Monday, December 31, 2018

Cannabis Companies Expect Big Growth After Trump Legalizes Hemp

By Lawrence Carrel
Source: forbes.com


Hemp plants grown for medical research purposes in Thailand. Taylor Weidman/Bloomberg© 2018 BLOOMBERG FINANCE LP
Lost in all the hoopla over the government shutdown is the fact that President Donald Trump just made hemp legal in all 50 states.
The 2018 Farm Bill Trump signed earlier this month allows for hemp cultivation and the transfer of hemp-derived products across state lines for commercial or other purposes.
Now that Jeff Sessions, one of the Trump Administration's biggest opponents to legal marijuana, is no longer the U.S. Attorney General, the Feds have removed all restrictions on the sale, transport, or possession of hemp-derived products produced in a manner consistent with the law. This means life for sellers of Cannabidiol, better known as CBD, just got a lot easier.
Hemp and marijuana are both Cannabis plants, but hemp has less than 0.3% of THC, the psychoactive chemical that gets folks high. Marijuana has between 5-35% of THC.
Hemp has many industrial uses and can be found in food, clothing, body care products and even automobiles, according the ministryofhemp.com. One of its growing uses is for the extraction of CBD oil, another chemical in the plant that has medicinal purposes, but doesn't get folks high.
People claim CDB can treat ailments such as anxiety, depression, stress, insomnia, muscle inflammation, joint pain, and even acne. The Cannabis industry isn't just selling marijuana in states where it's legal. CBD, which is put into oils, lotions and foods, has become a significant source of revenue for the industry in states where marijuana is still illegal.
Even though hemp can't give you a buzz, all cannabis plants were outlawed in 1970, when the Drug Enforcement Administration was created and began fighting "The War on Drugs." The new Farm Bill, which allocates billions of dollars in subsidies to American farmers, ended all that.
The new law means the makers of CBD products can buy raw materials across state lines and sell their products without the threat of arrest. Almost as important, the Farm Bill lets hemp growers apply for federal crop insurance, and allows CBD product makers and sellers to receive financial services from banks and credit card processing companies. This is huge, as the inability to do non-cash financial transactions has been one of the major roadblocks to the industry.
I attended the Cannabis World Congress & Business Exposition in New York over the summer. At the exposition, which was pretty much an industry trade show, I met a lot of people in the industry who are not growing or selling marijuana. These many businesses support the sale of this newly legal product. I decided to do an informal survey to see how these owners of small businesses had fared in 2018, what big problems they faced, and how the future looks with the Farm Bill signed.
Senate Majority Leader Mitch McConnell, (R) Kentucky, holds a hemp pen before the start of a signing ceremony for H.R. 2, Agriculture Improvement Act of 2018, at the White House in Washington, D.C., on Thursday, Dec. 20, 2018. The Trump administration's aid package for U.S. farmers made hemp legal in all 50 states. Zach Gibson/Bloomberg© 2018 BLOOMBERG FINANCE LP
High Falls Agriculture/High Falls Extracts
Rick Weissman co-founded High Falls Agriculture with his wife Sheila Doyle in 2017. The company received a license to grow hemp in High Falls, N.Y., and produced its first harvest in 2018, growing 1,500 pounds of hemp on about 12 acres.
He said his marketing company, High Falls Extracts, which launched seven months ago, will extract CBD oil from the hemp and create a new line of products.
Since they hadn't yet produced any CBD products on their own, in 2018 the company started by buying CBD products from Colorado and branding them under the High Falls name. From September through December, they have seen average revenue growth of 32% compounded month over month, which is about 20% higher than their projections.
He said the company has been relying on market channels that include word-of-mouth, social influencers, wellness ambassadors, sales people and attending events as a vendor where they introduce the product to people and give out samples
Next year, the company expects to extract CBD oil from its own crop and produce its own products. Weissman's aiming to produce 1,000 pounds an acre. He said compared to hay which sells for between $500 and $1,000 an acre, he expects to make as much as $50,000 an acre, including the CBD extraction and selling products containing the oil. He also expects to get more farmers to let his company grow hemp on their land.
"The one thing I like about this business is I don’t think its correlated with the rest of the world or stock market," said Weissman. "It's going up regardless. I think the applications for hemp-derived CBD could be extremely large, and exceed the $50 billion for the marijuana black market."
One of the biggest problems the company experienced in 2018 was with its credit card processor. Before the Farm Bill, the sale of hemp and marijuana was restricted by the federal government. This led most banks, credit card companies and other payment systems to refuse to process payments for sales of cannabis products.
The company had established an account with federally chartered bank, but the credit card processor routed transactions through the United Kingdom because the mainstream credit card merchants weren't allowing this to occur. This led to questions of fraud activity by the credit card processors, as well as, clients using their products.
However, three weeks ago, High Falls switched processing to a U.S. bank. This removed the routing through the U.K. and its fees dropped from 6% to 3.5%.
Arder Botanicals
Heather Lambert, the co-founder of Arder Botanicals, a seller of CBD products in Augusta, Ga. had similar problems.
After forming the company in July 2018, she said, "Our credit card processor shut us down. There is a lot of uncertainty over legality and one day it decided it didn't want to process CBD merchants any more. It's very hard to find credit card processors that aren't overseas."
Since the company is a mail order ecommerce firm, this pretty much destroyed revenue generation
"A lot of people we know used PayPal (PYPL) or Square (SQ)," said Lambert. "But if they catch you they would usually hold funds that CBD merchants had received for up to six months." She added that Arder's problem just got resolved this month, by Elavon, one of the major credit card processors.
Proactive Data Storage and Monitoring
