Welcome to CERES! We’re a financial transaction network for the legal cannabis industry. We’re helping bridge the sizeable gap between cannabis and crypto and reshaping the currently fractured world of cannabis. Together with CERES Coin and CERES Token, CERES’ blockchain transaction network is helping fix the issues that currently plague the legal cannabis industry in the United States - specifically, issues in banking, regulation, oversight, and safety.
To explain how we’re impacting this booming industry, we’ll first explain how the CERES ecosystem works and then break down the various problems facing the industry and the ways that CERES is a valid solution.
CERES is built on three components - the CERES blockchain transaction network, CERES Coin and CERES Token. The CERES transaction network allows for cannabis sellers, vendors, manufacturers, and users to purchase and sell goods without the use of banks or cash. CERES Coin is the currency used within this transaction network. CERES Token is an STO (security token offering) that can be openly traded. We chose this dual-asset structure because many ICOs fail to realize that a single asset (a coin or token) cannot be used as both currency and an investment vehicle without diminishing the value of both. You can learn more about our dual-asset structure here.
CERES is currently in the process of becoming SEC-qualified as a security. SEC-qualified securities can be traded under Regulation A+ funding laws. Securities can qualify as either Tier 1 or Tier 2 investments. Tier 1 securities can crowdfund up to $20 million in 12 months, while Tier 2 securities can crowdfund up to $50 million in the same timeframe. (CERES is applying for Tier 2 status.) As a Tier 2 SEC-qualified security, we’ll be required to be "above board" with investors, filling out all the proper paperwork and operating under scrutiny and oversight. You can learn more about the importance of SEC qualification for securities here.
When investors put their money in unregistered and unregulated securities, they run the risk of having that company shut down by the SEC. In this case, the “investor” is on the hook for all the money they lost, and the company often folds shortly thereafter. This was the case for about 50% of ICOs in 2017.
Today, thirty-three of the fifty U.S. states have approved the use of adult cannabis in some form - from recreational to medicinal use. However, there is one big problem for everyone involved and that is the lack of access to banking services for the cannabis industry. That means no access to credit cards, bank accounts, or capital. Financial institutions are loath to provide banking services to an industry that is still illegal at the Federal level (cannabis is listed as a Class I drug on the Controlled Substances Act).
There are around 10,500 banks or credit unions in the US and only 660 provide some type of banking services to this industry. Of those 660, about 50% provide meaningful services that allow cannabis-based businesses to grow. In total, that means just 3% of banks are willing to work with this booming industry. Why are they so hesitant? In a word: cost. The costs associated with adhering to the Bank Secrecy Act (BSA) and the Patriot Act force financial institutions to either not bank with the industry or charge extraordinary fees associated with the extra compliance tasks that they must undertake.
Since cannabis companies don’t have access to banking services, the all-cash industry is plagued with secondary “symptom” issues like:
The more cash-reliant cannabis companies are, the more risk banks must accept to work with them. It’s cyclical. CERES is helping solve these problems one by one.
Finally, a solution for the banking issues that have befuddled the $50B cannabis industry since its inception. CERES uses a blockchain-based financial infrastructure tool that utilizes a stable coin as its centerpiece. Every transaction with that “coin” is posted to an immutable auditable ledger. The ledger will contain the key information needed by financial institutions to be compliant with FINCEN AML rules as well as the Patriot Act and the BSA. Another key element of this CERES solution is that the CERES coin will be an SEC security. Everyone wins!
How will the CERES blockchain help solve financial issues in the cannabis market?
Cash-based industries are vulnerable to crime and danger. Steve Deangelo, the CEO of Harborside Health, one of the largest cannabis businesses in the United States said, "There are thousands [of cannabis businesses" in the United States now, and all of them are carrying around tens or hundreds of thousands of dollars in cash. If something isn't done to change the situation, it's, in my opinion, just a matter of time before we see a tragedy." With the CERES blockchain, cannabis companies will be able to create payroll and payment systems that negate the need for cash, thus reducing the chances of an employee-facing danger carrying around bags of cash. Cannabis businesses will also be less desirable targets for would-be thieves.
As a bonus to switching from a cash-based model to a coin based model, cannabis companies will save money. Cash is expensive to handle, and an estimated 15% of sales are lost to transaction costs. The CERES blockchain network will help lower these costs by reducing transaction fees and reducing the cost of insurance.
Currently, there is no reliable way for states to regulate and monitor legal cannabis sales in the U.S. When California legalized recreational cannabis, the state invested more than $60 million into software that would track and monitor the shipments and sales of cannabis, but only 9.3% of the potential manufacturers and 7% of growers participated. The reality is that most companies are still tracking their sales with pen and paper. This makes regulation exceptionally difficult. The CERES blockchain provides a clear, easy-to-follow and impossible to fabricate transaction record. Regulation and tracking are not only beneficial for states and regulatory bodies but its also a helpful feature to cannabis companies that want to grow and scale their businesses. You can’t grow what you can’t measure; the CERES blockchain will allow these businesses to have reliable metrics and trackable data.
Some may argue that these are all temporary problems facing a new industry. Someday, cannabis will likely be federally legal, and then all these workarounds may not be needed. What purpose will CERES hold then? We are excited about a cannabis-friendly future and see the CERES blockchain as being just as important, if not more important, in this new ecosystem. When the federal government legalizes adult recreational cannabis, it will be a race for cannabis companies to set up banking systems, build payroll systems, and find ways to track their products and sales. CERES will be a natural partner since we’re already up and operating.
Regulatory offices and governments will also be reliant on CERES to provide valuable information for oversight purposes. CERES’ blockchain transaction ledger is immutable, making it a reliable way to stay on top of taxes, as well as a tool to prevent fraud.
Hoping to follow the footstep of the Blockstack which just completed a $23MM raise for its Stack token, CERES is issuing the 1st ever preferred equity that will trade as a Security Token (CERES Token) – a 100% digital asset. With their CERES Token, CERES Token investors will be allowed to participate in the revenue streams generated by CERES’ multiple lines of business.
We’re breaking new ground with digital assets by giving enthusiasts and investors access to preferred equity - the CERES Token. We’re excited to fundamentally reshape the marijuana industry in the United States. Want to learn more about CERES Coin and how we’re impacting the finances and culture of the marijuana industry? Contact us at info@cerescoin.io.