CannabisNewsWire
Editorial Coverage: With the end in sight for the 2018 U.S.
Farm Bill, which contains provisions likely to grant hemp full
agricultural legalization, and revenues from existing hemp products
rising, hemp farmers are seeing reasons for excitement this
fall.
- The Farm Bill is set to finally pass through Congress in the
near future.
- Predicted hemp revenues for the next few years are
soaring.
- Hemp is doing particularly well in states with supportive
politicians, such as Kentucky.
Sugarmade, Inc. (OTC: SGMD) (SGMD
Profile) has made the most of this opportunity through
investment in Hempistry, a hemp cultivator with big plans for
expansion. The popularity of cannabidiol (CBD) products means that
hemp may soon surpass the value of other cannabis products, which
is providing strong profits for companies such as Tilray,
Inc. (NASDAQ: TLRY). This popularity will likely to lead
to growth in the food and beverage industry, one reason why
Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) has
received substantial investment from that sector. HEXO
Corp. (OTC: HYYDF) (TSX: HEXO) plans to increase its
310,000 square feet of cannabis cultivation space to almost 1
million square feet by the end of the year. Meanwhile,
Aphria (NYSE: APHA) (TSX: APHA) is developing new
products to tap into Canada’s lucrative market.
To view an infographic of this editorial, click here.
Hemp Rides High on Wave of Change
Four years ago, it would have been virtually impossible to talk
about a hemp industry in the United States. As a variety of the
cannabis plant, hemp had been made illegal under legislation
decades ago despite not containing significant quantities of the
active drug compound that gets marijuana users high from other
distinct forms of cannabis. State level reforms had done nothing to
protect hemp on a federal level, and the plant was struggling to
make its mark.
All that changed with the 2014 Farm Bill, which allowed for the
cultivation of hemp at trial and research sites. Together with the
emergence of laws in more cannabis-friendly states, this has
allowed the industry to take off in a big way. Hemp is being put
forward as a potential cash crop to be used in producing fibers,
medicines and health foods. Farmers are starting to see big profits
from hemp crops. And with fresh legislation on the verge of passing
in Washington, the industry appears set for a surge in growth.
Fighting over the Farm Bill
For companies invested in hemp, such as Sugarmade, Inc.
(OTC: SGMD), one piece of legislation has dominated
the political landscape over the past year — the 2018 Farm
Bill.
Farm bills are pieces of legislation passed by Congress every
few years as the previous iterations expire. They set out
government policies on issues of agriculture and food supply. As
complicated pieces of law covering multiple topics, these bills are
much haggled over by both houses, and the 2018 bill has been no
exception. Divisions over food stamp rules and immigration policy
has held up its passage for months.
This year’s farm bill has Sugarmade’s attention because of a
section that will remove quality hemp production from drug
enforcement restrictions nationwide. Backed by Senate
Majority Leader Mitch McConnell, this has been one of the less
controversial parts of the bill despite hemp’s illicit history. The
possibility of offering struggling farmers a valuable cash crop is
one that both parties can get behind.
Unfortunately, this important change for hemp was left in limbo
thanks to the other battles over the bill. But now discussions in committee are finally moving towards a
finished bill that unifies the House and Senate versions, as the
lame duck Republican house majority tries to pass a law it can
stomach before control of a dominant voting bloc passes to the
Democrats.
Bottom line: the legalization of hemp cultivation could be just
days away.
Hemp Heads into the Mainstream
This political change has been facilitated by shifting public
attitudes towards hemp. The plant is increasingly popular in food
and body care products and has been singled out as
one of the top trends for next year by Whole Food Market.
That’s good news for Sugarmade, which recently
launched its own industrial hemp initiative, as it means
there’s not just a consumer market for hemp-derived products but
also the political will to make production easier.
These shifts in attitudes are reflected in the varying fortunes
of states as well, with some receiving far stronger support for
their hemp industry than others. For example, Kentucky’s hemp
industry is bolstered by advocacy from the state’s politicians.
