A trading platform for industrial hemp, a by-product of the cannabis plant, is set to be launched in the US by Irish entrepreneur and UCD alumni, Brian Liston. Seed CX, which was founded by Liston and Edward Woodford earlier this year, is a Chicago-based platform that will facilitate the trading of emerging agricultural commodities such as industrial hemp seed and another hemp extract called cannabidiol (CBD), which is one of the chemicals in cannabis.
Investors can buy these commodities for a certain price and trade them on the Seed CX exchange to get bigger return at a later date. Users will have to pay a monthly fee to get access to the service and there will also be a fee incurred for each trade carried out.
Liston told Fora that the next aim now that the platform has received regulatory approval from the Commodity Futures Trading Commission in the US is to open the service for business before the end of this month.
He added that the market will start with three tradeable hemp commodities, but the plan is to expand the exchange to cater for others very soon. We’ve tapped into this market just focusing on legal cannabis to begin with, but it is very clear that there is a bigger need,” said Liston.
“So we’re going to launch at least three other agricultural derivatives within the first three to four months. Those are likely going to be completely outside of the hemp industry.”
As part of the launch, Seed CX will also roll out a marketplace for people looking to simply buy and sell industrial hemp and not trade agricultural commodities in a similar fashion to stocks. According to Liston, the difference between the derivatives side of the business and the cash market is akin to the New York Stock Exchange versus Amazon.
“We want to provide both sides, which is what most exchanges don’t do … it just makes sense for our customers to have both. We are also a data aggregator. So we take information and research from both the derivative exchange and marketplace and we also survey people. Then we consolidate that and give it back to the industry.”
He said the company will compile research papers, pricing indices and data feeds and sell that information to people within the agricultural commodities industry.
“We’re doing the first annual state of the industry in a couple of months and people in the industry charge anywhere from $4,000 to $10,000 per report per person for that kind of thing. We probably won’t go that high, but the research side is very valuable.”
Earlier this year, Seed CX secured a round of funding for $3.42 million, with some high profile investors from Brooklyn Bridge Ventures and 500 Startups among the backers.
Liston said the stigma attached to the cannabis and hemp industry has made it tricky to raise funding, but this taboo also means there is a bigger opportunity because there is little or no competition in the space.
“There is a natural filter so some people who would otherwise invest in larger amounts are limited.
“For example, some venture capital fund couldn’t invest in us because it couldn’t convince the legal team to allow it, but the partners at the fund invested in us personally … so the cheque was about a tenth of what it could be. So that means you have to get investment from more people.
“We have about 60 investors so far whereas other people in our timeline usually have six.”
By Killian Woods - The Journal.IE/Oct. 1, 2016
Photo: Seed CX; inset- AP
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