CannabisNewsWire
Editorial Coverage: Legal changes could soon make transacting
business easier for the cannabis industry.
- Reports indicate that the president plans to reform cannabis
laws, making commerce easier for businesses working in states with
legal markets.
- Reforming the law could improve the position of companies
working with cannabidiol (CBD) as a food additive and industrial
hemp.
- Hemp and CBD are now large segments of the cannabis
sector.
- These anticipated legal changes are part of a wider
international shift.
One of the companies that may benefit from changes in the United
States is Marijuana Company of America, Inc. (OTC: MCOA)
(MCOA
Profile), which works primarily in cultivating
industrial hemp and developing CBD products. Tilray, Inc.
(NASDAQ: TLRY), which has affiliates around the world, may
use its global experience to adjust to changes in the United
States. Research into cannabis by companies such as Cronos
Group, Inc. (NASDAQ: CRON) (TSX: CRON)
will become easier, eventually improving product ranges and patient
well-being. The legislative shift is also being encouraged by
companies such as PotNetwork Holding, Inc. (OTC:
POTN) through efforts at public and industry events. And
as industry leaders such as Aphria, Inc. (OTC:
APHQF) (TSX: APH) swallow up smaller
companies, a stronger, consolidated sector is likely to result.
To view an infographic of this editorial, click here.
White House Hints at Cannabis Reform
Spirits have been lifted in the American cannabis industry
following a report that the
White House is planning to support drug law reform. California
Sen. Dana Rohrabacher told Fox Business that insiders around the
president have said he intends to push for a reform of cannabis
regulation. This would reportedly involve encouraging the federal
government to make medical marijuana legal on a national level
while leaving the status of recreational cannabis up to individual
states.
The reasons behind Rohrabacher’s announcement are clear. As a
Republican defending a closely fought seat in a pro-cannabis state,
he stands to benefit from convincing his constituents that his
party is pro-cannabis. But the stance is also part of a wider trend
in politics.
A growing number of politicians from both main parties have
shown support for legalization, driven by shifts in public
attitudes. Polls this year have indicated that 64 percent of Americans support legalization and
74 percent support legislation that would protect
states that legalize cannabis despite the federal government’s
opposition. Always happy to ride a high-profile trend, President
Donald Trump has previously indicated that he will support a states’ rights agenda on the issue,
despite action in the opposite direction by his attorney
general.
What will this mean for cannabis companies?
Making Life Easier for Cannabis Companies
Cannabis is already big business in the United States. Nearly
two-thirds of states have legalized medical marijuana in some form,
and one in five have legalized its recreational use. Clearly,
there’s a large legal market to be served. This has led to growth
not only for companies catering to those sectors but to those
engaging in cannabis in other ways, such as Marijuana
Company of America (OTC: MCOA).
MCOA illustrates the variety of ways in which companies are now
engaging in the cannabis sector. Rather than producing medical or
recreational cannabis, the company has focused on varied uses of
industrial hemp, a form of cannabis without the psychoactive
qualities. Derivatives of hemp can be used in food, textiles,
construction and medicines, making it a versatile and valuable
crop.
Within that part of the sector, MCOA has a variety of
operations. The company is engaged in two partnerships to improve
plant strains and cultivation techniques, and sells a range of
products derived from hemp. This range of business opportunities is
part of what makes the cannabis sector so profitable, with a value
in the billions of dollars
in Canada alone.
The potential profits of the sector mean that ambitious
companies such as MCOA have been able to raise finance through investment rather than through
hard-to-come-by bank loans, which have been in short supply in the
United States because of the federal government’s stance toward the
plant. Clearing up the contradictions between state and federal
laws would make business much easier.
Industrial Hemp
One of the biggest growth areas within the current cannabis
market may not necessarily feed into the medical or recreational
cannabis markets. That sector is industrial hemp.
Hemp is a form of cannabis that contains only a minimal level of
tetrahydrocannabinol (THC), the chemical that gets cannabis
consumers high. Before the general prohibition on cannabis
cultivation, hemp was largely used in producing rope and textiles.
Now this space is seeing a resurgence thanks to changes in cannabis
legislation. MCOA is involved in growing hemp through businesses
such as its New Brunswick Hemp Project, one of many companies
exploring hemp’s potential.
