By all accounts, America’s emerging cannabis industry is looking very promising and is shaping up to be the country’s biggest business experiment of the 21st century.
But the mushrooming niche sector could quickly prove to be the proverbial bull in a china shop, with contradicting state and federal laws, the resulting apprehension of banks to touch the industry’s abundance of money and the precarious lack of cohesion as dozens of states continue to rethink their laws on the substance.
While many entrepreneurs are eager to put business plans into action if and when legalization occurs in their state, “the patchwork nature of marijuana legalization on the local, state and federal level creates problems for buyers, sellers and users,” says Wall Street Commodities expert Steve Janjic, CEO of Amercanex, the first fully electronic marketplace exchange for the cannabis industry.
“We will soon hit the tipping point at which state after state will legalize cannabis like falling dominos.”
What is the best way to insure a legal, fair and accountable business model for the young industry? The solution is a Wall Street-like model to allow the young industry to participate in exchanges to buy, sell or trade inventories in a fully-disclosed and transparent marketplace, he says.
Janjic outlines the various benefits such a system would have on the cannabis industry.
• Ensures regulatory and tax-agency accountability and reporting: One of the benefits touted by cannabis legalization is radically increased tax revenue, but could an understaffed IRS really track the unknown volumes of money in this embryotic market? A digital commodities exchange system would monitor, track and audit orders, activities and transactions of all market participants in a jurisdiction from a simple online user-interface or automated reporting formats complete with e-mail capability. Growers and retailers could calculate, apply, debit and credit taxes and related fees in real-time at the point of transaction and have revenues accrued.
• Helps cultivators, distributors and retailers stay connected to market trends, insuring a fair and open market and business success: A Wall Street-like model would cultivators and vendors a central electronic platform to sell/buy their inventories anonymously, so that only product, quantity and best-available pricing are shown, enabling a completely transparent, neutral and non-manipulated free market. Under such anonymous conditions, supply and demand are the only factors affecting price discovery.
• Forces the industry to self-regulate: The more states that allow for cannabis usage, whether for medical or recreational purposes, the bigger the industry will get. The longer the industry endures without a unifying and orderly structure like a commodities exchange, the more exposure to scrutiny it’s likely to receive. An automated system could avert unnecessary criticism by allowing all parties to monitor, track, account and audit every aspect of every transaction for every participant within the intra-state network.
• Ensures fair and orderly transactions, efficient dissemination of pricing, market trends and more: A Wall Street-like model should display the full depth of market with live, executable prices and associated quantities per a given product or strain. A real-time interface would provide market access to participants using prevalent best sell/buy prices. Goals of such a model should include a diverse base of clients within the market, true price competition, tailored solutions to suit the needs of all participants and 24/7 access over the internet.
Steve Janjic is CEO of Amercanex, founded to provide a transparent, neutral and non-manipulated marketplace for institutional cannabis-industry participants, including growers and retailers. The company, a commodities exchange for the rapidly growing industry, strictly adheres to the centralizing regulatory and reporting requirements to local and regional regulatory authorities.
Janjic is also the global head of eFX Sales and Distribution at Tullett Prebon, one of the world’s largest institutional brokerage firms, with 168 years in the marketplace. While with Tullett Prebon, he has established a global sales force focusing on institutional e-commerce and prime brokerage sales/distribution teams.
