CBD-Derived Products on the Rise After Farm Bill Gives License to Grow
FinancialBuzz.com News Commentary
NEW YORK, January 16, 2019 /PRNewswire/ --
Cannabis has become the new craze as legalization efforts continue to spread. The cannabis movement has gone into full swing, with recent milestones like Canada's complete legalization of cannabis and the U.S. adding an additional three states to its growing list of pro-cannabis states. However, the industry is limited due to regulatory restrictions imposed upon cannabis businesses. On the other hand, cannabidiol, or CBD, has significantly fewer guidelines as opposed to THC because of its non-psychoactive nature. With the recent passing of the U.S. Farm Bill, which legalized hemp, the CBD market is expected to rapidly expand. According to data compiled by the Hemp Business Journal, a division of New Frontier Data, the total sales for the U.S. hemp industry totaled USD 820 Million and are expected to coalesce into a USD 1.9 Billion market by 2022. Additionally, the market is projected to grow at a CAGR of 14.4% throughout the forecast period, from 2018 to 2022. Specifically, the industry is expected to be driven by the increasing sales in the hemp-derived CBD and industrial application segments. Weekend Unlimited Inc. (OTC: WKULF), mCig, Inc. (OTC: MCIG), Freedom Leaf, Inc. (OTC: FRLF), PotNetwork Holdings, Inc. (OTC: POTN), Future Farm Technologies Inc. (OTC: FFRMF)
In 2017, the hemp-derived CBD product segment delivered USD 190 Million in sales, accounting for 23% of the overall market. Another large segment in the hemp industry is the food segment, which delivered USD 137 Million in sales, accounting for 17% of the hemp market in 2017. The food segment is expected to reach USD 212 Million by 2022, although the food edible sector, in particular, is limited due to the U.S. Food and Drug Administration's regulations. On the other hand, the beverage industry has been thriving. Large beverage companies have invested in CBD producers in an effort to create therapeutic, non-alcoholic drinks. "Interest has spiked from the beer industry on mounting evidence of a substitution relationship between cannabis and alcohol, while large soda companies increasingly view CBD as a natural fit within their strategically important wellness offerings," Managing Director of Canaccord Genuity Bobby Burleson wrote in a note, according to Bloomberg.
Weekend Unlimited Inc. (OTC: WKULF) also listed on the Canadian Securities Exchange under the ticker (CSE: YOLO). Just yesterday the company announced breaking news that the, "closing of its previously announced (Nov. 13, 2018) acquisition of Verve Beverage Company (VBC).
'With the addition of Verve we now have a platform for Weekend to expand both its distribution and product offerings, THC (tetrahydrocannabinol) by state where legal and CBD (cannabidiol) across the country. This distribution network will allow us to grow and manage indirect channel and big-box placements nationwide for multiple brands in our portfolio,' said Paul Chu, Weekend President and Chief Executive Officer.
'Verve is a premium energy beverage with over $236-million (U.S.) in historical sales in the direct-to-consumer channel. VBC Brands owns the exclusive distribution licence to launch this proven brand into retail stores in the U.S., Canada and Mexico, leveraging over $150-million spent in marketing and developing the brand,' said Bradley Robb, President of VBC Brands.
'VBC's Champ CBD and non-CBD beverages serve to extend our opportunities in the wellness industry, positioning the company's line to take advantage of growing demand as the market shifts in attitude, and legislatively, regarding quality cannabinoid products,' explained Mr. Robb. 'As the official energy drink of the National Hockey League's San Jose Sharks, Champ sales and distribution will be initially focused in the California market,' added Mr. Robb.
Verve and Champ highlights:
- Verve is uniquely positioned in the beverage market with a proven product and a recognized brand.
- Functional beverages are one of the highest-growth categories in the beverage industry.
- Over $100-million was spent developing the Verve brand globally.
- Verve is physician formulated and clinically studied.
- The Verve brand has sold over $236-million (U.S.) in historical direct-to-consumer sales, now positioned for retail distribution rollout -- the sales generated gross margins of approximately 50 per cent.
- Verve is launching a CBD-infused beverage in the first quarter 2019.
- CBD-infused beverages are expected to become a $600-million market in the United States by 2022 according to Canaccord Genuity as reported in Bloomberg.
- VBC is introducing new emerging beverage brands such as Champ Energy under its exclusive distribution licence.
- Champ Energy is the official energy drink of the NHL's San Jose Sharks.
- VBC plans to launch additional CBD-infused products and has plans to grow its retail footprint through its distribution network and retailer relationships throughout the United States in beginning in January, 2019.
