CannabisNewsWire
Editorial Coverage: Moments prior to signing a historic 2018
Farm Bill and effectively legalizing industrial hemp, President
Donald Trump tweeted out a
video of his performance at the 2005 Emmy Awards, singing the
song “Green Acres.” Having already passed through the House of
Representatives and the Senate, the bill was met with much fanfare
across nearly the entire cannabis sector, including benefactors
such as Green Growth Brands (CSE: GGB) (OTCQB: GGBXF)
(GGB
Profile), Cronos Group, Inc. (NASDAQ: CRON)
(TSX: CRON), Canopy Growth Corporation (NYSE: CGC)
(TSX: WEED), Harvest Health and Recreation (CSE:
HARV) and MedMen Enterprises Inc. (CSE: MMEN)
(OTC: MMNFF).
To view an infographic of this editorial, click here.
Trump’s signature was the last hurdle for the $867 billion bill.
Now the market is gearing up for the massive potential of
hemp-derived cannabinoids hitting stores. Among the benefactors of
the passage is Green Growth
Brands (CSE: GGB) (OTCQB: GGBXF), whose goal it is to
become the leading retailer of cannabis and CBD products in North
America. Under its Seventh Sense brand, the company is about to
market its own line of hemp-derived cannabidiol (CBD) personal care
products.
Back in September 2018, the market research firm Brightfield
Group published a 2018 market overview and analysis on hemp-derived
CBD. Among the observations made in the report was the possibility
that the CBD market could eclipse the cannabis
market. Less than three months after the report’s release, the
Farm Bill’s passage significantly improved this possibility.
According to the Brightfield Group’s analysis, the CBD market is
expected to annually grow by 147 percent, from $591 million in 2018
to an estimated $22
billion by 2022.
A ‘Monumental Policy Shift’
Upon the passing of the bill on December 20, 2018, the cannabis
retail innovators at Green Growth Brands saw the timing as nearly
perfect for their company. Having passed just ahead of the launch
of its hemp-derived CBD personal care product line under the
Seventh Sense brand, Green Growth Brands announced its goal to
become North America’s leading retailer of cannabis and CBD
products.
"The new bill is a significant step in America's acceptance of
CBD and the benefits it can provide consumers," said Peter Horvath,
CEO of Green Growth Brands, in the company’s corresponding press release. "This development dramatically
accelerates our ability to grow our North American retail network.
This piece of legislation provides clarity on how we can build out
our operations and logistics, reassures those investing with us in
this new, exciting industry and gets us closer to the ultimate goal
of giving customers high-quality, CBD-infused personal care
products at affordable prices."
According to an AMA (Ask Me Anything) interview, Horvath expressed his excitement over the
company’s current selling of test quantities of the Seventh Sense
CBD brand in a couple of national retailers’ stores already. “The
selling is surprisingly good for products in the personal care
category, exceeding our sell-through expectations,” said Horvath.
“These are products never before seen, in a brand that’s totally
new, and without any marketing.”
Green Growth Brands expects to roll out bulk orders for the
product in 2019 and will announce the wholesale partners it is
working with when appropriate. Already the expectation is for the
launch of a web store and CBD kiosks, which Horvath deems are a
“category killer,” in February 2019.
The company expects to derive up to 39 percent of its annual
revenues from the CBD segment in 2019, with the potential for that
figure to rise to 43 percent by 2021. Current company estimates
place the dollar figure of the annual revenue from this segment at
roughly $59 million for fiscal year 2019.
Due to Green Growth Brand’s overwhelming amount of c-level
retail sector experience, Horvath and his team have a healthy
degree of authority on their expectations. The company roll call
includes expertise from several household names, including
Victoria’s Secret, Designer Shoe Warehouse, American Eagle
Outfitters, Bath & Body Works and more.
Branding is a quintessential aspect of Green Growth Brands’
future success. The team’s strategy is focused around being the
best brand, coming from what it calls an “emotional brand”
perspective. The company has an array of brands — including Camp,
Meri+Jayne, Seventh Sense and Green Lily — all of which will be
utilized for both CBD and cannabis purposes.
