Hemp Exchange - Chris Fontes

Dan Humiston: [00:00:00] Welcome to another episode of Hemp Barons.

 

Dan Humiston: [00:00:09] Hello everyone. I'm Dan Humiston. And not only do we have another great guest on today's show we also have a big surprise. Hemp Barons has a new host. Yep I'm handing over the mike to one of the world's foremost hemp authorities and just an all around beautiful person I can promise you that. She is so much better than I'll ever be and she's gonna make this show great. So let's not waste any more time talking let's join my conversation with Chris Ponce from the hemp exchange and meet the new Hemp Barons host.

 

Dan Humiston: [00:00:51] Hi Chris welcome to Hemp Barons.

 

Chris Fontes: [00:00:54] Yeah thanks for having me on.

 

[00:00:55] Well we have an exciting show today. Chris I have a new host for the Hemp Barons show I convinced Joy Beckerman who a lot of our listeners will remember was on two shows two of our early shows. And I convinced joy to take over because I mean who better to host the Hemp Barons show than joy Beckerman. So Chris you're her guinea pig. You're gonna be her first person to interview.

 

Joy Beckerman: [00:01:20] Joy welcome to the show. Thank you for a privilege and a pleasure on so many on so many levels. Chris I'm excited to think you're my first interviewee. I'm excited to start.

 

Chris Fontes: [00:01:28] Yeah. I feel overly privileged to have this ability and opportunity to be here for this interview. This is fantastic. I appreciate it.

 

Dan Humiston: [00:01:35] Well I'm going to step back. I'm going to be a fly on the wall on this one. There's so much to talk about with the hemp exchange. Holy cow I'm on the website right now. Everyone buckle your seat belts because this is going to be another great interview so I'm going to be the fly on the wall you guys go for it. I'll catch you guys at the end of the interview. Great.

 

Chris Fontes: [00:01:51] Thanks Dan.

 

Joy Beckerman: [00:01:53] Thank you so much Dan. Well Chris hemp exchange really filling gaps and chopping the wording carrying the water so to speak for the building of this promising emerging hemp economy that we have in the United States. Yes thank you. We're talking about a platform that you would have dealt with. Gosh it's wonderful a place to buy and sell hemp farmers hemp offices and product manufacturers with only verified business truly building the supply chain here. Can you tell us what gave you the idea to start the hemp exchange. What was the inspiration.

 

Chris Fontes: [00:02:23] Yeah great question. So you know truth be told I had an affiliate in the in the industry already who had to have previous business experience with and I had to give credit where credit was do they identified the need. I've been following the cannabis space on and off for several years but hadn't quite delve deep enough into hemp at the time to really see the problems that industry experts were experiencing. And so there's another group doing their business hemp realized just like everyone else that purchasing and selling products is one of the most painful experiences in the entire industry right now. And so they kind of had to start like Man I wish I could just go to a marketplace where someone was already said it. So when I'm looking at products I know the product is actually real simple concept but that doesn't exist. And you end up spending hours on the phone hours and due diligence trying to figure out who's real what's real. And so they approached me and said you know with your background with our existing relationship how do you feel about this project. And I was very excited. It hits a lot of nerves. For me personally and I joke and at first.

 

Joy Beckerman: [00:03:32] This is so fantastic and when we talk about verified businesses and any state here state and federal license is verified where it's required you folks have a legal team or legal staff to help you decide where those licenses are required. I know I'm also the regulatory officer and industry the agent for Alex Dena. which is is a huge hemp for that company. And so keeping up of course with the bobbing and weaving rapidly developing area of law and regulation in our what I call a schizophrenic day 47 language that we think Ohio's about to come on board has some type of law. How do you keep up with that rapidly developing area.

 

Chris Fontes: [00:04:16] Yeah great question. So we do have a group that we've worked with plus we have an attorney on staff. And on top of that I would say that I am a non licensed we'll see hobbyists legal enthusiasts and so I do a lot of the myself I do a lot of staying on top of legislation and doing my sort of cursory here's how I'm interpreting it. Here's what's changing. And we do want the lion's share of the work on the upfront. And then I pass out also legal teams that basically say Yes you're you're absolutely right or no. This is why I have a degree in this and you don't because you're totally wrong. It's a group effort indeed.

 

Joy Beckerman: [00:04:58] Now it takes a village no doubt. But I'm so glad of course that you've got those types of folks on your team. Can you walk us through the inexperience a farmer has biomass and or a farmer is about to grow biomass or about can grow hemp and they want to find a buyer. Can you walk us through what that experience would be like on the hemp exchange registration and how that process goes.