New York-based Proactive Data Storage and Monitoring provides affordable storage and archiving of video surveillance to help cannabis companies meet legal requirements.
Tom Maggio, the company's chief executive, said states are requiring cannabis companies to store two years of video surveillance for all cameras.
"In Pennsylvania, this whole thing could potentially cost $400,000 to store that video for two years," said Maggio. "My one-time fee is closer to $45,000."
"The cannabis world is tremendous and it’s really grown," he said. "It's mind blowing how many people are opening up businesses. We’re working with companies out of Maryland and California, some with 100 locations."
Maggio said Proactive's revenues from cannabis quadrupled in 2018, from 10% to 40% of total sales. On a percentage basis, Maggio said his entire business has quadrupled every quarter in 2018. In dollar terms, he said it's in the high six-figures.
International Cannabrands
Of course, come of these small companies are hoping to grow to a point where they hope they can make their millions when a larger company buys them and the founders can cash out.
In that case, Steve Gormley may be the guy giving you a call. Gormley is the chief executive of International Cannabrands, a publicly traded Canadian company that is an aggregator of profitable middle-market cannabis brands. The company, which trades on the Canadian Securities Exchange under the ticker symbol (JUJU), is best know for its JuJu Royal brand of naturally produced medicinal herbs.
"It’s a branded space where no one company owns more than 4% of the market in any state and companies with strong brands trade at a higher multiple."
As of March 31, 2018, the company reported revenue of $45,117, double the sales of the quarter a year earlier and posted a net loss of $520,802. Although there are not any financials reported since then, Gormley said the company's revenues are up 15% from the third quarter.
His advice to people who want to enter the industry, "Go into distribution if you want to double revenue. In retail it's always distribution. And you're talking about making straight money, the best margins are in cultivation and manufacturing. Those are the highest margin businesses. Manufacturing is all about the creation of the oil. All your cogs go down with distribution, like any other retail business."
Viridian Capital Advisors
If you're one of those companies hoping that one day you might want International Cannabrands to buy you out, you need to talk to Scott Greiper, the president of Viridian Capital Advisors, a boutique investment bank based in New York, with offices in Canada and Israel.
Viridian invests in private, market-share leading businesses in different sectors of cannabis industry that are looking for experienced management teems.
Launched in 2014, the firm helps companies raise capital, build boards of directors, establish governance controls, drive joint venture opportunities and perform mergers and acquisitions.
Viridian is totally focused on the cannabis industry. Over the past 12 months Viridian's business has increased about 350%, said Greiper.
He added that the amount of capital the firm has raised for clients has increased 250%.
Over the past few years, Greiper said the firm's capital raises were in the range of $1 million to $5 million. This year, capital raises have increased to the range of $15 million to $25 million.
For the first three quarters of 2018, Viridian reported that $6.0 billion in capital had been raised in 420 individual raises. The total year-over-year growth in dollars was 226% over the same period in 2017. The number of raises grew 50% year over year.
Greiper said that the pace of legalization is accelerating around the world, not just in the U.S., for both medical and recreational marijuana.
"This is a very dynamic marketplace for investors and acquirers," said Greiper. "This is driving companies to become more efficient and more profitable operators."
He said the biggest drivers for creating a large consumer market are: the lifting of the stigma of marijuana; globalization; more advanced technology for agriculture, genetics, biotechnology, and the extraction business coming into a mom-and-pop industry
This is leading to greater efficiency, economies of scale, and lower costs of production.
Vista Green Group
Ron Smalley Jr. runs Vista Green Group, a consulting firm based in Portland, Maine. Since 2012, Vista Green has built a team of experienced medical cannabis professionals to help young companies navigate the rapidly expanding cannabis marketplace, with knowledge, support and resources such as legal work, accountants, application writers, architects and engineers to help design facilities and oversee construction and help with horticulture and cultivation.
This past year, the company saw revenues grow 30% year over year and posted a profit. Smalley expects similar growth next year.
"In the near future, there is a great opportunity for the products controlling the raw materials and the processing of raw materials," said Smalley. "Right now we're seeing a bottleneck in processing, and it costs millions to bring on new products. There are plenty of farmers, it's the bottleneck of processing holding things back. Over the next 12 months you’ll see huge growth in the hemp industry for plastics and fiber."
Vicente, Sederberg
Brian Vicente has been working on marijuana laws since graduating law school in 2004. He's the founding partner of Denver law firm Vicente, Sederberg. The firm's entire business revolves around the cannabis industry.
Vicente, who has written ballot initiatives around the country, represents patients and caregivers. The firm helps people who want to start a new business and helps investors place capital in some of the larger companies. He said over the last 12 months, the biggest change in his business has been the increase in work from cbd and hemp companies.
"Up until about two years ago, our business was 100% about recreational or medical marijuana. But now there's been a real dramatic shift," said Vicente. "Hemp and CBD companies now make up 50% of all the calls coming into the firm.
Vicente said the firm is profitable and that revenues have gone up by 30% to about $12 million. He said he expects to see substantial growth in 2019, as more states pass marijuana laws, and growth in the CBD market.
"The biggest issue facing the industry is will the Feds legalize marijuana?" said Vicente. " We believe marijuana prohibition is a failed policy. I think there's about a 70% chance that it happens next year. The more states that make it legal the better it is."

