Hemp. It’s one of the world’s fastest growing plants—a separate
species of the cannabis sativa genus that, due to its >0.3%
tetrahydrocannabinol (THC) content, makes it literally almost
impossible to get high from smoking it.But that’s not stopping it
from taking the marijuana industry by storm.Just weeks ago,
U.S. President Trump signed the
2018 Farm
Bill into law. The newly revamped bill legalizes
industrial hemp in the U.S., and in doing so not only makes hemp
and CBD eligible for lucrative federal crop insurance, but
also removes CBD from the Controlled Substances Act.CBD, or
cannabidiol, is the naturally occurring phytocannabinoid in the
hemp plant that studies suggest can be used to treat inflammation,
pain, anxiety, depression, and a plethora of other health
conditions—all without the psychoactive effect found in
marijuana.The updated 2018 Farm Bill is a major step forward in the
marijuana industry’s quest for legitimacy, as the still-nascent
sector wrestles with lower than expected
earnings and explosive short-seller claims.However,
challenges remain ahead for the U.S. hemp-derived CBD
market. Despite the Farm Bill legalizing industrial hemp at
the federal level, individual states still have the final say in
the legislation surrounding hemp legality. Moreover, even though
CBD has been removed from the Controlled Substances Act, the FDA
remains the supreme arbiter of whether or not CBD is allowed to be
in food and wellness products.Despite these challenges, companies
across the United States are gearing up for CBD’s anticipated
legalization—from pharmaceutical firms to industrial hemp farms and
more.
CBD Legitimacy Through Pharmaceutical
Support
The U.S. Food and Drug Administration’s (FDA)
primary mandate is to protect public health by ensuring the safety
and efficacy of drugs, biological products, and medical
devices.With this in mind, it’s easy to see just how important
scientific evidence will be in the rollout of hemp-derived CBD
products across the United States.British biopharmaceutical
company GW Pharmaceuticals PLC (NASDAQ:
GWPH), a pioneering authority in plant-derived cannabinoid
therapeutics, is providing much needed evidence for CBD-based
medicines in droves. Just recently, the company’s CEO spoke at
the JP Morgan HealthCare Conference — one of the largest healthcare
investment conferences in the world.GW Pharmaceuticals is the
company behind Epidiolex, an FDA approved
drug that contains purified CBD and is used to treat a rare
epilepsy syndrome in children known as Lennox-Gastaut syndrome or
Dravet syndrome. It's also the first cannabis-related company to
receive analyst coverage from J.P. Morgan. That should come as
little surprise, since Goldman Sachs & Co. LLC, Morgan Stanley
& Co. LLC, J.P. Morgan and Cowen and Company, LLC all acted as
joint book-running managers for their most recent offering of
nearly US$350 million.With that type of coverage and investment
services from some of the biggest banks in the world, further
support from the scientific community is all but guaranteed at this
point, and will likely serve as a catalyst in building momentum
towards broader FDA approved CBD products.In the meantime, other
well-funded firms are getting ready for a tidal wave of CBD
demand…
The U.S. Hemp Farm Rush, A Prelude To
CBD-Infused Beverages
The world’s biggest marijuana companies, both
Canadian and American, are already preparing to capitalize on
hemp-derived CBD market through the development of expansive
industrial hemp farm projects in the U.S.Canopy Growth
Corporation (NYSE: CGC) (TSE: WEED) is a prime example of
a Canadian foray into the U.S. industrial hemp market,
having recently announced plans to invest up to US $150
million in the development of large-scale production capabilities
for hemp extraction and product manufacturing in the Southern Tier
of New York.It’s a logical move—especially considering the
“lucrative” U.S. federal crop insurance subsidies we mentioned
earlier.Via Market Watch:
"Over the new farm bill’s five-year life, the
Congressional Budget Office estimates that annual subsidies
totaling between $7.5 and $8.5 billion will flow to crop producers
and the insurance industry."
Canopy Growth is competing against the reigning
hemp-derived CBD producer, Colorado-based Charlottes
Web Holdings, Inc. (CSE: CWEB) (OTC: CWBHF) — a vertically
integrated producer of premium CBD wellness products who touts 300
acres of hemp planted as of 2018.Charlotte’s Web is of particular
interest, not only for their current dominance of the American
hemp-derived CBD market, but because they recently hired
Eugenio Mendez as their Chief Growth Officer.Mr. Mendez previously
served as Vice-President, Global Marketing of Water, Enhanced Water
and Sport Drinks for Coca-Cola.Could Charlotte's Web be gearing up
for an infused CBD beverage division?