 

Chris Fontes: [00:05:24] Certainly so the first step in any kind of verification is the most simple and that's just getting them to the site asking them for an email. Having them pick a password and then verifying that email addresses is accurate. So we send me an email and six click to verify this email. Very simple steps but it actually weeds out a bunch of garbage. So step one verify your email address. From that point you can look at what's on the marketplace you can't interact with any. Because you're not a verified business or a verified individual in any way. But you could at least see what the marketplace has to offer. From that point on the farmer says Yeah I like what I'm seeing. I want a complete registration and was my biomass. There's a form that was shown to them and for an axiom every time they log in a complete registration. If you want to interact on the system you got to do this step in involves them filling out their information first name last name who they are their business name business address and then give us any licenses that you have that are relevant to your business. That will help us identify that you're a real business and you can you can do these things you're trying to do so that's any kind of business license. IRS ACIM. Secretary of State AG license. Anything that proves that they are a business entity and their photo I.D. so that all gets uploaded through the system and then it gets put into a queue where we have a manual process where an individual actually looks at this name or through the documentation matches it up to make sure that it's all in sync and it physically calls secretaries of state to ensure that the business license is real and that it's valid and that the person trying to interact with us can do so on behalf of that business often with WoW with farmers even sometimes we have situations where the person doing the work isn't necessarily the person the size of the business. So then we go the extra mile saying look we need a letter of affirmation stating that you're stating that authorize business on behalf of the entity So by the time we get all this stuff verified we know that they're a real business we know who they are. We have a photo I.D. of the individual. We verify it weeds out a lot of the nonsense. Right. Because a lot of people that are intentionally trying to do harm. Good.

 

Joy Beckerman: [00:07:31] I'm so sorry to interrupt. It's just. Thank you. This is the level of due diligence that is so once the theory in the industry and after 30 years and of course I was raised by a lawyer and had a dual career for 21 years in compliance and complex civil litigation rather. I'm just I'm just so grateful that is exactly the level of due diligence that this industry needs. And for you to toe the line and have that as your process is just really impressive and necessary now and I'm assuming a very similar process for the hemp processors as it were in terms of e-mail verification first step and then several layers of verification including manual confirmation of the documentation that's been given. Same thing with the processors and the product manufacturers.

 

Chris Fontes: [00:08:16] Yeah it's the same steps so as far as we're concerned you know when we first were we're creating the products we have this idea that you add a self identify I'm a farmer and then we'd ask you all the farmers of the questions I'm a processor we'd ask you processors specific questions. But we determined that at the end of the day it's too difficult in this industry to pigeon hole any one company into any one persona because because often times they do several things. Some farmers do their own extraction. Some processors have their own biomass. And you know oftentimes even farmers will have sometimes they'll wholesale biomass on behalf of a friend that's a farmer to lose down the road. So instead of trying to identify who they are and restructuring structuring structuring the verification based on who they are. We structure the verification based on what they're doing. So everyone gets on the system which is in the same way same registration process same they complete their business registration identically we verify all that stuff the same way. What happens next is we don't further pester them for any kind of act state license until they try to take an action. So for example if you're trying to list biomass in Colorado at that point we'd say Hey in order to do this you need this license from Colorado and we don't have it on file for you. So you need to upload that now and we're not going to approve your product listings until we've verified that this license is accurate. If you're trying to purchase extracts in certain states as a processor it's licensure. So we determine where are you located and what are you trying to do. And we use our our compliance matrix that we've built both manually and are updating daily that we've built. And like I said manually that's inserted into the system and the system can then identify what licenses do you need to try to do what you're doing. And do you have those licenses already verified. And if you don't. Again they upload it and it's a manual process. We're now pretty much on a first name basis with every state AG departments and state science departments and a couple of states to verify hey we've got this license business real now.

 

Joy Beckerman: [00:10:19] This is fantastic and I love that you're developing those relationships and it also helps to build trust in the industry with those regulators and and those lawmakers who I'm sure you've made some phone calls to as well. And you know demonstrating our due diligence and demonstrating that we're working in partnership the industry the researchers the regulators and the lawmakers to deliver on the promise of this American plant.

 

Dan Humiston: [00:10:47] I want to take a minute to thank all of our Hemp Barons listeners and to let you know that you can support the show by subscribing to MJ Bell's premium. It's only four dollars and ninety nine cents a month and you gain access to all previous episodes of Hemp Barons as well as all m MJBulls other podcast and exclusive content. Go to MJBulls dot com and enter promo code Barron's to get your first month free.

 

Joy Beckerman: [00:11:12] Now could you walk us through it so I verified. Let's say we've got a pool of folks verified as I'm sure you do. And now I actually want to do a deal. I have let's say and. You're doing these transactions you FBI insured banking partners. Of course you are. And and what a tremendous struggle that is I'm sure these days. All right. Walk us through. I want to know a certain amount of biomass I delivered might be a way that meets all of the specs for a buyer and I'm and there's been a deal made or how is the deal made. How was the negotiation process needed. And then if you could be on that tell us then how is the money transacted the way how does the negotiation process and then the actual financial transaction how does that work on your platform.

