CannabisNewsWire
Editorial Coverage: This year will see the largest U.S. hemp
crop since changes to federal law created an avenue for production
to start again, turning over decades of fallowed industry.
- Thousands of acres of hemp will be harvested across 19
states.
- Kentucky is seeing particularly good crops, due to near-perfect
growing conditions over the summer.
- The main product taken from these crops will be cannabidiol
(CBD) oil, used in a growing range of health and wellness
products.
- Crop production is set to continue increasing in light of high
demand and legal changes.
To view an infographic of this editorial, click here.
Sugarmade, Inc. (OTC: SGMD) (SGMD
Profile) is profiting from this development by
expanding from hydroponics into investment in hemp production,
broadening its cannabis-related portfolio. Other companies are
expanding internationally. Tilray, Inc. (NASDAQ:
TLRY) is now working with affiliates and subsidiaries in
Europe, South America and Australasia. Cannabis grower
Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) has
drawn billions of dollars in investment from the beverages industry
as big companies look to get into the market. And Aurora
Cannabis, Inc. (NYSE: ACB) (TSX: ACB) has established an
extensive network of supply agreements across Canada, which will
help to raise sales and awareness of cannabis and related products.
New uses are also set to increase demand, thanks to research by
companies such as Cronos Group, Inc. (NASDAQ: CRON) (TSX:
CRON).
Farmers Count the Green from Growing Hemp
Harvest
As summer turns to fall, a small number of U.S. farmers are
bringing in a new harvest — hemp. For some states, this is the
first time that the crop has appeared in more than 50 years because
hemp had been outlawed under sweeping anti-cannabis legislation.
The last few years have seen significant changes, primarily because
the nation’s 2014 Farm Bill funding provisions authorized limited
hemp cultivation, and several states began supporting the crop. Now
hemp is making a comeback.
This promises to be a good year for hemp. Early indications are
that farmers will see a robust crop with a high market value. The
growth of the market for CBD oil means that there are plenty of
outlets not just for hemp fibers but also for the plant’s other
derivatives. And these first successful harvests, accompanied by
pending legal change on the federal level, are set to establish
hemp as an important crop over the next decade.
The 2018 Hemp Harvest
The past year has seen big growth for hemp. In 2017, the acreage
of hemp production expanded by 163
percent through agricultural sites in 19 states. Now the
largest hemp harvest of the new era is expected. It’s good news for
companies invested in hemp, such as Sugarmade, Inc.
(OTC: SGMD).
Like several of the companies involved in the hemp industry,
Sugarmade was drawn to the sector by an interest in the wider
cannabis market. The company’s main business is the supply of
hydroponic equipment used for indoor agriculture. The growth of the
legal cannabis market has fueled profits for Sugarmade as growers
have valued its supplies. Now the company is diversifying its
presence in the thriving sector.
When it comes to driving business, hemp is a beast that is very
different from recreational marijuana. While both are forms of
cannabis, industrial hemp has very low quantities of
tetrahydrocannabinol (THC), the ingredient in cannabis that gets
users high. In Kentucky, for example, hemp plants must have
no more than 0.3 percent THC. Hemp is also
grown differently, using large-scale outdoor cultivation rather
than the intensive indoor methods used for other forms of
cannabis.
Moving into this part of the market involved a different
approach by Sugarmade. Instead of simply relying on its presence as
a supplier of tools and equipment for profits, the company has
committed a million dollars to investment in
Hempistry, Inc. Hempistry’s hemp cultivation is based in
Kentucky, the state with the third largest
acreage of hemp growth, just behind Oregon but far behind
Colorado, which is home to nearly as much hemp as the next three
states combined.
While the top states have thousands of acres of hemp under
cultivation, others are just starting to get involved, thanks to
smaller scale projects. Washington State saw its first 175 acres of
hemp planted in 2017, while Minnesota went from 51 acres in 2016 to
1,205 acres in 2017.
Kentucky has seen a particularly good year for hemp. Almost
perfect growing conditions over the summer and early fall are
setting it up for a bumper harvest. Sugarmade executives, including
CEO Jimmy Chan, have visited the Hempistry project to inspect it
and found that it lived up to the hype. It is seen as
ultra-premium-grade hemp, perfect for extracting one of the biggest
products to come from hemp — CBD oil.