To move its CBD products to market, the company will have three
separate strategies: wholesale, e-commerce and kiosks. The latter
strategy is an indication of Horvath and his team’s extensive
retail knowledge, as they work to grow their brand. Kiosks help to
reduce leasing costs for retail exposure while selling
brand-specific emotional brands at a relatively inexpensive price.
One executive on the team had significant success with this
strategy as a former executive of Sunglasses Hut.
By the end of 2019, Horvath’s company expects to have
approximately 1,400 SKUs on the market. Should it reach this goal,
Green Growth Brands would have a strong case for dominating the CBD
products market. The timely passing of the 2018 Farm Bill may only
serve to speed up the process.
Additional Benefactors of the Hemp Bill
Prior to the final signing of the Farm Bill, Canadian cannabis
company Cronos Group, Inc. (NASDAQ: CRON) (TSX:
CRON) grabbed headlines by entering into a subscription
agreement with tobacco company Altria Group, Inc. Altria agreed to
make an equity investment in Cronos of approximately $2.4 billion.
The strategic partnership provides Cronos Group with additional
financial resources, product development and commercialization
capabilities. Cronos is one of the few Canadian producers listed on
a major U.S. exchange, while not having any current operations in
the country.
Another company that’s been keeping its eye on U.S. regulatory
changes is Canopy Growth Corporation (NYSE: CGC) (TSX:
WEED). The company wasted no time in commending the
passing of the Farm Bill by announcing that
"Canopy Growth will participate in the American market now that
there is a clear federally permissible path to the market.
Consistent with the spirit of the Farm Bill, Canopy Growth will
participate in ways that support American farmers." Canopy already
has a deep hemp-specific portfolio of intellectual property through
a previous acquisition of
Colorado-based ebbu, Inc. In addition, much speculation has
surrounded the potential for the company’s ongoing partnership with
Constellation Brands to develop new cannabinoid-infused products,
which will likely include a line (or multiple lines) of CBD
drinks.
Following the closing of a reverse takeover of RockBridge
Resources, Inc., vertically integrated Harvest Health &
Recreation (CSE: HARV) announced the acquisition of Colorado-based CBx Enterprises, a
producer of cannabis products and technologies for extraction and
processing. Harvest's footprint spans across 10 states, including
California, Colorado and Massachusetts. The company reported
revenue of $29 million in 2017 and has made $18 million in
investments resulting in 40 permits and licenses across the United
States. Having focused its attention solely in the United States,
Harvest has no immediate plans for international expansion. With
each regulation change in the Farm Bill, the company’s fortune
appears to look brighter.
However, the Farm Bill’s passing may not please companies solely
focused on the dispensary side of the sector. After already going
through a rigorous process to be licensed in the states that it
operates in, groups such as MedMen Enterprises, Inc. (CSE:
MMEN) (OTCQX: MMNFF) gained exclusivity to carry and sell
legalized cannabis products. Upon hemp-derived CBD becoming legal
and available, the door to more open competition in the space could
open widely. MedMen doesn’t seem to be fazed by the passing, having
recently announced the finalization of the acquisition of
Chicago-based PharmaCann, one of the largest medical cannabis
providers in the United States, with ten retail stores and three
production facilities across multiple states.
Whether or not federal legalization is in the cards for the
United States is up in the air. However, the unfettering of CBD
could be seen as the first step. Now with the anti-cannabis stance
of former Attorney General Jeff Sessions out of the way, the path
to legalization starts to get a little bit clearer. With the
majority of Americans, including Republicans, now in favor of
legalization and a bevy of CBD-infused products on the way, the
days of cannabis prohibition may be on their way out. With a
soon-to-be-launched line of hemp-derived cannabidiol (CBD) personal
care products, Green Growth Brands is poised to
enter the potential billion-dollar CBD market opened up by the Farm
Bill’s passage.
For more information on Green Growth Brands, visit Green Growth
Brands (CSE: GGB) (OTCQB: GGBXF). Please also visit PotStockNews.com.
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