 

Chris Fontes: [00:12:02] So one quick step back. We did touch I think is important when you list a product not only do we verify your state seizure but that you're able to sell that product but we also require two things that are fairly unique. The first one is proof of life and you know people people say why require proof of life all the time. But people face this as well. They send pictures of stuff that they don't want to say those things they don't have. So what our system does is every product listing it generates a unique passcode that has good generates a QR code and the individual trying to sell the product has to print off that QR code physically take it to the product take a picture of the QR code in front of the products and then send that to our system a system will match the QR code and say yep this this QR code matches this product. So that can't be faked and passed around and then a then it will flag as human again to look at it and say yep they're trying to sell biomass and I see biomass in the background that's what they're selling. So now we know they have physical access to the products which also weeds out a generous slew of individuals. And then lastly to see away everyone requires a seaway but we take it a step further and we actually send the sea away to the issuing labs and say we need to verify that this is real or has this been faked and labs or I just have to stop for a second.

 

Joy Beckerman: [00:13:23] I really just have to stop for a minute which is so fantastic that. I almost didn't want to ask that question. And it's so important. You've been around every block as a guy we have seen counterfeit sea away. I mean people get their own coa back Photoshop. So you're calling to verify as I have also sort of be the proof of funds which is why I'm also asking about of course that transaction. So. Sure.

 

Joy Beckerman: [00:13:51] I just have to start with here because my heart is filled right now and warm really we are the stewards of this industry. And when I read on your website and as you know people create Web sites they can project to the world as if they are a multi-million dollar corporation. They have all kinds of assets that they absolutely don't have. But when I see your website and. You know the most trusted every year all of your processes and protocols that you've passed probably really gives you the right to say that really fantastic stuff. So I again thank you for letting me interrupt this system so enthusiastic. Absolutely. You thought of everything here and this is just so important and people need to have a positive experience and you're really creating that environment on your platform in such a tremendous way so you go see it.

 

Joy Beckerman: [00:14:44] Thank you for all of that. And now Nick. I mean the transaction. How did it go down.

 

Chris Fontes: [00:14:49] Yes. So once the product is listed and it's visible on the site anyone can click on it. They can see to see a redacted see always so they know that the profile matches their needs. They can see product pictures to get a good idea of what's a crutch purchase. There's a button that says Click a bit so they click click to bid. And the window pops up and says How much do you want to purchase of this lot. And what price are you willing to offer. No it's not an auction. The person that listed the products set the price that they wanted but we know in this industry that someone says I want forty five dollars a pound and someone may say I'm only willing to pay forty three dollars a pound. It almost never is just cut and dry is the asking price. So we've built out into the system so someone could say well I want 100 pounds or a thousand pounds or 10000 pounds and I'm only willing to pay forty three dollars pound. That information gets subsidies. Seller the seller then can accept it reject it or counter they could say I won't go lower than 44 and they send that offer back to the buyer. The buyer again can accept or reject or counter they can counter as much as they want until they find terms that they agree on. But once an offer is accepted Oh I should back up one step as a lawyer you'll appreciate this too. Before you submit an offer and before you get the paralegal but I approach a paralegal still I think depreciation will be there. Whenever you submit an offer or you accept an offer you are required to read through the terms of use and provide an E signature through the application that adheres to the east sign act. So you basically fulfilling your contract right there. Yes I agree. I have this product and I'm actually going to deliver it or I agree I have the funds and I'm actually going to purchase that I have responsibility to do that. So once once something is accepted. First thing we do is we get a hold of the buyer Sarah buyer. You have an accepted offer you've purchased X amount of quantity of whatever for X amount of dollars. Here is the total that you owe for that. And here is the bank accounts that you need to wire those funds to and you have 72 hours to perform that task. So instead of trying to do the manual effort of checking due diligence on crucial funds and stuff like this it's much easier just to say look if you if you say you're going to buy this product within the next week's time you actually have to pay for it. It's not rocket science. You either have the funds or you don't. So it's a wire within 72 hours those funds go into our FDIC bank account and at that point we say all right now this is a real deal. We know that it's not just a tire kicker. They fulfilled their end of the purchase agreements. Now we contact the seller and we say seller we've captured funds we need to schedule shipments. They say great and we work out a time that works for our third party logistics company.