The message is clear: CBD-infused beverages are
poised to become one of the marijuana sectors next biggest growth
segments, and cannabis companies know it. It’s
why Tilray (NASDAQ: TLRY) entered into a
research partnership with Budweiser brewer
Anheuser-Bush InBEV SA, an agreement in which both
companies are able to invest up to US $50 million towards the
research of non-alcoholic THC and CBD beverages.The message,
however, is nothing new. Investments from major alcohol companies
into the cannabis sector have been fueling speculation over the
direction of the CBD-infused beverage market for
months.Via Bloomberg:
"AB InBev is the third alcohol company to partner
or invest in a Canadian marijuana producer after [Canada] became
the first major economy to legalize marijuana in October.
Molson Coors Brewing Co. signed a joint
venture with Hexo Corp., while Constellation Brands Inc. is
now the biggest shareholder in Canopy Growth Corp . .
."
But while the number of major beverage companies
beginning to enter the CBD-infused beverage space is increasing, a
handful of companies have already set the stage to take advantage
of hemp's legalization.The Alkaline Water
Company (NASDAQ: WTER) (TSXV: WTER), a leading
producer of premium bottled alkaline drinking water sold under the
brand name Alkaline88®, is one of these such companies. The
Alkaline Water Company, which plans to launch their
CBD-infused alkaline water product line sometime in Q1 2019, has
already achieved a national presence in all 50 U.S. States, selling
their products in over 47,500 locations with a distribution that
spans more than 150,000 stores through the biggest national grocery
retailers such as Walmart, Kroger, Safeway-Albertsons and
CVS.Alkaline Water’s leading brand, Alkaline88®, is not only the #1
selling bulk alkaline water in the U.S,
but it’s the fastest growing premium water brand
in the U.S.And unlike many of the companies touting a
CBD-infused beverage line to excite the market, the Alkaline Water
Company has already been researching the infused space and has been
taste-profiling and testing product formulations for the launch of
their new product line.It’s already announced a co-packing
agreement with American Nutritional Products Inc. (ANP) for the
development of each of its recently announced hemp product
extensions.But that’s not all.
The First National U.S. Beverage of its
Kind
One of the biggest challenges when it comes to
infusing beverages with CBD, or hemp, is maintaining efficacy.But
Alkaline Water Company has already secured a deal that brings a
patent-pending process that can bring true water-soluble,
full-spectrum features of bioactive natural hemp extract molecules
to U.S. consumers.According to the Alkaline Water Company:
“The Alkaline Water Company Inc. has entered into a
Binding Letter of Agreement with Infusion Biosciences, Inc., that
provides a non-exclusive license to utilize its proprietary Aqueous
Phytorecovery Process (“APP”) technology.
Under the Agreement, IBS agreed to provide A88
Infused with ready-to-drink natural hemp-extract formulations.”
With APP’s formulations, A88 Infused is expected to
be the first national U.S. beverage
company to bring true water-soluble, full-spectrum
features of bioactive natural hemp extract molecules to U.S.
consumers.The Alkaline Water Company could very well be one of the
first U.S. beverage companies to bring CBD-infused beverages to the
market with distribution — creating a first-mover brand advantage
for CBD-infused drinks that could potentially rival the likes of
Canopy Growth, Tilray, and others…
The Year Of CBD-Infused
Drinks
Though the passing of the 2018 Farm Bill was a
watershed moment for the hemp-derived CBD market, state specific
legislation on industrial hemp production remains a potential
stumbling block for would-be farmers. As this legislation is ironed
out throughout the year and the reality of CBD-infused beverages
draws nearer, expect behemoth beverage companies to be caught
off-guard by smaller, more nimble drink companies — like The
Alkaline Water Company.
The original post can be found here:
https://mugglehead.com/what-the-2018-farm-bill-means-for-the-legal-cbd-market/
Directors of Mugglehead own shares of Alkaline
Water (WTER) at the time of this writing.
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