CannabisNewsWire
Editorial Coverage: With federal legalization of hemp expected
in the United States by Christmas, the farming and cannabidiol
product industries are anticipating great changes in their
future.
- Hemp farming, which has been illegal in the United States since
1970, is about to be made legal under the newest Farm Bill
legislation.
- Pilot projects and work in Canada have allowed companies to
prepare for U.S. hemp farming by developing their techniques,
science and crop strains.
- With legalization promising great growth, companies are seeking
paths to investment opportunities.
Marijuana Company of America, Inc. (OTC: MCOA) (MCOA
Profile) is among the innovating companies carrying
out cultivation, research and development projects on sites in the
United States and Canada. Canopy Growth Corp. (NYSE: CGC)
(TSX: WEED) has been expanding its operations through
partnerships with other companies, covering investment, supply and
research. Cronos Group, Inc. (NASDAQ: CRON) (TSX:
CRON) has expanded its cultivation and markets while
negotiating for fresh investment. Aphria, Inc. (NYSE: APHA)
(TSX: APHA) has partnered with a company specializing in
branding to develop new consumer-driven brands and products for the
cannabis market. Aurora Cannabis, Inc. (NYSE: ACB) (TSX:
ACB) is putting out new products in the United States and
looking to export those products abroad, following the successful
export of medical cannabis into Europe.
To view an infographic of this editorial, click here.
The End of an Era?
For decades, hemp has been locked out of agricultural
development in the United States. Once a vital crop used to produce
the rope and canvas on which the American naval and merchant
shipping forces relied, it was made illegal in 1970 under
legislation designed to reduce drug addiction. For nearly half a
century, farmers have been unable to cultivate this crop despite
growing evidence of its usefulness.
Now that is set to change. After months of haggling, politicians
in Washington have finally brokered a deal to
pass the legislation that will make hemp legal. For the past
four years, a small band of farmers and university researchers have
been involved in pilot projects, testing the potential of the hemp
market. The profitable outlook, together with growing demand for
health and wellness products derived from hemp, have led
politicians to change their stance.
Could 2019 be the year that hemp’s cannabidiol (CBD) derivatives become household
commodities?
Legalization Legislation
The past decade has produced considerable growth for companies
working in the hemp sector, such as Marijuana
Company of America, Inc. (OTC: MCOA). Hemp is a form
of the cannabis plant with very low levels of tetrahydrocannabinol
(THC), the psychoactive ingredient in the marijuana strains of
cannabis. Despite hemp’s essentially innocuous nature, it was made
illegal under sweeping federal regulations that classified all
forms of cannabis as Schedule I substances, among the most
dangerous and least medicinally helpful of drugs.
Since 1996, the legal landscape has been changing as states have
introduced pro-cannabis legislation in defiance of federal drug
policy. This allowed companies such as MCOA to emerge and start
looking at the potential of industrial hemp. However, these
companies were caught in a no-man’s-land industry sector between
conflicting state and federal legislation. Under those
circumstances, building a commercial hemp industry had limited
practicality.
A change at the federal level began four years ago, when the
2014 Farm Bill made it legal for companies to carry out pilot
projects to grow hemp. Companies moved quickly to make the most of
the opportunity, setting up facilities such as the farm MCOA established in Oregon. From 9,650 acres in
15 states in 2015, hemp production grew to 77,000 acres under 3,500 licenses in 23 states in
2018.
During the course of that change, the hemp industry has gained
widespread acceptance in Washington and throughout the country,
leading to cross-party support for hemp’s inclusion in the new Farm
Bill as an agricultural commodity. But conflict over other aspects
of the bill held the legislation up until late November. Then, in
the waning days of a lame-duck Republican House, an agreement in principle was finally
reached.
Once the farm legislation is passed as expected, growing hemp
could become fully legal in the United States as early as January.
That would be huge news for farmers and a great start to the new
year for the fast-growing industry.