CBD — Key to the Hemp Market
Hemp isn’t a new crop, even if its appearance in current markets
seems like a novelty. As long ago as the Mayflower pilgrimage, hemp
fibers were used in North America to produce rope and canvas for
sailing ships. Even in the early 20th century, just
before it became illegal, it was mostly grown for these fibers.
Now, that has changed.
Hemp fiber still has value in producing everything from cloth to
construction materials. But the real wealth is in CBD oil. This is
why Hempistry has built a crop labeled as ultra-premium and why
Sugarmade determined to invest one million in the business.
While CBD doesn’t have the psychoactive effects of THC, it’s
still an active ingredient in cannabis that produces a chemical
response in users. Research into its effects is in its infancy,
thanks to so many years without businesses backing. But studies
over the past decade have led to its use in a wide range of health
and wellness products. Some of the highest-profile research has
focused on its potential use in tackling epilepsy, but CBD oil is
turning up in a huge range of products that appear to impact
everything from pain management to improving mental processes.
The CBD market is growing enormously in the United States and
beyond. The large, healthy harvests coming out of Kentucky should
find no shortage of demand for the oil extracted from its plants.
Sugarmade’s first foray into CBD has all the signs of success.
Where Next for Hemp?
Based on these results, Sugarmade has already begun plans to
significantly expand its hemp operations next year. Hempistry has
optioned 23,000 acres for potential hemp cultivation, more than is
currently growing in the top five states put together.
Statistics taken from the Hemp Business
Journal show that the U.S. hemp industry saw at least $820
million in revenues in 2017. Some experts forecast that number to
increase to more than a billion dollars in 2018 and continue to
grow at a compound rate of 14 percent per year until 2022. This
increase is driven in part by growth in demand and in part by
changes to the status of the hemp industry.
Central to this is the new version of the Farm Bill currently
being considered by the U.S. Senate. The bill includes clauses with
cross-party support for hemp cultivation that would expand the
potential for farming. Hemp is currently restricted to trial crops
and scientific studies, but under the new bill, it could be grown
as a regular crop by farmers across the country.
This legal change will let companies such as Sugarmade support
the cultivation of large quantities of hemp to meet the huge demand
for CBD oil. And if that demand keeps growing, the industry could
take off at an exponential rate.
Reaping the Benefits
This growth isn’t just taking place in America. Demand for CBD
oil and other cannabis-related products is expanding around the
world, as is the industry meeting that demands. Tilray,
Inc. (NASDAQ: TLRY) manufactures products used by
thousands of patients, researchers and physicians across the globe,
and is building that international reach. In addition to affiliates
in Australia, Canada, Germany, New Zealand and Portugal, the
company recently acquired Alef
Biotechnology SpA in Chile.
One of Canada’s largest cannabis companies, Canopy
Growth Corporation (NYSE: CGC) (TSX: WEED) has drawn
jaw-dropping financial backing from beyond the cannabis industry.
American beverage company Constellation Brands’ $4 billion investment will allow the two companies to
develop CBD-infused drinks, building a leisure market for
ingredients derived from hemp. With a corporate giant such as
Constellation taking an interest, pressure is likely to grow for
further reform in Washington, easing the way for growth in the hemp
industry.
Canopy Growth isn’t the only big player in Canada, where the
recent legalization of recreational cannabis is set to supercharge
the industry. Aurora Cannabis, Inc. (NYSE: ACB) (TSX:
ACB) is one of the big players and has already established supply agreements that will let it sell
products in provinces across the country. Increasing public
awareness of cannabis, driven in part by such supply channels, will
also increase awareness of related CBD-based products, with a
supplemental boost for hemp.
Meanwhile, researchers continue to find new uses for CBD and
other cannabinoids. Cronos Group, Inc. (NASDAQ: CRON) (TSX:
CRON) has recently announced
new work with the Technion–Israel Institute of Technology to
explore the use of cannabinoids in skin care. Not only are existing
markets expanding, but new ones are being created as additional
promising uses for cannabis-based products are found.
This year’s bumper hemp crop looks to be just the beginning of a
burgeoning industry with an exciting future.
For more information on Sugarmade, visit Sugarmade, Inc.
(OTCQB: SGMD)
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