The company will issue 60 million common shares to the shareholders of VBC. One-half of those shares will be held pursuant to voluntary escrow agreements, that see 20 per cent released immediately and the balance in equal instalments every six months over the next three years."
mCig, Inc. (OTCQB: MCIG), headquartered in Jacksonville, Florida, is a diversified company servicing the legal cannabis, hemp, and CBD markets via its lifestyle brands. mCig, Inc. recently provided an update on its high yielding CBD hemp project in New York. mCig is currently developing high-output ethanol extraction equipment with European partners. In addition to using the new equipment for its New York harvest, mCig also plans to use its customized extraction equipment for extracting CBD distillate and full spectrum oil from hemp in Europe. Current discussions with European hemp producers are promising, and mCig plans to leverage these relationships to gain traction in the European hemp and CBD markets. "We're harvesting our first annual hemp crop and are already in discussions with other farmers interested in growing hemp as an alternative to traditional crops. With these partnerships, we plan to expand our operations in New York, and grow over one hundred acres of hemp there in 2019. And, we're on the cusp of breaking into the European market," says Paul Rosenberg, Chief Executive Officer. "It's great to be where we're at right now."
Freedom Leaf, Inc. (OTCQB: FRLF) is a diversified, global leader in plant-based care providing premium Hemp CBD health products across advanced care, consumer and pet markets to promote greater health, wellness and longevity. Pura Naturals, Inc. (OTC: PNAT), makers of eco-friendly earth-conscious health and beauty products, and Freedom Leaf, Inc., parent company of leading CBD health and wellness brands Leafceuticals, IrieCBD and Hempology, recently jointly announced a Strategic Alliance Agreement between the companies. On December 20th, 2018, Pura and Freedom Leaf entered into a Strategic Alliance Agreement where Freedom Leaf will supply CBD to Pura as part of Pura's health and beauty line of products that contain CBD. The Pura Health and Beauty Line will feature "IrieCBD Inside" with Freedom Leaf, Inc. receiving a royalty. Freedom Leaf will also assist with marketing, distribution and sales of Pura's products and receive a fee for this work. Clifford J Perry, Chief Executive Officer. and Member of the Board of Directors of Freedom Leaf, adds, "Freedom Leaf is happy to provide our CO2 extracted CBD to Pura Naturals for inclusion in their new health and beauty line of products. We are always looking for methods of increasing the reach of our IrieCBD brand."
PotNetwork Holdings, Inc. (OTC: POTN) is a publicly traded company that acts as a holding company for its principal subsidiaries. Diamond CBD Inc., wholly owned subsidiary of PotNetwork Holdings, Inc. recently entered the Coffee segment, an industry expected to reach revenues of USD 46 Billion in 2018. This new line of premium Chill Coffee Capsules was recently added to the Company's broad range of cannabinoid and natural hemp products. Each box comes with 4 individual capsules in original chill coffee, decaf chill coffee, chill black tea, and chill green tea flavors. The unit price for each box is USD 10.00, with MSRP at USD 19.99. Produced in accordance with a universal K-Cup design, these pods fit in almost all modern single cup coffee makers, making it an easily integrated enhancement to any environment, delivering 25mgs of CBD in a tasty favorite beverage at less than USD 5 per cup. "The cannabis industry is growing at an explosive rate," said Kevin Hagen, Chief Executive Officer of PotNetwork Holdings, Inc. the parent company of Diamond CBD, Inc. "Wanting to give customers an experience that they could enjoy, our aim is to be hemp industry pioneers bringing innovative hemp-derived products to the whole world. Since drinking a hot cup of coffee is usually the average person's initial start to their day, we considered what America is still passionate, infused with the CBD edge that they enjoy."
Future Farm Technologies Inc. (OTCQB: FFRMF) is a Canadian company with holdings throughout North America including California, Massachusetts, Florida, Maine, Puerto Rico and Newfoundland. In response to the recent passage of the 2018 U.S. Farm Bill, Future Farm Technologies Inc. recently announced that it is expanding its existing hemp portfolio to include a potential partnership in Florida. The Florida project builds on Future Farm's work with its partner, Rahan Meristem, Ltd., to apply molecular and analytical tools for the discovery of scientifically recognized medicinal and industrial uses of hemp-derived products. The wealth of cannabinoids and terpenes in hemp opens a wide window of opportunities for expansion of endorsed medical uses of hemp products. Currently, Future Farm is a finalist among seven potential research partners being considered by Florida A&M University, which is preparing to commence industrial hemp research and production. "The significance of this legislation cannot be understated as it paves the way for the industry to expand, while providing legitimacy at the governmental and institutional levels," states Jim Cincotta, Future Farm's manager of its Florida operations. "It will allow for in-depth exploration of the myriad of applications of this remarkable plant. We know that some of the Florida based research activities will explore optimal hemp growing conditions to assure a consistent supply for local medicinal, retail and industrial processors."
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