Navigant Research Blog

Cannabis and Cryptocurrency: The American (Green) Dream

— March 6, 2018

Legal ambiguity surrounding the cannabis industry has slowed the marijuana business in the US. Stakeholders are uncertain of the potential legal ramifications that currently threaten the business environment. Despite ongoing setbacks, the legalized marijuana industry remains valued at over $7 billion in the US, which means high value transactions are occurring. Yet, for profits to continue, the industry must find a way to overcome hurdles at the federal level. Possible solutions for navigating the shifting legal landscape involve methods that provide greater transparency and assured accountability. With the explosion of millennial-led investments in cannabis stocks and cryptocurrencies, it comes as no surprise why stakeholders are looking to blockchain technology to help settle these legal debates.

The Latest

In November 2017, IBM proposed a blockchain solution to Canada as a way to regulate and authenticate transactions of legalized marijuana. Further fueling this movement toward a blockchain-backed cannabis industry, California-based analytics company, Budbo, recently made headlines after selling out its token presale 10 days before its official release date. The sale represents a common fundraising strategy in the world of blockchain, where companies sell virtual coins that represent hard currency. Selling a whopping 20 million tokens at presale is a big deal, especially for a startup involved in such a nascent industry. This instance shows that regulators are not the only ones calling for greater transparency for the cannabis industry, consumers want it too.

From Seed to Sale

Coined the Tinder of weed, Budbo’s software utilizes a GPS-enabled tracking system. The app provides real-time data by tracking the total lifecycle of the product from seed to sale. Yet the real value lies in the technology’s cooperative-like design, which requires inputs from stakeholders along the entire value chain. In this way, users can stay up to date with the latest information concerning the marijuana marketplace, an important feature that would prove useful for cannabis traceability.

Insert Blockchain

My colleague, Johnathon de Villier, explains that blockchain technology does not operate under a central authority, which makes transactions arguably more secure and easier to validate. In addition to its decentralized architecture, blockchain provides full and permanent disclosure of all data entries, meaning market participants are equally informed. This would allow for government officials to track the supply and demand side of things, creating an appropriate regulatory space for a market plagued with inconsistencies. Cannabis businesses and consumers both stand to gain from a more defined policy space. Setting standards would push for higher value products and encourage companies to compete on a quality basis rather than quantity alone. However, the worth of any information system lies in the quality of its data. Cryptocurrency for the cannabis industry is particularly susceptible to the pitfalls of poor data as the network effect relies heavily on input from the cannabis community—blockchain in and of itself does not ensure reliability. While blockchain’s immutable ledger could provide some much-needed clarity for the businesses’ grayer areas, the novelty of blockchain continues to represent significant barriers to technological and institutional change.

 

Indoor Farming: Land of Opportunity

— February 20, 2018

Plenty, a vertical farming startup, has generated lots of media buzz. So far it has raised $226 million and is associated with big names like Alphabet’s Eric Schmidt and Amazon’s Jeff Bezos. Plenty promises to grow crops efficiently while shortening supply chains and catering to customer preferences. However, there is more than just hype behind Plenty’s big names and big numbers. There are important political and environmental drivers that are pushing market incumbents into urban farming, signaling that indoor farming is not just a passing fad.

Enter China

National self-interest is driving China to invest in agtech solutions like indoor farming. The state-run Agricultural Development Bank of China has pledged $437 billion in loans to finance agricultural projects through 2020. This is $31 billion more than the value of the US’ entire agricultural production last year. Currently, China faces food security issues stemming from pollution, uncertain trade relations with foreign countries, a history of food safety crises, and a growing middle class. Pairing China’s food security issues with a well-funded farming startup like Plenty is a no brainer.

Securing Food In-House          

However, China isn’t the only player with skin in the game. Other countries facing food security issues are interested as well. Qatar, for example, relies heavily on expensive agricultural imports due to water scarcity and unproductive farming land, leaving the region vulnerable to supply shortages and price spikes. Saudi Arabia faces its own food security issues, which the country is attempting to alleviate through investments in foreign countries such as Sudan, Pakistan, and Ukraine. However, as indoor farming becomes more affordable, it will likely attract investors away from foreign agro-investments and toward local indoor solutions, which would strengthen resilience to issues stemming from food insecurities.

In addition to national self-interest, environmental issues are also prompting greater interest in indoor farming. As climate change threatens to disrupt weather patterns, indoor farming allows farmers to control the weather—and a number of other variables—allowing companies like Plenty to produce greater crop yields and higher quality food than traditional farmers. Indoor farming consumes less water, which will surely be on the minds of farmers and policymakers as climate change threatens to exacerbate drought around the globe. These farms also allow food to be grown safely away from pollution and contamination, which are becoming increasingly problematic as farmers overuse pesticides and fertilizers and as developing countries are faced with mounting pollution.

Headed to Greener Pastures?

Despite its wide-ranging benefits, LED technology for indoor farming is relatively new and is not yet economically viable on a large scale. In fact, a 2017 Agrilyst report found that only 51% of indoor farms in the US are profitable. This is the case for most young farms, as older facilities averaging 7 years or more have had time to realize greater returns from energy efficiency and operational savings. In order to gain traction, urban farmers should focus on crops that are in local demand and that will always be in demand, like salad crops, in order to establish their business. Once farmers begin generating a profit, they can then devote more resources to experimenting with other possibilities.

