This Blockchain Startup Will Solve Cannabis Industry's Challenges: Interview with Paul Lintilhac, CIO of Trace
With the move towards medical and recreational legalization, cannabis is gradually becoming mainstream. As a result, we are seeing more entrepreneurs in the cannabis space trying to solve the fledgling industry’s challenges. We sat down with Paul Lintilhac, CIO of Trace, a startup that provides a blockchain-based regulatory platform and supply chain tracking application for the cannabis industry to talk about his company, its services, and the people behind it.
Please tell us about Trace. What does the new platform offer?
Trace is a Vermont-based company that provides a blockchain-based regulatory platform and supply chain tracking application for the hemp industry. Using cutting-edge blockchain technology, Trace has created a platform for businesses and consumers to verify basic information about the provenance and current state of hemp products from soil to shelf. Hemp cultivators use Trace’s mobile iOS application to declare their grows, connect with a verified network of test facilities, processors, and distributors, and move product from soil to shelf in the supply chain. Another benefit is that using Trace, cultivators can connect with buyers to sell their verified product.
So who is behind the new platform?
Trace was founded by myself and Josh Decatur (CEO). The two of us have very different but complementary backgrounds.
What is Josh Decatur’s background like?
Josh is from South Hero Vermont. He is an expert in the hemp and cannabis supply chain and a lifelong entrepreneur. While attending college at the University of Vermont, Josh built his first grow with his brother Justin as medical caregivers, later moving from Vermont to Northern California to study under master growers in Arcata California. An expert in crop optimization, Josh became Director of Farm Operations for Stone Road, a California recreational Cannabis brand in Northern California, where he touched every part of the cannabis supply chain from seed to sale. In the process, he helped the business expand from its retail footprint across the golden state. Whether managing his own CBD brand, or leading a large scale operation in California, Josh learned firsthand about the inefficiencies and opportunities of the modern hemp and cannabis supply chains.
What about you, Paul? How did you become interested in the blockchain tech?
Well, I consider myself a seasoned entrepreneur and expert in blockchain and data science. My interest in blockchain started back in 2013, when I built and operated an AI augmented bitcoin trading system. Since then I have worked as a quantitative analyst for Global Risk Management Advisors, where I provided risk reports for hedge funds ranging in size from $30 million to more than $10 billion. I also worked as a senior data scientist at an alternative lending company called Ondeck Capital, where my risk models were used to allocate margin, determine collections calling schedules, and power BI tools and publish automated company-wide reports for a $1 billion portfolio. I also founded another startup called RAKR at ConsenSys. RAKR is a blockchain powered search engine and marketplace for public knowledge relating to accounts and contracts on the Ethereum blockchain. I have a BA from Dartmouth in Math and Physics and a Master’s degree in Financial Mathematics from Courant Institute at NYU, where I also pursued a doctoral degree. My research on the mathematics of optimal arbitrage was published in The Journal of Quantitative Finance in 2016, and I often speak at quant finance, blockchain, and/or machine learning conferences.
What do you find exciting about blockchain technology and its applications?
I get excited when I see blockchain being used within a larger data infrastructure, where it is focused on the worst trust problems. What if data is being forged, lost, or mutated; people are really interacting in a high-stakes marketplace without accountability; or there is real symbolic value in making sure certain agreements are enforced, not just 99.99% of the time but 100% of the time? All these are situations where the database and rules around it should not be managed by any centrally-controlled execution environment, since breaking the rules even once would be unacceptable. Other than hemp, I’m interested in the prospect of decentralized identity on the blockchain. Along with something called Zero-Knowledge Proofs, this is one of the fundamental building blocks for bigger ideas like voting on the blockchain or taxes on the blockchain, both of which I find extremely exciting. Blockchain is appropriate for these applications because even the tiniest possibility of voter fraud or wrongful disenfranchisement– no matter how unlikely it actually is — has a huge cost on our politics in terms of creating gridlock, exacerbating partisan politics, and damaging trust. What I am NOT excited about is the lack of ambition and tenacity of many blockchain projects, which are too often satisfied with marketing stunts and short term profits. If blockchain companies are to gain traction, we need to compete directly with legacy systems and talk about blockchain as one small but important piece piece of a complete and mature product.
What does Trace offer to farmers, businesses, regulators, and consumers?
Our technology ecosystem offers a range of support throughout the supply chain for all participants. Trace’s web-based tools for Hemp program participants and State regulators allow for transparent and efficient communication between Hemp cultivators, processors and the regulatory bodies, which need to manage permitting and compliance in their state. Trace’s mobile-based tools support all Hemp business owners and their teams, providing supply chain tracking support from the cultivation planning state all the way to distribution and sales. The mobile app relies on blockchain smart contract technology to ensure that the data entered about any grow and its test or processing results are immutable, tamper-proof, and secure. We allow all supply chain businesses to verify the information they enter about their own products, which offers a trusted chain of custody about the products the end consumer will buy and consume. Our tools are designed to make it fun, easy, and efficient for all Hemp business owners to stay compliant and ensure their products are represented fairly and accurately in the marketplace.
How is the blockchain instrumental to what Trace does?
Trace uses the blockchain in a few important ways that gives farmers, businesses, regulators and consumers access to certain services in a more decentralized way. Trace’s decentralized identity system means that each organization has full control over which devices can access or edit their data. While other non-blockchain systems may claim this, the truth is that whichever server that code is running on probably has a system administrator with access not only to your data but to everyone else’s data. And if that admin’s credentials are compromised, there could be a system-wide breach (this type of thing does actually happen in our industry by the way). With blockchain, there’s no single server; no system administrator; and no back door to your data. In addition, Trace uses smart contracts for each lot that turn them into bona-fide digital assets on the blockchain. These lot contracts can 100% guarantee the enforcement of certain rules that are of interest to regulators, like ensuring the lot won’t change custody if it has >.3% THC. In the near future, we can leverage the fact that we are deployed on the main Ethereum blockchain in order to easily integrate cryptocurrency payments into the exchange of lots. Two or three years out, once the market is ready, the programmability of these lot contracts will allow us to construct customizable, over-the-counter hemp derivatives like hemp futures or options. Without blockchain, these kinds of financial services are usually only available to banks and large institutions.
What are the main issues specific to the cannabis industry that Trace can help solve? Why is transparency particularly important in the cannabis industry?
Trace reduces supply chain friction while increasing security, trust, and transparency between regulators, businesses and consumers. We’ve been on the cutting edge of decentralized technologies building our software using a combination of blockchain and other decentralized technologies to make it so that data is exceptionally secure, accessible, and that there is granular security in permissions around who can access what when, so that we keep privacy and security as bulletproof as possible for our users.
By providing the consumer access and insight to finished products, Trace also creates unparalleled accountability for hemp cultivators, processors and test facilities. Thanks to our cutting edge decentralized technology, Trace ensures that test results from test facilities remain unchanged as product is bought and sold in the supply chain.
Does the platform intend to serve the medical or recreational cannabis industry?
Yes. We’re starting with hemp where we believe the need for this type of software is the greatest and where we have the most expertise. We’re going to solve this problem first and go from there.
What are the company’s main challenges and what are you trying to achieve in the next few years?
Our challenges are similar to challenges being faced by our users across the hemp & cannabis industry. Everyone is figuring out the best way to run a legal business in the market and determine what industry standards are needed to keep the industry as efficient as possible. We are in the trenches everyday with our users helping them overcome challenges & building technology that solves their problems for the long haul. Over the next few years we hope to revolutionize the seed to sale tracking market and create industry standards in hemp that improve on the status quo in other more established industries as well.
Interviewed by Maria Birger