Amercanex is a digital exchange aimed at matching cannabis cultivators with dispensaries and manufacturers. The company is also bringing out the big guns of Wall Street tech, commoditizing cannabis with a robust electronic trading platform. They call it the ECM or Electronic Cannabis Market.
The founders of Amercanex are all Wall Street veterans. Michael Herron, President of Amercanex, recently presented to investors at the Seed Series summit in Los Angeles.
He projects his voice easily, reaching every corner in the room and takes pride in his moniker the “Loudest Guy on Wall Street.” Herron is a well-known commodities broker and entrepreneur on the West coast. Steve Janjic, CEO, who recently infused one million of his own funds in Amercanex, specializes in foreign exchange. The board of directors boasts Richard Schaeffer, former NYMEX Chairman and Gordon Rutledge former CEO of the Dubai Mercantile Exchange (DME).
It's safe to say that we are still in the early stages of development for this emerging cannabis market. A quick search of the Federal Trade Commission website for the word “cannabis” returns zero results. Many Americans are still oblivious to the headlines sharing news of successful cannabis treatments for cancer and children consuming non-psychoactive CBD to mitigate seizures.
The political climate is indeed warming, but until the Schedule 1 sanctions are lifted, there is no possibility of a nationwide exchange for cannabis. Cannabis Commodity Exchange (CCX) launched shortly before Amercanex with a wholesale market in Colorado. The Amercanex exchange is available in Colorado and California, but interstate exchange is prohibited in accordance with federal law.
For anyone with a financial services background, trading cannabis as a commodity is to be expected as a natural progression of the market. It makes sense that marijuana would need a market place where a grower's supply will meet the demand of marijuana edibles manufacturers or dispensaries on a large scale, just as gold or oranges are traded in the commodities market.
Once cannabis is legalized, regulatory bodies will be established to protect the interests of participants. The next step will be speculative trading on futures prices or derivatives. Off-shore FX brokers are already requesting an API from Amercanex to access the data stream to create a speculative trading platform.
While they wait to conquer the mercantile world of cannabis, Amercanex founders currently monetize by selling virtual seats on the exchange. The seat value follows laws of supply and demand as they are limited in number. As the seats begin to sell out, the prices rise – they are currently listed at $10,000 each.
Legitimacy is a highly important consideration given the stigma and history of illegality for this much sought after plant in the U.S. and abroad. The Amercanex exchange meets this need with real-time transactions - thereby creating structure and transparency.
The founders are currently in conversations with government entities from around the globe including those of Jamaica, who according to Chief Marketing Officer Robert Ruiz, have disclosed an intent to mandate the use of the platform's ACE interface technology for their own local cannabis market. Puerto Rico and Chile are also engaged in the conversation.One of the core contributions of an exchange is that it creates a market-determined value for the commodity, in this case marijuana.
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Using the Amercanex platform, cultivators list their product on the exchange with lab results to identify quality and value of the product. Potential buyers then evaluate the lab results by strain for terpene profile or chemotype and determine if the product meets their expectations before taking delivery of the flower. All parties are extensively vetted to safeguard the sanctity of the exchange and keep things legit.
MERRY JANE sat down for an interview with Robert Ruiz, Amercanex's smooth-talking CMO, a man who chooses his words carefully, the likes of which is to be expected from the former VP of Sales and Marketing at Concorde Forex Group. What follows are the highlights of our conversation.
MERRY JANE: On the sell side with cultivators - are growers currently having trouble moving quality product? Or are you seeing some strong liquidity in the market?
Robert Ruiz: “We can move the product - no problem. The issue potentially facing cultivators is that as more growers come on line, and more enterprise level entities enter the market place with increased efficiencies, mom and pop operations could be squeezed out and the prices of the increased supply will drop as a result. This will be tough on cultivators, especially at the onset, but consumers will enjoy the more competitive pricing.“
MJ: What is the current rate of cannabis on the Amercanex exchange? What is your projection for the market 5 years from now?
RR: “Cannabis is currently trading on the exchange in the range of $1800-$2300 per pound.” (A quick glance at the current U.S. spot index price reflects this rate at $1901 per pound or $4.19 per gram, Cannabis Benchmarks reports.)
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“As for my future vision of the market, I foresee the rise of a boutique recreational marketplace, similar to what we see in the wine industry now. In respect to medicinal outlets, the focus should be on medicinal attributes as one might see in a traditional doctor's office with posters that show benefits by strain to meet common health issues.”
“In Colorado, we're already seeing some evidence of what could be the future. Some clinics offer terpene profiles displayed on iPads. I'm hitting the pavement on an almost-daily basis visiting dispensaries that we work with. Overall, I'm very impressed with the budtenders that I encounter both with the quality of service and in terms of what they bring to the experience. At Trenchtown for example, there is a warmth to the environment – not sure what they attribute their good mood to,” he laughs, “perhaps it's the scent in the air?” “I wish traditional doctor's offices would treat me that well.”
Mr. Ruiz suggests that the best approach for the cannabis market in terms of streamlining efficiency, is to make changes slowly. However, when legalization happens, they will be ready to move quickly.