Investors are banking on big money expected from the cannabis industry in the coming years, eagerly anticipating the market to burst open. One specific sub-sector projected to grow exponentially is hemp, with valuations up to $2.1 billion in consumer sales by 2020. With all of the focus on cannabis, it is worth noting that only 25,000 acres (101 sq. km.) planted and harvested in the United States in 2017 were devoted to hemp, and that was the biggest harvest yet. Most investors and companies are focused on the marijuana side of the business, but the hemp variety offers many undervalued opportunities.
Of the nearly 70 cannabis companies publicly-trading on the Canadian Securities Exchange, Global Hemp Group Inc. (CSE: C.GHG, OTC: GBHPF, FRANKFURT: GHG, Forum) is one of the 38 that deal in hemp products. Founded in 2014, GHG is headquartered in Vancouver, with base operations in Montreal and Los Angeles. The Company is working to establish a strong presence in industrial hemp in both the United States and Canada through a multi-phased strategy.
The first phase is underway. Global Hemp is developing hemp cultivation for the extraction of cannabinoids (CBD/CBG/CBN/CBC) to create a near-term revenue stream. Once this has been successfully implemented, the second phase will focus on the development its Hemp Agro-Industrial Zone (HAIZ) concept for the production of value-added industrial products utilizing whole plant processing.
The practical applications for hemp are basically limitless. Aside from cultivation for CBD content, hemp is grown for its fibre and seeds. Its seeds can be eaten raw, or ground into a meal, turned into milk, prepared as tea and used in baking. Growing hemp in the United States has been illegal under the Marijuana Prohibition Act, but then Colorado changed the laws, paving the way for industrial hemp production in the country. It has been legal to grow in Canada for many years and has sprouted into a multi-million-dollar export product. Hemp oils, plastics and building materials can be purchased on the market and present the ability to “green up” many industries.
Stockhouse Editorial recently had the chance to sit down with GHG President, CEO and Chairman of the Board, Charles Larsen, who heavily advocates for hemp as a means to revolutionize practically every industry from medicine to food, even housing, clothes, and automotive. This one single plant promotes many applications beyond CBD. Experienced breeders and genetics scientists are developing a variety of the plant that will eventually be imported to Canada with a high cannabinoid content.
Stockhouse Editorial recently had the chance to sit down with GHG President, CEO and Chairman of the Board, Charles Larsen, who heavily advocates for hemp as a means to revolutionize practically every industry from medicine to food, even housing, clothes, and automotive. This one single plant promotes many applications beyond CBD. Experienced breeders and genetics scientists are developing a variety of the plant that will eventually be imported to Canada with a high cannabinoid content.
Through a joint investment of $2.3 million (USD), Global Hemp co-operates an outdoor cultivation project in Scio, Oregon, a 109-acre agricultural property south of Portland that is ideal for cultivating hemp since it contains a high-level of organic matter in the soil with irrigation infrastructure and sufficient water rights.
Current outdoor cultivation on the farm is orchard style, with Global Hemp also exploring a perpetual year-round harvest model with an initial five greenhouses across a space of 19,296 sq. ft. This strategy could optimize revenue generation throughout the year. To maximize planting density, GHG is planting 45,000 high-yielding CBD hemp clones in June. It is anticipating 12% to 18% CBD yields in Oregon, which is significantly more CBD yield than its other outdoor project in northeast New Brunswick. Hence the Company’s strategy to import high CBD genetics into Canada to breed and register with Health Canada for distribution to the farmers across Canada who are seeking varieties containing much higher CBD content than currently available.
Planting from seed in a traditional dense cropping style across 125 acres on the Acadian Peninsula, is now complete. This type of hemp is expected to produce around 2% CBD content.
GHG will measure the two projects to determine just how much yield per-acre orchard style produces compared to dense cropping. The Company is experimenting with everything from the dirt to nutrients, as well as data collection and analysis that will be used to optimize their business model and even possibly launch a data services venture to distribute this valuable information to the farmers, regulators and marketers who currently have very little hard data to analyze. A veteran of the investing space for more than 25 years, CEO Larsen knowns the value of electronic data and when he started in the investment industry, technology and databases currently available, did not exist. The same will happen in the hemp and cannabis industry, except it will happen in a compressed time frame, as the technology already exists, data just hasn’t been collected to analyze.
