“This is nothing short of seismic for the cannabis industry.”
Kristen Nichols, editor at Hemp Industry Daily, speaking with Bloomberg.
After decades of suppressing jobs, products and medicine, the United States has made a drastic turnaround on the hemp industry. In light of the cannabis industry finding mainstream acceptance across much of the country, what does this mean for its future?
The Agriculture Improvement Act of 2018 was passed by the House and Senate last week by a vote of 87-13 and now expected to be signed by the President on Friday. This “farm bill” is a three-year $867 billion, 800+ page act that covers a wide range of nutrition and agricultural government programs. It also removes industrial hemp from the list of federally-controlled substances, which is timely as cannabis becomes legal in more states, it could create a legal hemp-derived cannabidiol (CBD) market worth more than $20 billion by 2022, according to a report released by cannabis research firm Brightfield Group, which is estimated to be 40 times bigger than it is now.
(Image via senate.gov)
From soft and durable clothes, to light and nearly impervious vehicles, the potential for the hemp market is massive and has been covered by Stockhouse in past editorial, but what about its implications for the industry at large? The connections are deep and both industries stand to gain quite a bit.
The Brightfield report also ranked its top 20 hemp-derived CBD companies, four of the top five being publicly-traded Charlotte's Web Holdings (CNSX:CWEB), CV Sciences (OTC:CVSI), Medical Marijuana (OTC:MJNA) and Elixinol Global Ltd. (OTC:ELLXF). What can companies such as these offer the overall industry now that their operations have a greater blue sky potential?
The murky legislation around hemp, CBD and cannabis has made utilizing one, but not the others a legal challenge, but under this new open season, companies will have a much easier time incorporating CBD into a wide swath of products. It was a significant stumbling block to the buzzworthy Coca Cola / Aurora Cannabis deal which, if successful, would be so enormous it could legitimize and transform the cannabis industry overnight. There was also a hemp connection buried within this deal.
It may have been an erratic year for Aurora Cannabis Inc. – (TSX: ACB, OTCQB: ACBFF, Forum), but one move the industry giant made that could pay off in the near future was its acquisition ofICC Labs Inc. (TSX-V: ICC), whose operations are focused in South America. ICC has been focused on becoming a leading producer of cannabinoid extracts globally. It has a broad range of capabilities, as a fully-licensed producer of medicinal cannabis in Colombia, as well as a fully-licensed producer and distributor of medicinal cannabinoid extracts, as well as recreational cannabis and industrial hemp products in Uruguay.
ICC is expanding rapidly, with both established facilities and a number of projects in various stages of completion that will bring the estimated production capacity of cannabis and hemp to over 450,000 kg per annum, adding significant value to Aurora's funded footprint.
(Image via Hempco)
Aurora also owns most ofHempco Food and Fiber Inc. (TSX-V: HEMP). Hempco is in the business of developing hemp foods, hemp fiber and hemp nutraceuticals, a “tri-crop” opportunity for producers and processors at its 56,000sq. ft. facility located at Nisku, Alberta. The intent behind this acquisition was for Hempco to built-out its facility and turn its business focus global, with product diversification, as well as, subject to anticipated regulation changes, a low-cost source of raw CBD material for extraction.
The story is just beginning for the legal hemp industry in the U.S. and now cannabis companies north and south of the 49th parallel have a giant new market to tap into. To keep their edge over the playing field, many will likely look to add value to their assets by acquiring or partnering with companies that specialize in hemp. Some companies have already been preparing for this rebirth and it’s just a matter of time before everyone has a little hemp on the side.