Alex Arkentis is the CEO and Co-Founder of CanXchange, the European commodities exchange for physical hemp and CBD products. A serial technology entrepreneur and investor, Arkentis has been involved in successful startups in the UK and Europe. He and two co-founders started CanXchange in 2019 to advance industry standardization by creating the market and trading infrastructure needed to position cannabis as a thriving global commodity.
HempToday: How would you describe the uptake with CanXchange so far? What’s been the reaction?
Alex Arkentis: A year ago our platform went live for the first time and the pickup has been better than we anticipated. Currently we have more than 150 active clients across Europe. We have taken the first year as an opportunity to focus on gathering customer feedback to ensure we are making the relevant tweaks to help us best serve our clients and improve the overall user experience. The reaction has been positive to date and the feedback has really proved the gap in the market and need for the different services we provide. At the moment we are reinforcing our sales and marketing departments as we need the additional resources to help support increased demand and market growth.
HT: What do you see happening in the CBD markets these days? How did companies behave coming through the glut?
AA: At CanXchange we have always seen CBD as a trend. But that being said we think it’s one that will continue for a considerable amount of time and we’re confident that it will be the precursor to a boom on the industrial side of the market. We have also started to see businesses looking more towards alternative cannabinoids like CBC, CBG and CBN as there is a need for innovation and diversification to be competitive. At the beginning, CBD was very much centered around wellness oils, but now it has evolved into food and cosmetics as well. The market is undoubtedly still led by CBD but is slowly becoming less dependent on it as more doors open for industrial materials.
HT: What’s the short-term outlook for CBD biomass prices?
AA: Large market players provided an increased amount of supply over the last year or so which obviously led to a price reduction across the low quality (low potency) biomass. It seems to be that after last year’s glut, there is still a large amount of oversupply left in the market and hence why prices are so low at the moment. Rightly so, a lot of growers are concerned with regards to next year’s demand due to the ongoing Covid-19 crisis and they have taken the decision to either plant much less or nothing at all. If the Covid-19 situation eases and the demand for CBD products continues to rise there will be a sudden rise in prices as the amount of fresh product on the market over the next year will likely be much less.
HT: If you look across all of hemp’s potential applications, what do you see for the derivative sectors: fiber and hurd, food seed and seed oil, flowers for CBD and other cannabinoids? What do you expect to rise?
AA: My team and I are confident that fiber will rise. Its applications in big industries such as construction (shivs) and car manufacturing (fiber) have already grabbed the attention of big players who are looking to enter the market and will require huge volumes. The current lack of infrastructure is hindering the progress and access to the other products you mention, and this is exactly why CanXchange was started in the first place. We are working hard to further fill in the gap and strengthen the infrastructure to facilitate all product categories to ultimately help the market thrive.
HT: COVID has been a stress test for everybody. Who’s coming out on the other end? What are the characteristics of those companies that will survive to thrive?
AA: It’s no secret that Covid-19 has brought on a host of challenges for businesses large and small. Sadly, many businesses in the cannabis space have simply disappeared or gone out of business. The reality of the situation is that larger businesses who have significant backing are able to weather the storm whereas smaller businesses face greater financial challenges. It’s also an incredibly difficult time for new business and early stage companies due to the lack of funding and general nervousness with regards to the situation. That being said I still tend to think that if you offer a good product or service that adds value, there will always be demand in our fast-growing industry.
HT: Talk about your trading portfolio. What’s in there and what’s moving?
AA: We now have over 40 products live on the platform including biomass, flowers, distillates, isolates, oils and seeds. The product where we have seen the most movement has been with high potency biomass, CBD flowers and Isolates, which we believe will continue for the time being. As I mentioned previously, alternative cannabinoids (CBC, CBN etc.) are also gaining significant interest and it will be interesting to see how this develops. My team has worked tirelessly over the past year to ensure we have a large supply of product available and now that it’s in place we are committed to making sure our platform is equally valuable to the down and upstream components of the supply chain. This balance will be critical to the market’s long-term success.
HT: You’ve said before that security and trust are fundamental to CanXchange’s mission. How do you address this critical factor?
AA: It’s not a secret that the industry has lacked transparency and a secure market and we recognized that certain things were needed to be put in place in order to guarantee a legitimate market and transaction flow. The first thing we addressed was the implementation of a secure payment solution (operated by the conventional banking system) to eliminate cash payments and introduce financial security for business transactions. We have also put in place a rigorous due diligence/vetting process (in line with financial institution standards) for any business wanting access to trade on the CanXchange platform. This ensures all users are legitimate and ultimately protects our network of clients. Lastly our two laboratory partners, who test all items available on our platform, enable product standardization and consistency. These steps are fundamental to the CanXchange offering and we strongly believe they will open doors and encourage large corporations to confidently enter the market.
HT: What are the basic qualifications to be listed on CanXchange?
AA: We were inspired by the due diligence process for banks and financial institutions and literally no stone is left unturned. The main requirements are as follows:
- Demonstrate that you are a registered company or sole trader;
- Proof that you are active in the wholesale business;
- Consent and entry into an extensive background checks that include individual and entity checks, financial crime checks and anti-money laundering checks.
HT: How does the CanXchange pricing model work?
AA: CanXchange has a large range of clients who vary greatly and we have a mixture of offers depending on the nature of the business. Some are more commission based and others follow a membership model. Most interestingly, businesses who operate solely as buyers and want to optimize their transactions have the option to completely eliminate commission charges as well as profit on each transaction via a membership scheme.
HT: What are your thoughts regarding how technology can impact and help shape the industry moving forward?
AA: I strongly believe that our industry is no different to any other in terms of how much the presence of technology can help it grow and scale. There are so many innovative businesses popping up in the space, introducing new technologies which is exciting to see. For example, traceability technologies like seed to sale, satellite crop analysis, innovative testing solutions and so many others. At CanXchange we are constantly looking for new ways to disrupt and innovate so we closely monitor what other players are doing.
We think new technologies in R&D are fundamental to the growth of our industry and we are putting a lot of our current effort and attention towards this to really address what’s needed. In Q3 we will launch Version 2 of our platform which will be a big “tech” moment for us and it will incorporate all of our learnings and research thus far. We will continue to evolve our technology daily depending on what the market requires and how it evolves. Technology in the cannabis industry should be more of a hot topic and my team and I are fully championing it.
HT: Where do you see CanXchange in 5 years time and what is the long-term goal?
AA: Although an exchange will remain an integral part of our business, we are also working towards diversifying into other areas that will add additional value to businesses who want to operate efficiently and securely in the cannabis industry. Essentially we want to be the global “go to” business and financial authority for cannabis businesses. We will also consistently reinforce and expand our SaaS (Software as a Service) offering.