CannabisNewsWire
Editorial Coverage: The pending legalization of recreational
cannabis and the extraction of cannabinoids from hemp in Canada is
only one in a series of changes bringing expectations of new growth
to these industries.
- Legalization of recreational cannabis in Canada is set to
establish an industry worth billions of dollars every year.
- American companies can make the most of this change through
cross-border partnerships and Canadian subsidiaries.
- Industrial hemp offers another option for companies in this
sector, producing and extracting cannabinoids, including CBD and
other cannabinoids, from the flowers and leaves will become legal
on October 17, 2018.
Marijuana Company of America Inc. (OTC: MCOA)
(MCOA
Profile) is making the most of these
changes, developing CBD products and industrial hemp cultivation
processes alongside its Canadian partner, Global Hemp Group Inc.
(CSE: GHG) (OTC: GBHPF). Scotts Miracle-Gro Company (NYSE:
SMG) has acquired Sunlight Supplies to give it a larger
hold in the hydroponic cultivation market. GrowGeneration
Corporation (OTC: GRWG) is also specializing in
hydroponics, which it expects to become a $4.5 billion industry.
Micron Waste Technologies, Inc. (OTC: MICWF) (CSE:
MWM) is creating a specialist onsite waste management
system for cannabis farmers. And as hemp cultivation appears to be
on the cusp of expansion, Future Farm Technologies (OTC:
FFRMF) (CSE: FFT) is producing millions of seeds with
which to get farmers started.
New Laws and New Crops
The legalization of recreational use cannabinoids in Canada is
set to make waves in the market this year. As the first G7 country
to legalize recreational cannabis on a national scale, Canada is
leading the world in taking this lucrative trade out of the hands
of criminal gangs and making it part of the legitimate economy.
With the global cannabis market to reach a value of $57 billion by 2027, Canada provides a great
opportunity for companies to capture a piece of this rapidly
emerging market.
With sales worth close to
$6 billion, the Canadian cannabinoid industry has plenty of
potential. It’s drawing the attention of big business, with
Corona’s parent company investing billions in a
cannabis beverage partnership. It is also opening a new market for
companies in the related industrial hemp industry. On October 17,
2018, farmers who hold valid hemp cultivation licenses will be
allowed to begin to “harvest and store flowering heads, leaves and
branches of the industrial hemp plants cultivated during the 2018
growing season.” Companies will now also be able to transport,
sell, import and export any part of the industrial hemp plant
legally. This allows those involved in the industry to take
advantage of an entirely new product market utilizing hemp-derived
cannabinoids. For companies already invested in this sector,
changes in Canada may open the way for a vast increase in
revenues.
The Canadian Cannabis Market
It’s easy to see the appeal of the Canadian hemp and cannabis
markets for the companies moving into those markets, such as
Marijuana Company of America (OTC:
MCOA). Estimates by Statistics Canada indicate that
Canadians spent around $5.5 billion on cannabinoids in 2017. As
many commentators have pointed out, this places cannabinoid-based
product potential in the market on par with alcohol for value to
Canadian businesses, and close to the total spent on wine each
year.
With around 450,000 people using hemp and cannabis products each
day in Canada, this promises to be a stable market with a steady
stream of income. It’s one on which businesses can reliably build.
And it’s not just about the sale of smokable cannabis. There’s
potential for hemp and cannabis-based food and drink, as well as
all the paraphernalia used in consumption and the supporting
functions needed by the industry and retailers.
Hemp is used in a growing list of products, including dietary
supplements and skin products, and even clothing and accessories.
Overall, hemp is known to have more than 25,000 possible applications. And Marijuana Business Daily reported that the U.S. market
for hemp-derived CBD hit $291 million last year and is projected to
explode to $1.65 billion by 2021.
Cross-Border Work
The existence of a government regulatory framework for the
medical cannabis industry has made it easier for companies to
prepare for full legalization in Canada. Companies, such as MCOA
with its joint venture partner Global Hemp Group Inc., are already
cultivating industrial hemp and have production in place that can
be increased to cater to a growing market.
Though MCOA is an American company, it has gained a solid
foothold in Canadian hemp cultivation through a partnership with
Global Hemp Group, a Canadian public company. The companies have
established two agricultural projects together — one of them in New Brunswick and the other south of the border in Oregon. Both sites are being
used to develop better techniques for growing industrial hemp.
At the New Brunswick site, the work is being supported by
government research investment to help advance the local hemp
industry. Aided by drone technology, the companies are gathering
data on the impact of pests on hemp production, ways of correcting
soil acidity for better growth, and the impact of nitrogen
fertilizers. The resulting crops will provide materials for MCOA’s
branded hempSMART™ products as well as a rich harvest of data.