Thursday, December 27, 2018

2019 will witness the birth of many inventive CBD products

By Michelle Coluccio
Source: connoils.com

Benefits of CBD oil & oil powders

CBD oil is an all-natural alternative to medicines with nasty side effects, which can be worse than the symptoms of the original problem in many cases.

Common uses for CBD oil:

  • Decreasing inflammation
  • Controlling anxiety
  • Controlling seizures
  • Antipsychotic
  • Reducing addictive behaviors
 
  • Gastrointestinal inflammation relief
  • Promotes clear skin
  • Protecting cardiovascular health
  • Glycemic control for Type 2 diabetes
  • Chronic & acute pain relief


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As a single-source custom bulk supplier, we’re competitively priced in CBD oils and powders. Through our Peterson Plant Products (PPP) company, we plant or source conventional, organic and biodynamic products with full traceability and quality documentation, ensuring you meet the regulatory standards of your industry.

Is CBD Helpful, or Just Hype?

By Richard A. Friedman
Source: nytimes.com


Ronen Tivony/NurPhoto, via Getty Images


Suddenly, CBD is everywhere. CBD, short for cannabidiol, a non-psychotropic component of cannabis and hemp, is being promoted as the latest miracle cure. Enthusiasts rave about its supposed anti-anxiety, anti-inflammatory, antidepressant and, well, anti-everything-you-don’t-like effects.

You can get your CBD in a cocktail (a “Stoney Negroni” is being served at a Queens bar), skin creams and coffee. It’s only a matter of time before it turns up in avocado toast.

