Applied DNA Sciences, a Stony Brook biotech company, has entered into a $1 million contract with TheraCann International Benchmark, a cannabis consultancy based in Canada, with plans to break into the marijuana industry using blockchain technology.
Applied DNA, which uses DNA to make anti-counterfeiting products, is working with the Calgary-based company in hopes of helping growers, processors and distributors of medical and recreational marijuana in states where it is legal to better track the authenticity of cannabis and its derivatives. The Stony Brook firm’s contract is for two years.
“That industry offers quite a wide variety of products to the consumer or patient,” said James A. Hayward, chief executive of Applied DNA. “We expect that all of those products will need to be traceable to comply with state permitting.”
As part of the contract, TheraCann — which started as a software company — will also work with Applied DNA to develop a “blockchain platform” to track cannabis throughout distribution, Hayward said.
Blockchain is a digital ledger that records transactions for bitcoin and other digital currencies, called cryptocurrencies, across a network of computers.
Awareness of blockchain technology has risen as the price of bitcoin has risen and fallen sharply in the past year. On Thursday evening, bitcoin was quoted at $11,145, down 0.90 percent, by CoinDesk. Bitcoin has climbed more than 1,100 percent in the past 12 months.
While Applied DNA intends to use blockchain software in its cannabis endeavor, it said it has no plans to break into the world of bitcoin or cryptocurrency.
“We see a future where blockchain can play a role in lot of different industries,” Hayward said.
The stock price of a Farmingdale company formerly known as Long Island Iced Tea Corp., a maker of beverages, rose sharply after it announced plans to become a provider of technology used in digital currencies. The company is now named Long Blockchain Corp.
Mitchell Goldberg, president of ClientFirst Strategy Inc., a Melville brokerage, said many trading in the emerging cryptocurrency market don’t “really care” about the blockchain platform, and just want to sell bitcoin “for a higher price quickly.”
“Cryptocurrency is just a one-case use for blockchain,” Goldberg said, adding that Applied DNA’s plan is the first he’s heard of “real-life companies making use of the blockchain technology for tangible goods.”
Michael J. Driscoll, a professor of finance at Adelphi University, said that while he remains “very skeptical” over the future of cryptocurrency, the use of its underlying blockchain technology is promising.
“To say we’re scratching the surface is giving us too much credit,” Driscoll said. “There’s potential that this does become the new way of doing business going forward,” he said.
Shares of Applied DNA closed Friday at $1.58, down 2 cents. The company reported a net loss of $12.9 million on revenue of $4.8 million for the fiscal year ended Sept. 30.