This week Food and Drug Administration (FDA) begins the process towards allowing the addition of the nonintoxicating cannabis compound cannabidiol(CBD) to food, beverages and dietary supplements. The federal regulator will hear from CBD producers, researchers, growers, and retailers, looking at viability of federally legalizing the industry which research firm Brightfield Group projects to become a $22 billion business by 2022. Should the hearings go positively, the FDA could soon be giving a boost to a variety of companies with CBD assets, including CROP Infrastructure Corp. (OTC:CRXPF) (CSE:CROP), Charlotte’s Web Holdings (OTC:CWBHF) (CSE:CWEB), Canopy Growth Corporation (NYSE:CGC) (TSX:WEED), Curaleaf Holdings, Inc. (CSE:CURA) (OTC:CURLF), and Green Growth Brands Inc. (CSE:GGB) (OTC:GGBXF).
Ahead of the FDA’s announced set of hearings, diversified cannabis sector company CROP Infrastructure Corp. (OTC:CRXPF) (CSE:CROP) announced a 5-month CBD isolate supply agreement with California-based CBD isolate distribution company, Bioscience. The whopping deal, worth an aggregate of nearly US$90 million begins later this year in November, and carries out until the end of March 2020. As per the terms of the deal, should the supply agreement be extended, the overall value balloons to over US$131 million.
The economic and medical potential for CBD is impossible to ignore. The FDA will be weighing the pros and cons of a CBD market that NPR is calling a new “Gold Rush”. The hearings follow on the heels of last year’s 2018 US Farm Bill, which essentially legalized hemp-derived CBD production across the country.
Other federal regulators are already loosening their scrutiny on CBD, with the Transport Security Administration (TSA) recently quietly changing its policy on allowing passengers to fly with some forms of CBD oil on flights. The agency updated TSA.gov to reflect new regulations that allow FDA-approved medical marijuana and products that contain hemp-derived CBD oil—marking a major departure from its previous no-exceptions policy.
“Interest continues to skyrocket,” D.C. attorney Miriam Guggenheim, co-chair of the food, drug and device practice group at Covington & Burling told CNBC. “It is mainstream, interest is mainstream. It is not fringe anymore, which doesn’t mean mainstream companies are ready to jump in. But they want to be prepared to do so once the legal landscape is clarified.”
Given the mighty claims of CBD’s somewhat magic elixir qualities in treating everything from inflammation to epilepsy, there are many interested parties waiting for the official green light before the industry truly takes off.
NEVADA’S POTENTIAL AS CBD CENTRAL
Thanks to its forgiving growing conditions in the more elevated sections of the state, groups like CROP Infrastructure Corp. (OTC:CRXPF) (CSE:CROP have identified Nevada as the ideal location for CBD production. With both production and extraction licenses in hand for 2019 and beyond, CROP has amassed a farmland block totaling 2,115 acres devoted to hemp CBD production.
In Nye County, through a partnership between its subsidiary Elite Ventures Group, and licensee The Hempire Company, CROP completed construction on a state-of-the-art 57,600 sq ftnursery designed to maximize CBD yields, reduce farming risk, as well as costs for the 2019 planting season. Across the entire operation, the Nye County farm also has 1,350 acres under pivot irrigation using organic growing metholdologies.
Already the facility has secured a major supply deal, with CBD isolate giant, Bioscience. The California-based company has contracts across the continental USA, Canada, and European Union for domestic grade isolate, oil and aerosol products.
“We are thrilled to be working with such an innovative group as CROP on a partnership that we hope will flourish within the progressing CBD industry,” said Richard Parker, President of Bioscience. “Having the best products on the market is what we believe makes Bioscience stand out as a reputable supplier, and without producers like CROP that would not be possible.”
Michael Yorke, CEO of CROP added, “While the monetary value of the Supply Agreement is significant for CROP and its stakeholders, the relationship we are building with the team at Bioscience is key to our continual efforts to become a key player in the CBD production space and the development of new strains of product for isolation which will complement Bioscience’s industry leading clientele and what both Bioscience and CROP believe will be in demand in 2020, 2021 and far beyond.”
The CBD isolate deal is indicative of the lucrative possibilities for the CBD market, which is driving more innovation ahead of the FDA’s potential loosening of restrictions on what can and can’t have CBD added to it.
CROP also has plans for its own products derived from CBD isolates. The company has announced plans to infuse its CannaDrink functional beverage with hemp-derived CBD, potentially coming from its Nevada-based operations and those of its licensee partners.
CROP is also developing lines of CBD capsule and tinctures. Under the company’s Hempire and Tiff CBD brands, Crop will sell hemp, CBD isolate, and related products and will be utilized for the Canna Drink beverage line.
"We believe in the nutritional spectrum and health benefits of both hemp and CBD so adding a consumer goods vertical is a logical progression as consumer data shows strong trends in plant-based foods and nutritional products,” said Michael Yorke.“We see it as a tremendous opportunity for CROP Infrastructure's branding & IP portfolio."