Farming Hemp
The anticipated legislative changes may lead to a new
agricultural phenomenon for United States farmers, but it will be
far from the first hemp crop in North America. Aside from the pilot
projects in the United States, more liberal legislation in Canada
has allowed farmers to get a head start on hemp production. For
MCOA, this has meant pursuing profitable crops and supporting
farmers on both sides of the border.
In Canada, MCOA’s efforts have taken the form of an innovative
joint venture in New Brunswick. There, MCOA teamed up with Global
Hemp Group, Inc. and four local farmers to experiment with
techniques for hemp farming. This has led to practical
developments, such as the use of a bean
harvester to strip leaves and inflorescence from plants,
improving the efficiency of the harvest. It has also led to more
academic results, including research on plant
nutrition with Dr. Ron Smith at the University of New
Brunswick.
The company’s U.S. project at Scio, Ore., is earlier in its
development and proportionally smaller. The Oregon cultivation
benefited from good weather in 2018, extending growing time and leading to an improved
harvest. Here, MCOA is already growing hemp with a higher CBD
content — 6 to 12 percent. Large greenhouses were used to dry out
these plants, with staff continuing to learn and refine their
drying techniques with each batch.
On both sides of the border, partnering with other companies is
helping MCOA maintain a high pace of innovation and expansion. The
company is currently looking for opportunities to work with a
cannabinoid extraction player in the United States to make the most
of its crops.
Preparing for a Boom Market
With legalization around the corner, hemp companies are moving
to strengthen their positions for market expansion.
For MCOA, this has meant a move into mainstream advertising. The
company’s hempSMART™ subsidiary has partnered with asseenontv.pro to launch a television
advertising campaign for its Full Spectrum Pet Drops, a pet
well-being product using CBD.
CEO Donald Steinberg said, “As our hempSMART brand continues to
grow, MCOA will continue to search for and utilize new partnerships
that will uniquely market our incredible collection of all-natural
CBD product formulations. We feel that our strategic partnership
with ASONTV is an important milestone for the Company that will
help promote our hempSMART Pet Drops to consumers across the
country.”
The company has also filed an application to uplist its shares from OTC Pink to the OTCQB
tier on the OTC markets. This strategic move should provide better
access to institutional investors to raise funds targeted to help
the company grow along with the wider industry. A new CFO and
independent director were appointed over the summer to ensure
strong leadership during this period of huge potential.
Like MCOA, Canadian cannabis company Canopy Growth Corp.
(NYSE: CGC) (TSX: WEED) has been partnering with other
companies to support its growth. This includes an investment and supply deal with 48North Cannabis
Corp., a strategic supply
agreement with MediPharm Labs Corp. and a research and development collaboration with
Battelle. One of the factors fueling Canopy Growth’s expansion
has been an investment from Constellation Brands, which pumped
billions into Canopy Growth earlier this year. This financial move
should give the American drinks giant a way into the cannabis and
hemp markets, including the production and sale of CBD-infused
drinks.
Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON)
has also been pursuing growth, with expansion into Latin America,
an increase in the scale of cultivation and a collaboration with
Ginkgo Bioworks to develop innovative products for the cannabis
market. This has drawn the attention of outside investors, and the
company is now in talks with Altria
Group, Inc. about potential investments that could provide
additional funds at a strategic turning point for the market.
Aphria, Inc. (NYSE: APHA) (TSX: APHA) aims to
carve out a distinct space in the market through innovative
consumer products. Aphria recently announced the creation of a joint venture with Perennial,
Inc. to develop original consumer-driven brands and products
for the cannabis market. This will join Perennial’s experience in
brand development with Aphria’s expertise in cannabis to explore
edibles, beverages and other new lines of products.
Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) is
already busy putting new products out. The company has recently
announced the release of cannabis
softgel capsules for the Canadian market and expects to export
them to international markets next year. The company already works
on an international scale, having announced its first shipment of
medical cannabis to the Czech Republic in November.
Pending hemp legalization in the United States is only the
latest in a series of shifts in the wider cannabis sector, shifts
that appear to have opened the way for a wave of expansion and
innovation.
For more information on Marijuana Company of America, visit
Marijuana
Company of America, Inc. (OTC: MCOA)
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