers can focus on their craft, making decent but not exaggerated margins that they store for the long term in the soundest money that exists. Bitcoin therefore allows for many small players to compose the industry, it doesn’t entirely prevent consolidation but it certainly doesn’t accelerate it like fiat money does.
This is not the only problem bitcoin solves for the industry. Transaction settlement has been a central issue. Excluded from the traditional banking system, too many legally operating businesses have had to rely on cash to settle transactions. Sitting on piles of cash in today’s world is impractical and even dangerous. Meanwhile these same businesses are paying taxes like any other. Taxation without financial representation. Bitcoin fixes this. By its trustless non-intermediated nature, bitcoin allows cannabis businesses to settle transactions in a more secure way, while not relying on banks or payment processors. Who wants to pay processing fees and beg for financial services from financial institutions that despised our industry for years? We don’t have to give them our business now that we have the technology to be self-reliant. Let’s turn this hurdle into a competitive advantage. Instead of jumping through hoops to be accepted into the dying legacy system, the entire cannabis industry should migrate to bitcoin and get ahead of the game, period.
Conclusion
As big believers in decentralized anti-fragility, biodiversity defenders and freedom fighters, bitcoin is the natural fit for Strainly and probably, for the entire industry. Bitcoin, as a sound money system, is the third pillar of a healthy and vibrant cannabis industry, the first and second being the community of breeders and preservationists and open-source breeding. If one is missing, our ideal cannot materialize. Hence, we’ll be integrating bitcoin payments between members in the near future. Stay tuned.
Alan started growing after a trip to Amsterdam during which he passed the Sensi Seed Bank and became inspired to grow the beautiful plants on display. His dedication to growing quickly revealed the invasion of Big Ag (Monsanto, Syngenta, etc.), which had acquired exclusive plant patents on various edible plants worldwide. This deeply disturbed him, and he intuitively understood that the same fate would happen to cannabis genetics. That led to a quest to prevent the cannabis industry from becoming an ugly cross between Big Ag, Big Pharma, and Big Tobacco. The idea of creating Strainly, a platform for breeders and growers to safely connect and preserve cannabis biodiversity through a physically decentralized seedbank, came to him after a meditation session (true story). Learn more at strainly.io.
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