EUROPEAN investment bankers with decades’ experience trading global commodities such as oil, metals and gold have switched their attention to cannabis and hemp.
CanXchange was launched in London – with a seven-figure investment – and the aim of creating a world-leading on-line, hemp-trading marketplace.
It is currently seeking a further, Series A, seven-figure, investment which will help it double its headcount and expand its global reach into North America.
One of the three co-founders, Chief Strategy Officer George Popov told BusinessCann the European and North America hemp markets are currently worth around $6bn with the potential to reach $21bn by 2027.
Mr Popov worked on trading floors and platforms for Barclays and Merrill Lynch and Sigfried Legeay, the Chief Financial Officer, likewise traded for BNP Paribas, amongst others.
Along with serial technology investor Alex Arkentis, the Chief Executive Officer, the trio are the driving force being the CanXchange.
Mr Popov said: “Cannabis and hemp is on its way to becoming a global commodity.
Leading European Bank On-Board
“But, we realised what it lacked was a professionally-structured market place, one that connects physical supply and demand; one which is operated by professionals and can deliver trusted, ancillary platforms, and, most importantly a payment solution using traditional banking.”
CanXchange launched in March, this year and now has 15 staff, around 100 active marketplace participants and some 60 tradable products, including hemp biomass and CBD isolates.
The trio’s background and contacts allowed them to secure the payment solutions of Greek commercial bank Optima, while many traditional bankers still remain uncomfortable even allowing industry access to a simple account.
This allows transactions to be held in escrow until all parties are satisfied with the quality and expressed quantity of the physical trade.
CanXchange will take a 2.5% commission on these trades and, as it grows and develops a strong customer base, is able to consider bespoke arrangements based on volume.
Where Demand Meets Supply
Essentially the CanXchange is like any market; one where where supply meets demand with the price determined by the trading parties.
While similar platforms exist CanXchange says none are able to deliver as comprehensive, and secure, a package across all transactional stages.
This involves a thorough due-diligence, with robust background checks on all trading parties before acceptance on to the platform.
All product testing is undertaken at a Czech Republic laboratory to ensure consistency and validity with a Certificate of Authenticity benchmark issued on successful completion.
The two main connection points on the platform are from the farmer to the processor, and then further downstream, from the processor to the producer.
Whilst also including CBD content, for example, sellers of biomass need to include technical details such as whether the biomass is chopped or milled, stemless, seedless, harvest dates and production methods.
When interest in a product is expressed the seller receives alerts from CanXchange, whilst the trades involve the exchange of samples and employ trusted, global logistic partners for delivery.
Payments are not released until the buyer has examined the cargo and given it approval and, if there is a dispute, the money stays in escrow until a solution is found.
Mr Popov said “We have a number of high profile investors with experience across tech, banking and commodity trading.
“Our new funding round will reinforce our expansion plan into new markets, further grow our network of users, establish relevant partnerships and strengthen our technology to ensure we stay well ahead of any competition.
“The capital raised will allow us to recruit the required talent to at least double our headcount and further advance the business in line with our strategy.”
Medical Cannabis Products
As well as geographical expansion into North America CanXchange is looking to diversify into medical cannabis products.
CanXchange recently completed a major transaction for HempFlax, one of Europe’s largest hemp producers with almost 2,500 hectares under cultivation.
Mark Reinders, CEO HempFlax, said: “Our first transactional experience was seamless and the level of simplicity for the payment and logistics process was outstanding.
“The presence of a service like CanXchange will significantly strengthen our industry supply chain by adding an extra layer of trust and accountability.
“We look forward to using the platform to connect with buyers of our full-spectrum CBD oil, as well as our other natural hemp-derived products.”