Upcoming CBD Shortage is an Opportunity for Cost-Efficient Producers to Expand

New York, NY – May 30, 2019 – Few developments have been as game-changing for the cannabis industry as the U.S. Farm Bill. While demand for cannabis will remain strong over the upcoming years, experts are anticipating that the hemp industry will become a new big player in the marketplace. Ever since hemp agriculture was legalized thanks to the U.S. Farm Bill signed December last year, cannabis companies around the world have jumped on the opportunity to get in on ground zero of this sector. Well known Canadian listed companies such as Charlotte’s Web Holdings Inc. (OTC:CWBHF) (CSE:CWEB), CV Sciences Inc. (OTC:CVSI), Liberty Health Sciences (OTC:LHSIF) (CSE:LHS), Namaste Technologies (TSXV:N)(OTC:NXTTF), and StillCanna Inc. (CSE:STIL) (OTC:SCNNF) have all been making major moves in the growing hemp market.


Analysts at the Brightfield Group predict CBD will grow from a $600 million sector this year to $22 billion by 2022. With the US Farm Bill in effect, demand for hemp is expected to spike over the upcoming year as cannabis companies switch to sourcing hemp for their CBD.


The Growing Market for Hemp


While interest in hemp-based products has been growing, the current demand is only at a fraction of what it is expected to be. Just as Canadians saw drastic supply shortages after the demand for cannabis spiked post-legalization, so too will the CBD industry. For this reason, companies that can scale up hemp production in a way that’s cost-efficient are in the best position to dominate the market when CBD supplies become tight.


One of the first-movers in Europe when it comes to cost-efficient hemp cultivation is an up and coming company called StillCanna Inc. (CSE:STIL) (OTCPK:SCNNF).  The company boasts one of the lowest production costs of CBD isolate with a production cost of just $744 per kg. The wholesale price for hemp isolate is currently $6,077 per kg. Their new facility in Poland is expected to bring 2019’s production output up to 16,000 kg and in 2020, the Company’s output is expected to produce over 40,000 kg of CBD isolate.


Hemp-derived products are quickly becoming mainstream as Dr. Oz and Dr. Gupta spoke about “The CBD Oil Boom”. Even retail chains that haven’t traditionally embraced cannabis products, such as drug store chains and pharmacies, are stocking CBD products now. Walgreens has already announced they will be selling hemp-derived products in over 1,500 stores recently. Another major retailer, CVS, is already selling hemp products at over 800 locations in the U.S.


Charlotte’s Web Holdings Inc. is perhaps the biggest player in this market. Producing around 675,000 lbs of hemp in 2018 with more than 700 acres planned in 2019, the company’s revenue increased by 74 percent last year. The second largest company in the hemp market, CV Sciences Inc., has also seen significant growth even prior to the US Farm Bill passing. Over the past year, the company’s sales have increased by 200 percent and currently holds 11% of the overall hemp market.


Many retail-based cannabis companies have already embraced hemp-products into their line-up with great success. Namaste Technologies is one such example. Unique in the sense that they focus exclusively on online sales, the company owns 24 unique websites and brands, with many of them focusing on hemp products. Even in the medical market, hemp has surged in popularity. Companies that focus mainly on the health sector, such as Liberty Health Sciences, has seen a surge of hemp-product sales based on the reported medical benefits of the plant.


The Rise of Cost-Efficient Producers


StillCanna Inc. (STIL-SCNNF) has also been completing several strategic partnerships to further expand its capacity. They just recently finalized a deal with California-based BioSciences Enterprises for C$36 million, giving them a steady pipeline to sell their European produced CBD into the U.S. market. Richard Parker, President of Biosciences, said that “not a day goes by that our firm isn’t looking for a company like StillCanna, but finding a knowledgeable seed to shelf CBD manufacturer in this young industry is extremely rare.”


Other major deals that StillCanna signed include a $48 million agreement with one of the biggest CBD retail suppliers in Europe, DragonFly BioSciences. The deal would see StillCanna act as DragonFly’s sole processor of CBD, a significant achievement for a company that small.


Further Cannabis Developments


Charlotte’s Web Holdings Inc. (OTCQX:CWBHF)(CSE:CWEB) recently posted their Q1 earnings report for 2019. So far Q1 sales grew by 66% to $21.7 million, impressing analysts with steady growth. Ever since Congress passed the Farm bill legalizing hemp production, analysts expect this to be a game changer for the company.


Cannabinoid (CBD) oil is being used in a study with patients suffering from Post-Traumatic Stress Disorder (PTSD). CV Sciences Inc. (OTCQB:CVSI), a manufacturer of hemp base CBD-products, will be using their signature CBD-oil products in this clinical trial published in the Journal of Alternative and Complementary Medicine.


Liberty Health Sciences (OTCQX:LHSIF)(CSE:LHS) announced earlier in May that they had made some key executive changes. The biggest change was Sheri Cholodofsky, who was appointed as the new chief financial officer. She would be replacing the company’s former CFO, Jeff Chan, who filled the position as an interim CFO after the resignation of Rene Gulliver.


Ongoing development for Namaste Technologies (TSX-V:N)(OTCQB:NXTTF) has been its struggle to find an auditor after PricewaterhouseCoopers resigned from the role. Since then Namaste has issued management a cease trade order and just recently provided an update regarding their newest additions to their advisory board.


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