R&D is a key component to the Company’s HAIZ optimization model, which is expected to be the foundation for its portfolio of joint ventures, partnerships and acquisitions, who will come on board to take advantage of farming contracts and R&D looking into best agricultural and industrial practices. GHG intends to expand more on this as it digs deeper into Phase 2 of its build-out strategy.
Since the beginning, Global Hemp has been researching the market and the best ways to capitalize on the industry. Setting up its bases of operation in North America makes the most sense, since international markets want to export their products here and receive North American exports there. This research led GHG to partner with the Marijuana Company of America in 2017 to focus on product development and distribution. How the two fit together is through MCOA’s subsidiary and development / distribution subsidiaries Hemp Smart and Benihemp. Global Hemp Group will produce high-quality cannabinoids for MCOA’s product lines.
Global Hemp Group is planning to roll-out its wholesale products operating under a strategy that revolves around impending legislation on both sides of the border that could open up business in a big way. In the U.S., the proposed Hemp Farming Act would remove hemp from the list of Schedule 1 controlled substances, which it shares with marijuana and heroin, making it an ordinary agricultural commodity like cotton or wheat. Pharmaceutical giants are waiting for this legislation to pass in the Senate by July 2018, however this gives GHG a clear spot as a first-mover, already prepared to do businesses once the ink dries off the federal stamp of approval.
As the hemp market prepares to open up in the States, Canadian consumers will have to wait until early September until legislation is expected to pass that would permit cannabidiol extraction from industrial hemp. Canada has produced hemp for food for more than two decades but hasn’t gotten as far as participating in cultivating the hemp-derived CBD market. Growers in Canada must currently legally destroy the hemp flowers and leaves, which is where the highest concentration of CBD is found, but under this new legislation that will change. This further opens up potential for GHG’s business, but also bets on its U.S. farming operations and that the United States could potentially move past Canada as the #2 hemp producer in the world, behind China.
Retail investors watching the cannabis industry should take a deeper look at hemp, if for no other reason than the vast number of sectors it can compliment. For cannabis, there are simply two main sectors – recreational and medicinal. However, with hemp, the possibilities are practically limitless, hemp could potentially make a significant impact on almost every other sector of the economy.
Beyond being a source for medicinal advancements, food, clothing, auto parts, bioplastics and building materials, some other intriguing developments are just on the horizon. For example, research is looking at hemp as a better superconductor than graphene. The tech industry is busy looking for a renewable alternative semiconductor material for computer chips and batteries, that could eventually mean an end to digging up resources from the ground and using significant energy to process them.
There was even an experimental hemp car unveiled at a Vancouver tradeshow several years ago, developed by Nathan Armstrong and commissioned by the University of Alberta and the Government of Canada. 70% of the car, from the body, door panels, even down the brake pads was made of hemp-based composite that was said to be lighter than glass fibre and more resilient than steel.
Global Hemp is so passionate about the industry, it is also getting into the business of promoting it to entrepreneurs and investors. In early June 2018; Global Hemp acquired a 50% interest in Cash Crop Today Media, a global outlet that reports on the industrial hemp and cannabis sectors through its subsidiary CashCropToday.com. As a media, branding and tech outlet, Cash Crop covers everything from the latest industry news on investment information, entrepreneurship, politics and technology circulating through the cannabis and hemp sectors. It serves as a portal for investors nationally and internationally to get objective information about the industry as a whole through video content and via social media channels. Entrepreneurs can also use Cash Crop as a means to connect companies, many of which are scattered around the massive international network, that want to collaborate. It will also serve as a foundation where information can be sourced, from accounting to genetics, which is a good first-step to launching a business, as finding partners in this space can be a series of shots in the dark otherwise.
If the hemp industry performs even a fraction of how well it is predicted, investors looking to get in with a first-mover taking advantage of this space should do their due diligence with Global Hemp Group. This Company’s business strategy is focused on joint ventures, acquisitions and partnerships that add value to the industry as a whole, but also its bottom line to extract CBD from the plant. Once legislation fully allows for its cultivation and export, while even corporate pharma giants will need to play catch-up, GHG will be ready to operate at full capacity.
GlobalHempGroup.com
FULL DISCLOSURE: Global Hemp Group is a paid client of Stockhouse Publishing.