By Marc Brandl
[Note: A version of this article originally appeared in 8th Revolution’s Monthly Playbook – subscribe here]
Celebrity brands? Check. Direct-to-Consumer sales growth? Check. A newly heightened focus on ESG and DEI? Check. As these and other trends have grown in scale, attention, and money in the wider world, so they have as well in cannabis.
Non-fungible tokens or NFTs are no exception.
At this point it’s hard to avoid the hype and attention NFTs have received these last twelve months. 2021 will be remembered for the year NFTs broke into mainstream consciousness.
● NBA Superstar Stephan Curry sold 3,000 virtual NFT sneakers
● Fashion giants from Prada to Nike launching NFT collections and buying NFT studios
● Major retails announcing they’ll be entering the space; Walmart being the most recent
And of course, there is the money flowing into the space –
● Gary Vaynerchuk raising $14M for a sushi restaurant through NFT membership tokens
● OpenSea, the world’s biggest NFT PAAS recently raised money on a $13.3 Billion valuation
● Artist Beeple sold an NFT artwork in March for a record $69 million at Christie’s
What are NFTs?
NFTs are a technology tied in with the broader crypto ecosystem that includes blockchain technology, cryptocurrency assets like bitcoin and Ethereum and decentralized autonomous organizations (DAOs).
At its core NFTs are unique units of data that use technology to allow digital content – songs, videos, images – to be logged and authenticated on cryptocurrency blockchains like Ethereum and Solana. Once content is logged on the blockchain, every transaction from sales to transfers is recorded ‘on-chain’ creating a transparent and trackable ledger of provenance and price history. Contracts can also be written into the code of the digital content which shape the rules around how the content is utilized. The main impact of NFTs is making it easier for creators to own, sell and control the rights to digital content.
NFTs and cannabis industry.
The first most obvious use case for NFTs in cannabis is artwork showcasing specific cannabis strains or products. NFT’s offer another pathway to creating the first global brand in the industry. But due to the global nature of NFTs and national regulations on marketing and advertising, the opportunity is not clearcut.
Dan Sutton, CEO of Tantulus Labs and a longtime crypto enthusiast believes it’s still very early in the NFT Cannabis adoption cycle, “It is still too early to point to any material value creation case studies integrating cannabis with NFTs. Currently cannabis projects in NFTs have been focused on collectible art and play-to-earn (P2E) gaming.”
“Long term application of NFTs in cannabis will probably be slower than CPG company analogs, due to the complex regulation of cannabis across diverse jurisdictions. NFT audiences are inherently global, so any concept that revolves around redeeming an NFT for cannabis products seems more complex to me than other CPG categories. Attaching an NFT to a cannabis marketing campaign in Canada for instance, would be close to impossible.”
One project Dan is active with is WeedgangNFT.com. Artists are working in collaboration with master growers to feature famous cannabis strains and potentially create new strains both virtually and in the real world. An NFT strain generator, currently under development, will iterate traits like color and bud size, incentivizing breeding knowledge and game theory. Cannabis aficionados can buy an NFT artwork of their favorite strain or from their favorite master grower through digital tokens unique to the project and join a community in ownership of the strain NFTs and collaborate to bring virtually generated strains into reality.
Another Cannabis NFT pioneer is Oaksterdam University. Oaksterdam offers a range of cannabis focused education and certifications for aspiring cannabis professionals and entrepreneurs. Last year they launched a contest for artists to create two-sided trading card style NFTs with narration to raise awareness and funds for fighting the 50 year-long War on Drugs. Bids on the NFTs started at $420.
“Where it gets interesting is the cultural crossover between the small and early NFT audience and cannabis” continues Sutton. “We read a lot of headlines about NFTs, but only a few hundred thousand unique wallets hold them globally today. Many prominent leaders in the NFT world outspokenly consume cannabis, and the potential for conference, event, and IRL activation crossover could be valuable medium term as this audience grows.
NFTs are at the very earliest stage of the adoption curve. Many projects will never materialize or fail to live up to the hype and high valuations and Cannabis-specific regulation may be too large a barrier to overcome. The next few years will be critical in determining how important or not NFTs are within the crypto and cannabis industry. Most NFT cannabis projects are still in the lab being developed. Expect to see several major consumer facing US cannabis brands to launch or announce NFT major projects in the space in 2022.