From pills to edibles, CBD is wildly popular, and it is easily available online and in stores. Indeed, sales are predicted to reach $22 billion by 2022, according to the Brightfield Group, a cannabis market research firm.

I first encountered CBD while on sabbatical a few years back. As I drove up the Oregon Coast Highway, it was hard to miss all the cannabis shops along the Pacific. I stopped in one, perused the menu, and selected two marijuana specials — Nine-Pound Hammer and Trainwreck — and some CBD gummy bears. The cannabis was, well, as advertised, and the CBD candy, as far as I could tell, was a fruit-flavored placebo.

Many of my patients have tried it or want to learn more about it. One of them, an educated, successful and anxious man in his 40s, recently told me he tried mixing CBD oil in his tea, but it didn’t make him calmer. Then he rubbed the oil on his injured knee, and pronounced it a magic cure.

Which invites the critical question: Just how effective is CBD, and for what kinds of ills?

Cannabidiol has little direct effect on the cannabinoid receptors in the brain, so it is largely devoid of the euphoric effects of THC, the major intoxicant in marijuana. But if CBD really had no psychotropic effect at all, it would be hard to understand its popularity. In fact, because it alters the brain’s serotonin receptors and may interfere with the breakdown of anandamide — a cannabidoid that is produced naturally in the brain — it could well affect feeling and thinking.

But what does the evidence show?

In 2017, the National Academies of Sciences, Engineering and Medicine convened a panel of experts to review the health effects of cannabis and cannabinoids. They examined more than 10,000 studies,most of which examined marijuana, not CBD. They found evidence that some cannabinoids — not including CBD — are effective for pain, nausea from chemotherapy and muscle spasms in multiple sclerosis.

When it comes to CBD, the panel found only a few small randomized clinical trials, and concluded that there was insufficient evidence that CBD was effective in treating conditions like insomnia, addiction to cigarettes and Parkinson’s disease, and limited evidence in its ability to treat anxiety.

This year, the Food and Drug Administration approved Epidiolex, a CBD concentrate, for two rare and severe forms of epilepsy, on the basis of several clinical trials.

To be fair, the paucity of data about CBD’s efficacy and safety in part reflects the federal government’s irrational restrictions on cannabis research. Because cannabis is classified as a Schedule 1 drug, you need a license from the Drug Enforcement Administration to research it and, until two years ago, you could use only the cannabis grown at the University of Mississippi.

The good news is that in 2017, the National Institutes of Health funded cannabinoid research to the tune of $140 million, including $15 million on CBD. The F.D.A. also loosened restrictions on CBD research in 2015 and has announced that it is considering “pathways” to allow the sale across state lines of CBD in food and beverages, sales now confined to states that have approved CBD use.

Still, the explosive popularity of CBD is way ahead of any evidence to support its efficacy — or reliable reassurances that it has no serious adverse effects. Where is the healthy skepticism when we need it?

The public, rightly, is quick to demand proof of safety and efficacy when it comes to synthetic pharmaceuticals. Why should natural products, like CBD, get a pass?

Perhaps it’s because many people have romantic and misplaced notions about nature. Some even point out that we come hard-wired with cannabinoid receptors in our brains and they must have a purpose, so why not use them? This is not exactly a persuasive argument: Nature endowed us with our own cannabinoids, so unless you have a deficiency of them or sluggish receptors, you really don’t need supplementation.

Consumers who are still keen on the idea of CBD might want to know exactly what they are getting for their money — considering that the manufacturing of CBD products is completely unregulated.

Here, the evidence is not going to make them happy. A 2017 study in JAMA reported that only 26 of 84 samples of CBD oils, tinctures and liquids purchased online contained the amount of CBD claimed on their labels. Eighteen of them contained THC, which could lead to intoxication or impairment in some individuals. And a quarter had less CBD than advertised. The F.D.A. has likewise found many products that did not contain the amount of CBD they were claiming.

Future studies may show otherwise, but at present CBD looks more like an expensive placebo than a panacea.