 

Chris Fontes: [00:17:34] And the buyer and the seller and we schedule shipment our third party company has a lot of experience moving cannabis specific. And we have kind of some unique arrangements with them they will show up on site. They'll do a visual inspection based on description of products based on pictures. Make sure it looks like it's supposed to look like they will weigh the product to make sure what they're picking up is the right amount of product for what they're supposed to be grabbing. And then they will do a sample they'll grab a representative sample the best they can from every single container whether it's a super sect or a five gallon bucket or mason jars whatever it is they'll grab a sample they'll video themselves taking those samples they'll send all of that to us for storage and cataloging and then they'll drive to the buyer. They deliver the products of the buyer and buyer signs off on it. You have this looks like what is supposed to be a drop it off the buyer now has seven days from that time to do their own due diligence to make sure the product is real. Know that it's actual biomass or that it's actual Islip not powdered sugar. So from that point of state you discover any problems they send out also on lab lab tests they come back and say the CBD central way off or there's actually no CBD in this it's powdered sugar. Then we can arbitrate and at this moment we have the funds we have samples and we're in a very strong position to be a fair and neutral party to arbitrate between the two.

 

Joy Beckerman: [00:18:58] Having been in complex civil litigation and compliance you you're building this chain you know that is creating exactly the record that would need to be created if in the unlikely event and a things happen and b I'm sure once in a while something Mishkin there. Sure you know that there there is a perfect document and evidence and chain of custody trail so that a matter could judiciously be arbitrated or mediated in the event of a dispute. It is so impressive and I need you to know Chris I am simply not an easy woman to impress. It's not an easy industry. As you well know it is fraught with unfortunately not only folks who are seeking to defraud intentionally but also folks who just don't know any better. And so you are sort of I don't know if we're allowed to say this and I'll come up with something else if we can't but your bullshit radar so to speak isn't going off. Is the person thinking he really believes everything they're telling you and they just don't know what they're talking about and they've been sold a bill was good. This is so impressive Chris. Every step of the way not just from my hemp industry leader perspective from my straight up compliance and complex civil litigation professional legal support and expert witness career. Wow. That's what I had to say about the hemp exchange I mean really really great stuff. And and so when it does come to your. You have experienced your third party delivery and logistics folks have experienced it it sounds like they've also had experience even within maybe the medical or adult youth space and transportation. So which you bring into and correct me if I'm wrong with that assumption. Yes. So that brings a whole nother level of sophistication and challenges and corners to see around and I think that's another issue with any new industry. But we're not a new widget industry here we're talking about an agricultural and industrial revolution of epic proportions happening right here in our lifetime. And so to be able to see around those corners and to have that breadth of experience is just such an asset to the community and to the industry. Chris

 

Joy Beckerman: [00:21:07] I'm just beside myself and I'm I'm really wanting to talk to you more even off line and how can this really help together.

 

Dan Humiston: [00:21:15] I'm beside myself to listen to you two guys. Holy cow.

 

Chris Fontes: [00:21:19] I really appreciate the positive feedback. And you know we're we really are trying to be a force for good in the industry and stabilize the supply chain because the bottom line is with the projected growth we can't get there. If the supply chain is as fractured and untrusted and wrought with fraud as it is currently. So our our primary goal is very simple stabilize the supply chain so product manufacturers making consumer goods can be free to make those goods and be able to source material. And that's true for processors and it's true for farmers. Farmers should be able to just farm they shouldn't have to be sales experts and have a complete legal team for due diligence and like you said they shouldn't have to have bullshit readers. They should be able to just farm their products and sell their products.

 

Joy Beckerman: [00:22:09] And without those farmers we have nothing. They are everywhere. They are the ones who get the seeds into the ground. They are everything. So just Wow to be providing these solutions put a tremendous good deed YOU'RE DOING AND MAN AM I GOING TO BE WATCHING HIM exchange.

 

Dan Humiston: [00:22:23] I'm going to have all of Chris's information on the website. So if anybody wants to reach out to Chris directly we'll have all of his information and then of course we have Joyce information on there if anybody. Chris congratulations.

 

Chris Fontes: [00:22:34] Thank you.

 

Joy Beckerman: [00:22:35] Congratulations on an awesome interview. Yeah. Very good.

 

Chris Fontes: [00:22:40] Yeah. Very well done both.

 

[00:22:43] Congratulations.

 

[00:22:45] Thank you. You've inflated my ego quite well so I'm going to have to go home probably take the rest of day off. Otherwise all I'll be too cocky for the rest of the hour and.

 

Dan Humiston: [00:22:52] Tell your wife how great you are when you get home so sad that something like Christmas. Let's make sure we have you on the show again as this thing progresses and keep it up.

 

Chris Fontes: [00:23:01] Yeah we've got lots of interesting stuff coming out that I think would be also of higher interest and as we develop things that we can be public about all of reach out to you what you know and I appreciate the opportunity again. Thanks for having me I'm on the show.

 

Dan Humiston: [00:23:12] Thanks for being here so good luck.

 

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Dan Humiston