As the cannabis market matures it begins to look and trade like a traditional commodity market. Wholesale marijuana prices have fallen as supply increases and processors shop around for the best product at the right price.
In order to facilitate these transactions, cannabis exchange platforms are being created to give the marketplace structure and organization. The latest entry is The Cannabis Trading Center platform created by Mark Restelli and pitched during the Investor Summit at the California Business Expo in San Diego.
The platform offers cultivators a place to pre-list a harvest and essentially offer a futures contract for their product. Restelli came up with the idea after his experience with dispensaries trying to navigate through numerous vendors. He figured there had to be a better way for vendors and dispensaries to reach other other. That led to the inclusion of cultivators and the various businesses that need marijuana for their products, but don't grow it themselves. So far the Cannabis Trading Center has signed 110 businesses in just 17 days.
The Cannabis Hemp Exchange or CHEX is another commodities style trading platform. It too connects cultivators, processors and retailers with each other in order to transact trades. The platform provides real-time supply chain intelligence, cloud infrastructure and is mobile friendly. CHEX feels that it is different because it has integrated social features and QR codes for easy tracking and quality control.
CHEX will also include lab test results and seller vouch ratings. There are real time prices and supply and demand visibility. The platform will also integrate with other programs like Leafly, Salesforce and Agrisoft to name a few.
The Americanex was the first electronic trading platform for the industry and it was created in 2014 to create an open market place to allow participants to buy and sell product at true market pricing. “It's similar to an E-trade of Ebay but for a physical product,” said Chief Executive Officer Steve Janjic on MSNBC. The platform plans on selling 8,000 membership seats and they receive a discount on transactions. Non-members can access the platform and made trades, but the price per transaction is higher.
All product is delivered by approved delivery services and stays within each state. Their platform monitors all transactions for tax and compliance purposes bridging the gap between the participants and regulators. Americanex has also gone one step further by introducing ACEpay, which allows their customers to deposit cash and pay bills and taxes and thus staying in compliance with regulators The funds are held at top tier banks. Additionally the exchange offers seed to sale tracking software that also keeps the regulators and law enforcement concerns satisfied.
The Americanex parent company GreenTree also owns the American Hemp Exchange, which is a similar platform that will be used for trading of industrial hemp. Hemp is an agricultural product that can used for common items like fabrics, construction materials and even personal care products. It is legal to grow industrial hemp for research purposes in states where the law allows. So far 31 states have removed barriers to production and 15 have pilot programs. Legislation has been introduced to exclude industrial hemp from the definition of marijuana, but that was in 2015 and little has happened since then.
As more states legalize marijuana, these exchanges will continue to grow and create their own specialties. More than likely as the market matures, these exchanges will either go under or combine forces like the exchanges in the traditional equities market. Still, it is exciting to see these new ventures created to bring together all the players in the market.