These States Are Most Likely To Legalize Marijuana In 2019

By Tom Angell
Source: forbes.com

With the results of last month's midterm elections—which marijuana basically won—ten states have now legalized cannabis for adults, while 33 allow medical use. Those victories at the ballot box capped a year in which the fight to reform prohibitionist cannabis policies advanced significantly at the state, federal and international levels.
GETTY
The tally of states that allow the use of marijuana is poised to jump in a big way again in 2019, largely because a slew of pro-legalization candidates for governor also won at the ballot box on Election Day—giving cannabis reform bills a huge boost toward being signed into law sooner rather than later.
"2019 could be a banner year for legalization via state legislatures," Mason Tvert, spokesman for the Marijuana Policy Project, said in an email. "Several states across multiple regions of the country are strongly considering ending prohibition and regulating marijuana for adult use. A growing number of state lawmakers and governors are either getting behind these efforts or coming to the realization that they cannot hold them up much longer. The steady growth of public support we’ve been seeing around the country will likely translate into some major state-level victories for marijuana policy reform."
Here are the states that are most likely to legalize marijuana next year, in alphabetical order:

Connecticut

Gov.-elect Ned Lamont (D) said during his campaign that marijuana legalization is "an idea whose time has come." He followed that up after his win on Election Day by pledging during a transition press conference that moving on the issue will be one of his "priorities" in 2019.
Meanwhile, the state Senate president, who sponsored a legalization bill last year that didn't move under unsupportive—but outgoing— incumbent Gov. Dannel Malloy (D), says that passing a bill next year is "a significant revenue item" for the state.
Even the House Republican deputy minority leader, who opposes legalization, says he "would think it would pass" when it is brought to a vote on the floor. "Many of those opposed to legalization have left the Legislature."

Illinois

Incoming Gov. J.B. Pritzker (D) made support for legalizing marijuana a centerpiece of his campaign, beginning in the primary race against fellow Democrats. At one point he even held a press conference outside of a medical cannabis dispensary.
Shortly after Election Day, Pritzker confirmed that he wants to pursue legalization "nearly right away" when the new legislature convenes.
And the state House speaker, who until now has been noncommittal on ending cannabis prohibition, says he's on board with the incoming governor's marijuana plans.
A study from the Illinois Economic Policy Institute and the University of Illinois determined last month that legalizing marijuana would create 24,000 jobs, generate more than $500 million in tax revenue and infuse roughly $1 billion into the state economy overall by 2020.

Minnesota

Incoming Gov. Tim Walz (D), who is taking over for an outgoing Democratic governor who opposes legalization, has pledged to “replace the current failed policy with one that creates tax revenue, grows jobs, builds opportunities for Minnesotans, protects Minnesota kids, and trusts adults to make personal decisions based on their personal freedoms.”
He has also championed marijuana issues as a member of the U.S. House and demonstrated that he knows how to advance reform by authoring the first-ever standalone cannabis bill to pass a congressional committee.
Walz's efforts to legalize will get a boost from the newly elected Democratic House majority, though Republicans control the Senate by one seat. Still, the election of a pro-legalization governor puts Minnesota on the list of states to watch to end prohibition in 2019.

New Jersey

Garden State Gov. Phil Murphy (D), who was elected in 2017, campaigned on supporting marijuana legalization. Since being inaugurated earlier this year, he has continued to push for an end to prohibition.
Although the governor and lawmakers have quibbled over details such as tax rates and regulatory structures, progress is already being made toward getting a bill to Murphy's desk. Senate and Assembly committees approved marijuana legalization legislation last month, demonstrating that momentum exists to pick up the issue in the new year, when the governor and legislative leaders will continue to negotiate the finer points of exactly how to end prohibition.

New Mexico

The prospects for legalizing marijuana in New Mexico got a lot better with the election of ‎Michelle Lujan Grisham (D) as the state’s next governor.
During a debate she said legalization will bring “hundreds of millions of dollars to New Mexico’s economy." She has also supported cannabis reform measures as a member of Congress.
The state's House speaker said that if a legalization bill were to make it to the floor, "it would probably pass."
Even a Republican senator who is personally opposed to legalization now publicly admits that it is likely on the way soon, saying, “I don’t want recreational marijuana, but I understand the political reality that it is here."

