Before the New Year’s celebrations, MassRoots Inc. (OTCQB:MSRT) announced a new direction for the struggling company with the launch of a wholly-owned subsidiary MassRoots Blockchain Technologies, Inc. According to a statement released by the company, the new firm will focus on blockchain solutions for cannabis-related businesses. Is it a bold step for CEO Isaac Dietrich following his reinstatement atop the company last month, or the desperate move a dying company that can barely make its monthly rent payments?
Still in the planning phases, the company is exploring some ways to aide the cannabis industry with the popular technology. They plan to upgrade their point-of-sale system, MassRoots Retail through the use of blockchain’s distributed ledger technology, while implementing the technology’s smart contracts system into their platform to help with supply chain efficiencies. Other aspects of blockchain under review by MassRoots include the idea of eliminating intermediaries, corporate governance, and identity management.
In retrospect, it is not an unexpected move for a company that has had more downs than ups over the past twelve months. Internal struggles and financial troubles culminated in a power-play by Dietrich to reclaim his position as CEO of MassRoots after being ousted earlier this year. He came back to a company on the brink, however, as third-quarter financials released by the company in November showed dismally low revenues of around $11,500. SEC filings show the company needs at least $2.5 million in the fourth quarter just to keep its doors open.
It is not an unexpected move because blockchain, and to a lesser extent cryptocurrencies, have become the go-to move for companies that are either struggling to stay afloat or looking to break into the cannabis sector. A prime example of this trend is mCig, Inc. (OTCQB:MCIG) who entered the cryptocurrency market in October through a partnership with Render Payment for its Pre-Initial Coin Offering (ICO). Weak financials for the company earlier in 2017, primarily from their main offering of CBD products, have shown improvement recently. The question remains if it can be a long-term strategy for the company. Over the past 52 weeks, mCig has never surpassed $0.50 per share in stock prices.
The list of blockchain companies attempting to break into the cannabis sector is extensive. Paragon uses blockchain to record transactions in the industry. CannaSOS, founded in 2014, is also looking to monitor legal cannabis transaction through blockchain. Even corporate giant IBM proposed the use of Blockchain technology to the Canadian government as a means of a regulatory framework this past November.
"We believe blockchain has the potential to enable the cannabis industry to operate more efficiently and with a greater degree of accountability and transparency," Dietrich claimed in a statement. "MassRoots looks forward to being a pioneer in exploring blockchain-based solutions for the multi-billion dollar cannabis industry."
MassRoots seems to be betting big on the blockchain, but whether it is enough to lift the embattled company out of its financial doldrums remains to be seen. Currently MassRoots is trading at just under $1.00 per share, after reaching a high of $8.00 earlier this year.