Momentum Public Relations
Blog: October 4, 2018
A Canadian Press story published in the Huffington Post on September 27, 2018, by Armina Ligaya reported that American research house Brightfield Group has updated its 2018 CBD report and predicted that CBD market value will now reach US$22 billion by 2022. To show how much market perceptions have changed, in 2017, according to Forbes, Brightfield estimated that CBD would US$1 billion by 2020.
A blog on the Brightfield site captures the disparity between the two figures perfectly. It is posted under the title: CBD Worth $22 billion by 2022? That’s crazy, right? In another Brightfield blog Bethany Gomez wrote, “I have never seen anything like the explosion we are seeing right now in CBD.”
CBDs are the cannabinoids used in medical research and being developed into drugs to treat a variety of illnesses and diseases. There are drugs under development based on CBDs to treat fibromyalgia, nausea from cancer therapies, pain and there is at least one trial underway to see if CBD-based drugs can replace drugs like fentanyl. There are also veterinary CBD based drugs under development for pain and anxiety in dogs and cats.
CBDs are also the ingredient used to infuse everything from anti-ageing formulations, arthritis creams and non-THC beverages.
If you have invested in the marijuana market then you should also be looking at the CBD market because according to Brightfield, the market for CBDs could be larger than the market for recreational marijuana.
Here’s where things start to get interesting. The active psychoactive ingredient in marijuana is THC. CBDs can be refined from either marijuana or hemp and it’s much cheaper to refine it from hemp.
Most Canadian ‘pot-cos’ have some form of medical research branch. Canopy Growth for instance has a subsidiary, Canopy Health Innovations that is developing a CBD based treatment for insomnia. This past summer it appointed Dr. Mark Ware, a well respected researcher, as its Chief Medical Officer. Aurora has the Aurora Research Institute which is developing treatments for cardiovascular disease, cancer and neurological disorders. Aphria is funding Tetra Bio Pharma’s subsidiary Phyto Pain Pharma’s clinical trials.
Hemp can also be used to produce CBDs. Whether or not farm grown hemp would meet the clinical levels of purity for medical use is another question, pesticide residues and fertilizer residues may rule out medical use for hemp derived CBDs.
But the medical market may only be the tip of the iceberg. According to the US government there are 25,000 different products derived from hemp. On sale now are clothes made out of hemp, rope and fabric as well as a host of new age lotions, potions, creams and topical ointments. Least we forget, almost every Canadian marijuana company also has a CBD infused beverage under development and even the king of soft drinks, Coca Cola is noted as also looking for a CBD dance partner. These are the products that Brightfield expects to drive the CBD market.
The United States federal government is moving towards legalizing hemp in the 2018 Farm Bill which will be voted on soon. American farmers are anxious to find a product that will replace declining tobacco sales. Currently, the negotiations for a new farm bill have stalled.
Until now, Cannabis has been a Schedule 1, federally controlled substance ranked with heroin and LSD. This has meant that the market in CBD enhanced products has been a grey one largely splintered and usually located in old fashioned head shops, modern dispensaries and by mail order off of the internet. Once hemp becomes legal for interstate commerce CBD health and wellness products including CBD based dog treats will come out of the grey market and stand a chance of gaining national shelf space in chains like Walmart and Walgreens.
If the CBD market is going to be as big as recreational marijuana, or as those at Brightfield think, even bigger, then you owe it to yourself to take a good look at the CBD market.
The CBC posted a CBD story on September 27, and in it Tina Fraser, an Ottawa-based lawyer who advises the marijuana industry described the kind of products being developed and already sold in some cases by saying: “Think about cosmetics, and skin creams, and arthritic topical creams, and all sorts of types of products that you would go to a drug store to buy that could have these potentially therapeutic effects from CBD … That’s certainly not unrealistic, and I think in fact, odds are, we will be there [in Canada]. I hope, within the next five years.”
Investors looking for a way to play this developing market may want to take another good look at Crop Infrastructure Corp. (CROP:CSE). CROP is unique for any number of reasons.
To begin with, it may be the only Canadian marijuana company that doesn’t have any operations in Canada. If the future of the Canadian marijuana industry lies on foreign shores then CROP has already landed. And then there is CROP’s business model. It is based on Real Estate Investment Trusts. For the right tenant CROP will buy land, build roads and greenhouses and provide management, quality control and branding. In return CROP benefits from a two-year return on investment and royalties that stem from an ownership position that ranges from 30% to 49%.
At the moment CROP has 176,000 square feet covered or under construction and an additional 134,000 square feet planned. As well the company has interests in 325 acres of outdoor production. The company has two operations in Washington State and Nevada, one in California and in Italy. The company also has permits for Jamaica and two joint venture dispensary application in process in California. CROP has the US and Italian distribution rights to more than 55 CBD-based NHPs, natural health products and is of course developing its own CBD-infused recovery beverage.
According to a deleted tweet by Epstein Research, Epstein management believes that Crop has substantial exposure to the developing American CBD and hemp market because it has the largest hemp operation in Nevada. If you believe CBD is going to be big, then you should take a long close look at Crop and its operations.
This blog should not be construed as investment advice it is written for informational purposes only. It is incumbent on every investor to perform their own due diligence. Crop Infrastructure is represented by Momentum PR.