In the United States, hemp is currently grown legally on sites
designated as research and test projects. This was made possible
following the 2014 Farm Bill, which included provisions for such
sites.The potential for that bill to be expanded this year to full
agricultural legalization of hemp is expected to drive spectacular
success for farmers who choose to cultivate it. Hemp can be grown
outdoors in fields and will grow quickly in a wide range of
conditions. Some farmers have predicted that they may see revenues
of $90,000 per acre for the crop, compared with
only $600 for alfalfa, one of the most popular crops in the United
States.
The 2014 Farm Bill expired at the end of September this year,
and the bill scheduled to replace it has not yet been passed,
thanks to battles on a wide range of issues between Republicans and
Democrats. Surprisingly, hemp is fairly noncontroversial. The plant
has found cross-party support, with backing for legal reform driven
by Republican leaders. As a result, provisions in the bill that
would allow for more hemp farming will almost certainly be passed
when work on the bill is completed after the November
mid-terms.
The updated Farm Bill will make it easier for companies such as
MCOA to expand their operations and sell their products. And
following reports about cannabis law reforms coming out of the
White House, the bill looks likely to become a herald of wider
potential.
Hemp’s Big New-Profit Area — CBD
One of the most exciting areas for exploration is how hemp can
best be turned into profit. CBD is hemp’s primary active
ingredient. Recent research has found a range of uses for CBD in
health and wellness products. It’s the extraction of CBD that makes
hemp so potentially profitable for modern farmers.
CBD is already being used in a wide variety of products.
MCOA’s hempSMART line alone includes pain
capsules, a topical pain cream, face cream and pet wellness
products. Legal changes will make it easier for companies to
research and manufacture products such as these, broadening the
scope of the CBD market.
Unregulated CBD grants companies more potential to go
international, as its sale is less limited than that of medical and
recreational cannabis. MCOA is currently preparing to launch
hempSMART into Europe and has appointed a new
global sales director to oversee this work.
Legal Changes Affect Many Companies
Whether it’s the Farm Bill or President Trump’s promise to
accept a revision of federal laws, the possibility of legal changes
has the potential to affect a lot of companies working within the
cannabis sector. State-level legalization and changes in Canada’s
laws this month have allowed companies to emerge working entirely
within this sector.
Like MCOA, Tilray, Inc. (NASDAQ: TLRY) is
working beyond the boundaries of the United States. The company has
affiliates in Australia, Canada, Germany, New Zealand and Portugal,
and is now adding Chile to that roster through the acquisition of Alef Biotechnology SpA. Tilray’s
products are already used by tens of thousands of patients as well
as physicians and researchers around the world. That gives the
company existing experience and infrastructure to expand in a
reformed American market.
Another company with international reach — Cronos Group,
Inc. (NASDAQ: CRON) (TSX: CRON) — is earning a name for
itself not just as a supplier of cannabis products but also as a
researcher in the arena. Cronos has recently announced a study into
the effectiveness of
medical cannabis in tackling sleep disorders. Such research
will be both easier and more profitable as more countries legalize
cannabis.
A sign of the power of the sector is the growing number of
holding companies now built around cannabis. PotNetwork
Holding, Inc. (OTC: POTN) is one of those, with subsidiary
companies covering cannabis production and related parts of the
industry. The company is reaching out to
customers through large events such as the 2018 World Vapor
Expo, designed to increase the profile of cannabis and remind
those in power of the plant’s popularity. Such corporate PR work is
increasing the momentum of the movement towards legalization.
The growth of the industry has also led to a series of mergers
and acquisitions, as big players consolidate their hold.
Aphria, Inc. (OTC: APHQF) (TSX: APH) recently
completed acquisitions in Latin America, the
Caribbean and Canada, bringing
with them supply agreements reaching into Europe and Israel.
Liberalization of cannabis laws is becoming a global trend, and as
the businesses involved become bigger, so will the push for further
reform.
Legal changes appear certain to come to the United States. When
they do, there will be plenty of companies making the most of
them.
For more information on Marijuana Company of America, visit
Marijuana
Company of America, Inc. (OTC: MCOA)
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