PanXchange has launched an industrial hemp trading exchange. The goal is to allow producers, processors, trade houses and end-users to participate in a cash market for industrial hemp products. This exchange will allow for greater transparency as well as efficiency. The PanXchange team developed the idea eight years ago to bring together disparate parties in a specific market. The company has experience doing so for corn, grains, frac sand and other commodities markets. Given the technology we have today, their goal is to streamline fragmented the business.
A commodity trader needs to be available to find bids, offers, and negotiate costs. With the launch, PanXchange plans to be the go-to place where this can happen. There are a lot of opportunities and gaps that exist within the cannabis market, and the CEO of PanXchange saw the potential. Cannabis branding and quality are key and that is the direction that the company wants to take. When the 2018 Farm Bill was implemented the company worked diligently to come up with prices for industrial hemp as biomass and isolate. The prices need to be specific to the state and not the country.
The pricing turns out to be the easy part and the difficulty lies with counterparty and credit risk management. With licensed businesses coming out of an illicit market, a third party needs to facilitate contracts. The trading platform began with twelve initial charter members. Once a buyer or seller is in the platform, they can search for counterparties and investigate their creditworthiness. Parties can then negotiate prices on specific products and shipments. The exchange is also crucial to be able to negotiate between states. Often larger companies do not appreciate the transparency of the exchange as it makes the market less competitive. In turn, it offers a fair playing ground. From start-ups to businesses that are expanding through acquisitions and mergers, the cannabis industry is grateful for this equality.