New York

A year ago few observers thought that the Empire State would be one of the next states to legalize. But in that time, Gov. Andrew Cuomo (D) flipped from calling marijuana a "gateway drug" to saying it's time to "legalize the adult use of recreational marijuana once and for all." He also created a task force whose sole goal is to draft legal cannabis legislation for lawmakers to consider in 2019, and directed the Health Department to study legalization, with the resulting report concluding that the "positive effects" of ending cannabis prohibition "outweigh the potential negative impacts."
And Cuomo, who says that ending cannabis prohibition is one of his top priorities for 2019, isn't the only prominent elected official to evolve on marijuana this year. Three days after the governor endorsed legalization, so did onetime opponent Bill de Blasio, the Democratic mayor of New York City.
The push to make marijuana legal in New York got another huge boost on Election Day, when Democrats took control of the state Senate, where Republicans had long stymied cannabis reform efforts.

Rhode Island

While Gov. Gina Raimondo (D) has been cautious about legalization over the years, her rhetoric has shifted recently, even going so far as to suggest that the state might be effectively peer pressured into ending cannabis prohibition by neighboring states that are moving ahead.
“I'm not sure at this point it is practical to say we’re not going to legalize and regulate,” she said.
House Speaker Nicholas Mattiello (D), who has similarly been reluctant about legalization, is also now pointing to other states as a reason to more seriously consider changing Rhode Island's laws.
"I am mindful that Massachusetts has legalized it, I believe Connecticut is going to legalize it,” he said. “I think we’re probably going to end up with more social costs without the revenues and that would probably be the worst situation of all.”
Meanwhile, the Republican House minority leader is all-in on legalization.

Vermont

While Vermont lawmakers in 2018 already legalized the possession and home cultivation of small amounts of marijuana, the law does not allow any form of commercial production and sales, leaving the state without any recreational cannabis tax revenue or mechanism to regulate its trade.
Advocates believe the Democratic-led legislature is likely to send a bill adding legal cannabis commerce to the desk of Gov. Phil Scott (R) in 2019. While Scott signed the less ambitious legislation into law this year, he did so only reluctantly, and has expressed concerns about going further until the state has a better system in place to detect impaired driving. That said, the state Senate has already approved legal marijuana sales legislation in past sessions, and the House appears more open to doing so now that possession is legal—setting up a potential showdown over the issue between lawmakers and the governor in the coming months. It remains to be seen whether Scott would veto a broad legalization bill or whether lawmakers would be able to muster enough support to override him if he does so.
Still, with the regional dynamic heavily shifting in favor of legalization in the Northeast, Vermont is a key state to watch when it comes to cannabis in 2019.

Other Cannabis Moves To Watch

The above covers the states that seem poised to fully legalize marijuana in 2019. But there are others that seem potentially ready to do so via ballot initiatives in 2020 or that could pass other cannabis-related legislation in the upcoming new year.
In Kansas, for example, Gov.-elect Laura Kelly (D) supports legalizing medical cannabis, setting the state up to join its neighbors, Missouri and Oklahoma, in allowing patients to use the drug with their doctor's recommendation.
Incoming Wisconsin Gov. Tony Evers (D) says he wants to decriminalize marijuana and allow medical cannabis, and also supports letting voters decide on a referendum to fully legalize marijuana.
In Pennsylvania, Gov. Tom Wolf (D), who until recently said that the state is not ready for legalization, now says that he's ready to take a serious look at the issue. He also supports moving ahead immediately with less far-reaching moves to decriminalize cannabis possession.
In Texas, recently reelected Gov. Greg Abbott (R) indicated during a debate that he is open to some form of marijuana decriminalization—something the state Republican Party officially endorsed this year. Meanwhile, advocates will also push lawmakers to legalize medical cannabis.
And advocates are making it a priority to encourage South Carolina lawmakers to legalize medical cannabis.
Looking ahead to 2020, states like Arizona, Florida, Ohio and North Dakota could consider ballot measures to fully legalize marijuana, while Mississippi, Nebraska and South Dakota could see medical cannabis questions go before voters during that year's high-turnout presidential election.
"In state after state, lawmakers are coming out of the woodwork in favor of legalization," Justin Strekal, political director for NORML, said. "Be it on the grounds of criminal justice reform, community-police relations, racial justice, tax revenue or that they just see the writing on the wall, the political evolutions are accelerating at a tremendous rate."