In Oregon, the focus is on growing hemp strains with a high
yield of cannabidiol (CBD). CBD is one of the active chemicals in
cannabis that does not get users high, unlike marijuana’s
tetrahydrocannabinol (THC), though CBD still can be used for a
variety of medicinal uses. Using a mixture of seeded and cloned
plants, staff at the Oregon facility are growing high-CBD-yielding
crops while gathering data on their progress.
The Potential of Hemp
MCOA’s investment in industrial hemp means that the company may
be set to benefit from a revival in this long-suppressed superior
crop as well as the changing U.S. and Canadian laws. A century ago,
hemp fiber was used in the production of rope and cloth. Laws aimed
at outlawing marijuana killed the industry, but as the interest in
other strains of cannabis has grown in recent years, so too has attention on hemp.
In the United States, the 2018 U.S. Farm Bill is set to strike
hemp from the definition of “marijuana” under the Controlled
Substance Act. This would mean the revival of an industrial
agricultural crop that has been repressed for almost 100 years.
Language within the Farm Bill could ease regulations for CBD
companies such as MCOA by allowing extracts from the hemp plant to
now become legalized.
Hemp’s financial potential now lies in its use as a source of
CBD oil and other cannabinoids such as CBC, CBN and CBG. The
industrial applications of hemp in areas such as textiles,
bio-composites and building materials will become increasingly
viable as more biomass is generated in the cultivation of hemp to
produce cannabinoids.
CBD has become a hot ingredient in medicine and wellness
products in recent years, offering great potential for farmers.
Even with the growth of hemp tightly restricted, farmers in the
United States have predicted revenues of as much
as $90,000 per acre from producing hemp oil. For struggling
farmers, that compares favorably with the $600 per acre they can
get for alfalfa and other traditional and specialty crops. CBD is
the oil that goes into MCOA’s hempSMART
products. There are currently less than 300,000 acres of hemp
grown worldwide, compared to traditional crops such as wheat and
corn, with hundreds of millions of acres of each being grown. With
the potential disruptive applications for hemp from industrial to
medicinal, it will ultimately compete with traditional crops as it
is adopted by many sectors of the economy.
In addition, hemp has the advantage of being good for the
environment as well as for business. It uses less water than many
other crops, needs little in the way of pesticides and herbicides,
sequesters significant carbon dioxide and can be rotated with other
crops to improve the fertility of fields. Using hemp fibers for
paper may reduce the number of trees chopped down, thereby
protecting woodland and maintaining carbon dioxide at healthy
levels.
A Growing Industry of Growing Things
The spread of cannabis legalization, alongside the increasingly
well-recognized potential of hemp, is spurring growth for a number
of companies.
Scotts Miracle-Gro Company (NYSE: SMG) is one
of several companies providing the support services that cannabis
companies need. It recently expanded by acquiring Sunlight Supply, Inc., the United States’
foremost distributor of hydroponic equipment. Hydroponics is
fundamental to growing cannabis in indoor facilities, which are
often more effective and secure than outdoor cultivation. The $450
million deal will double the company’s share of the market in
cannabis growing equipment.
GrowGeneration Corporation (OTC: GRWG) also
provides equipment needed by cannabis growers in the form of
hydroponic systems, nutrients and materials for hydroponic
cultivation. The growth of the legal cannabis market in North
America caused an 80 percent
increase in the company’s sales in 2017. GrowGeneration
predicts that this continuing market growth will turn hydroponics
into a $4.5 billion industry in the United States alone by 2020. To
make the most of this growth, GrowGeneration has acquired several
smaller companies.
Like most industries, cannabis cultivation produces waste.
Micron Waste Technologies, Inc. (OTC: MICWF) (CSE:
MWM) is developing specialist technology to deal with this
concern. A producer of onsite waste management systems, Micron’s
products create clean water out of organic waste. With cannabis
cultivation growing, the company is targeting this sector with a
purpose-built cannabis waste digester. It even ran a competition with a $2,000 prize for the person who
came up with the best name for the waste digester, a move that
helped to publicize cannabis cultivation.
Future Farm Technologies (OTC: FFRMF) (CSE:
FFT) provides another of the pieces of specialist
equipment needed for indoor cultivation: lighting. The company
makes indoor lighting and vertical farming setups suitable for
cannabis cultivation. Future Farm is also preparing for the
expansion of the hemp market in the United States by producing
millions of hemp seeds ready to be sold to
farmers. If expected changes to the federal law in the United
States make it easier for farmers to cultivate hemp, then the
company will be in a position to equip new entrants to the market,
letting them quickly get in on a valuable cash crop.
Between the revival of hemp and legal changes, the cannabis
sector is growing. It’s an increasingly diverse industry, covering
medical and recreational cannabis, industrial hemp and CBD food
products. Canada now provides an ideal area for companies to build
up their presence in the industry, but the potential for growth is
international.
For more information on Marijuana Company of America, visit
Marijuana
Company of America, Inc. (OTC: MCOA)
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