Congressman James Comer has been outspoken in
supporting the state’s industry and in pushing to get the Farm Bill
approved.
Sugarmade is among the companies benefiting from Kentucky’s
positive attitude towards hemp. The business has invested $1 million in Kentucky hemp company Hempistry
to support its high-grade hemp operation for the U.S. market.
Harvest of this year’s crop has recently started, following a test
harvest of samples by the Kentucky Department of Agriculture (KDA),
and the company is inviting interested parties to place bids on the
crop. With demand for hemp rising, Hempistry’s legally grown,
CBD-rich crop is likely to be in high demand.
Rising Hemp Revenues
One of the reasons behind Sugarmade’s investment in Hempistry is
the dramatic rise in revenues from hemp crops. A few years ago, no
one could have predicted the popularity hemp would achieve by 2018.
The crop was mostly a side note, a reminder of the days when its
fibers were used to make ropes and sales. When interest in CBD
started to expand, producers realized that it could be extracted
from industrial hemp. By turning this interest into a separate
industry, businesses could sell CBD without becoming entangled in a
mass of legal and social uncertainties.
Companies that have made strong investments in hemp cultivation,
such as Sugarmade, will gain considerably from hemp’s ascendancy,
to the benefit of managers and common share investors. Jimmy Chan,
CEO of Sugarmade, commented, “Demand for industrial hemp and
products derived from hemp is soaring with no let up in sight. We
expect our direct investment into Hempistry to be accretive to
common shareholders, and our supply agreement to be lucrative. All
of us at Sugarmade see a tremendous opportunity to become a
supplier to this fast-growing sector.”
Expanding the Hemp Harvest
With the hemp market growing so fast and the Farm Bill promising
to make hemp farming easier, many companies are looking to expand
their operations. Having just harvested 100 acres of CBD-rich hemp,
Hempistry is focusing on achieving a 10-fold increase in its
acreage next year, which would make it one of the largest hemp
cultivators in North America.
This expansion is happening alongside that of companies in the
related cannabis sector. In Canada, recreational legalization has
been big news for companies such as Tilray, Inc. (NASDAQ:
TLRY), one of the largest cultivation companies in the
country. A leader in research, production and distribution, Tilray
has seen staggering financial growth over the past year, with an
85 percent rise in revenue during the third quarter
and a 78.9 percent rise for the year to date. Legal and social
changes have created the space for a substantial new industry to
flourish across North America and beyond, bringing in big bucks for
the companies that pioneered the sector.
Growth into the beverage and whole food markets is a likely next
step for many hemp and cannabis companies, and big players on the
inside of those industries have started to take note. Constellation
Brands, a leading American beverage manufacturer, has invested
billions of dollars in Canopy Growth Corp. (NYSE: CGC)
(TSX: WEED), one of the largest cannabis growers in
Canada. Canopy Growth is relatively small fry compared to the power
of Constellation Brands, but the funds such a corporate giant can
spare make a big difference in an emerging industry. The result is
likely to be the development and marketing of CBD-infused foods and
drinks, pushing the industry into places it hasn’t previously
reached.
HEXO Corp. (OTC: HYYDF) (TSX: HEXO) produces
cannabis through its Hydropothecary brand and recently announced
plans to develop nonalcoholic, cannabis-infused beverages with
Molson Coors Canada. This joint venture with one of the world’s
biggest beer makers is a significant move to position HEXO in the
burgeoning cannabis-infused drinks market. The company also
announced that it has closed on the acquisition of its first major
facility outside of Quebec.
Aphria (NYSE: APHA) (TSX: APHA) has also seen
rising revenues and profits since 2016, thanks to the growth of
this innovation-led market. It recently announced a collaboration with Perennial, Inc., to develop
products for the Canadian market, a critical region for any company
looking to expand beyond the United States.
With hemp revenues on the rise and politicians about to ease the
way for hemp farmers, this is a sector that’s likely to keep
growing in strength for years to come.
For more information on Sugarmade, visit Sugarmade, Inc.
(OTCQB: SGMD)
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