Tech innovation is on its way, helping to make indoor agricultural operations more efficient through enhanced applications like LED and data analytics. The problem is funding these investments. Hopefully, there are more Jeff Bezos of the world to support the indoor farming movement and help make the world a greener, more sustainable place. For more information on horticulture lighting, watch for our forthcoming report, LED Lighting for Horticultural Applications.

 

Speculation Over Smart Home Technology

— January 18, 2018

Over the holidays, I received my first personal assistant. Her name is Alexa, and despite the latest hype and commercial appeal, my virtual assistant remains in her box, lifeless and unused. I have reservations about engaging with a smart device that was programmed to listen, track, and record my personal habits in the privacy of my own home. According to recent consumer reports, these misgivings are common. In fact, over a third of Americans are uncomfortable using smart technology as privacy policies fail to address ongoing security issues. For some users, the convenience of voice-controlled devices, like the Amazon Echo and Google Home, is shadowed by security concerns. Data leaks and recent reports of hackers gaining access to home devices and speakers have not helped matters, begging the question, what do consumers stand to gain from smart home technology?

An Ecosystem of Connectivity

For starters, the ease of access to information and remote-control capabilities of home appliances have helped users save a lot of time and money. Energy efficient solutions like smart thermostats and internet-connected lights paired with other smart devices have helped consumers reduce monthly energy bills. Products like Amazon Echo act as a smart home platform for connecting various Internet of Things-enabled devices, like security cameras and remote-controlled cooking gadgets. Consumers already using some of these devices are more likely to install additional ones as they discover new tasks for machines to handle. Throw in the added convenience of a voice-activated assistant and the benefits of connected home technology start to become more convincing for even the biggest skeptic. Yet the real risk of hackers taking advantage of these features remains as the growing transfer of control from homeowners to smart devices is left unprotected.

A Silver Lining

Despite ongoing security concerns, smart technology offers consumers the opportunity to lead more efficient lives. Yet for users to reap the full benefits of these devices, privacy and security concerns must be addressed. Doing so attracts long-term buyers, securing data and customers in one fell swoop. Since innovation leads regulation, privacy policies for this technology will require continuous revitalizing. Proposals like the European Union’s cybersecurity certification framework represent steps legislators are taking to confront these issues. Vendors can also play a role by being more transparent about their offerings and educating consumers on where risks lie and how best to avoid them. Understanding how the tech works and where faults exist may convince hesitant consumers, like myself, to give it a go and take advantage of what these smart devices have to offer. For more information about smart home technology, check out Navigant Research’s Digital Assistants and AI in the Home.

 

IoT: Building Awareness – Part II

— January 4, 2018

Today’s facility managers are faced with the challenge of assessing performance while trying to sift through endless streams of data. People want better data, not just more, as constant flows of information can sometimes muddy the waters for decision makers. The integration of various subsystems in building automation further deepens this web of connectivity, which is why commercial buildings today are looking to smart building technology as a way to better facilitate and manage system operations. Knowing how a system operates is imperative to business development and economic growth. Thus, companies are starting to focus on the primary element of those systems: building occupants.

Stand Out from the Pack

As “IoT: Building Awareness – Part I” explained, the Internet of Things (IoT) has had a significant impact on intelligent building designs. The increased sophistication of smart technology has created a more competitive business market, making it difficult for companies to outperform their competitors. As intelligent building systems become better at adopting the latest technologies and connectivity strategies, the challenge for businesses becomes knowing how to leverage their competitive advantage. Focusing on occupant satisfaction may give companies the leg up they need in a market where customer loyalty and employee retention is becoming a major challenge. This may also be beneficial from a branding perspective, as the growth in IoT services has made it difficult for companies to differentiate themselves in a world of streamlined automation. Focusing on occupant satisfaction takes a more holistic approach to facility management by helping businesses and employees—and the buildings they occupy—become more efficient through enhanced decision-making capabilities.

Management 101

You can’t improve a system without knowing how it operates. News of partnerships like the one between Lucid and Cushman & Wakefield are becoming more mainstream as businesses look to advanced software solutions and intelligent integration for understanding performance operations. Advanced sensors and data analytics that track tenant behavior provide valuable information into system operations and allow facility managers to make better decisions on how to upgrade their offerings. This is important from an efficiency standpoint because it helps managers understand where areas may be underperforming, why, and how to address those issues. For example, building owners can cut down on utility costs if they know which rooms will require less heating or cooling based on the number and location of occupants.

It’s a Win-Win

Businesses and employees also stand to benefit from this comprehensive approach, as various studies stress the relationship between comfort level and worker efficiency. Researchers at the University of Warwick’s Department of Economics reveal causal relations between employee well-being and company performance. This study, along with several others, shows that employees are happier and more engaged in areas where they feel comfortable and can be more productive. Facilitating occupant satisfaction can also strengthen employee retention as happier employees are more likely to succeed in their careers. These findings are important for business owners justifying investments toward creating amicable office environments through smart building technology.

 

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