30 Reasons Why Growth of Hemp Derivatives Will Likely Outpace Growth of Medical Marijuana
The legal marijuana industry is the fastest growing industry in America. So say the headlines. It’s being called America’s billion dollar crop. (Actually, the US market is predicted to swell to over 7 billion in 2016.)
Most of these headlines use the term “marijuana” rather than “cannabis” because medical and recreational marijuana are extremely hot topics especially with the Drug Administration’s expansion of marijuana study while simultaneously keeping marijuana as a schedule 1 substance much to the dismay of advocates. Still, in truth, the actual market for medical cannabis derivatives includes cannabidiol, or CBD. CBD is a non-psychoactive cannabinoid molecule which can be extracted far more efficiently from Marijuana’s less glamorous sister, agricultural hemp.
The confusion and vilification of hemp and marijuana has been by design since the 1930’s when then media tycoon William Randolph Hearst saw hemp as a direct threat to the timber empire. The timber was making the raw materials for his newspapers and he stood to lose a lot of money if he switched to Hemp. Rather than use hemp paper, which was actually used on a draft of the Declaration of Independence, he chose to take a different approach; yellow journalism.
Here’s the most important distinction between marijuana and hemp: whereas marijuana gets people high, hemp can be consumed all day long without making users the least bit giddy. Go into any Wholefoods for example or health food store and Hemp related products are everywhere as they are viewed by nutritionists as superfoods. Back to CBD…
Medicinal hemp derivatives currently hold a minority share of the medical cannabis market. But CBD is showing serious potential to be a much larger segment by 2020. Let me explain why, and I think you’ll agree with me.
The exponentially growing volume of media buzz surrounding recreational and medicinal marijuana – the so-called “Green Rush “- is having a dramatic effect on hemp. By osmosis, news of CBDs numerous health benefits is seeping into the conversation. These benefits are not trivial. Researchers are saying they include relieving pain, reducing epilepsy seizures, and shrinking tumors. “All this attention on cannabis extract is bringing about what we like to call a ‘liquid gold rush,’” said Tapio Maki, CEO of CBD Incorporated, an emerging company in the CBD space. As the founder of a company called “Smart Salt Inc” which was acquired, Mr. Maki understands the growing consumer niches as they relate to the health industry and the technology that complements them. He now has his sights set on the growing CBD market.
“Most cannabis entrepreneurs have their eyes on medical marijuana markets, and very few are on medical hemp. We feel that the CBD market place will grow faster than medical marijuana for many reasons. CBD has much more functionality for consumers in general. It will be a very long time before you’ll see THC in mass market consumer supplements. Also, it’s also not a federal crime to import CBD and it isn’t subject to state-by-state regulation in terms of transporting it.” He stated to Marijuana Stocks.
Investors and entrepreneurs are starting to see the bigger picture. For those that need more convincing, here are what I think are the top 30 reasons why growth of CBD from hemp is likely to outpace growth of medical marijuana.
1. Acceptance of medical cannabis is growing quickly – Let’s start with the obvious: Because of all the media attention, medical cannabis is becoming more and more accepted and is growing in popularity around the country. Along with this acceptance people are taking a harder look at the facts and finding out that CBD often does the job just fine without the infamous side effects of marijuana products.
2. Popularity of CBD is growing exponentially – Most people already have some idea of whether or not they are interested in using marijuana long before MMJ cards come to their state. But the vast majority of consumers still have never heard of CBD. Anyone who looks into medical marijuana the least bit further than the headlines will get turned on to the many virtues of CBD and be “hooked,” so-to-speak. Thousands are falling in love with CBD daily. CBD evangelism is rampant.
3. CBD wouldn’t get a fly high – Although the hysteria makes it look like “all the cool kids are doing it,” (using marijuana), in fact, the vast majority of health food junkies and medical patients don’t want the side effects of marijuana. They want the benefits of medical marijuana without the buzz. CBD is the answer to their prayers. It literally wouldn’t get a fly high.
4. CBD is a buzzkill – Not only does CBD not get you high, it actually chills the buzz caused by marijuana. Many medical marijuana patients are now using equal doses of THC (the buzz-causing compound in marijuana) and CBD oils to get maximum benefits of both compounds, but with a greatly reduced high.
5. CBD is just as effective (in many cases) – CBD is used to treat not just a few, but all of the top 10 health conditions that are currently treated with medical marijuana. If a patient is suffering and need of immediate relief from certain symptoms, THC can provide it. CBD is perfectly good for just about everything else including keeping you healthy in the first place.
6. Hemp is a no-brainer – Agricultural hemp is really easy to grow. Probably the easiest crop to manage. It’s a weed, for Pete’s sake. Hemp can be grown outdoors and doesn’t require chemical pesticides and fertilizers. No expensive grow lights and hydroponic systems required. In places with the right weather, you can sow seeds and come back in 3 months and harvest a crop. Of course it’s a little more complicated than that. But not much.
7. Perpendicular expansion – CBD is showing up in everything from chewing gum to suppositories, shampoo to skin cream, beer to smoothies, gummy bears to chocolate bars. That trend will continue to feed on itself. Health foodies will become as loyal to CBD as they are to other supplements, and want to see it in all their products. Think shake powders and energy drinks. Imagine the volume when it starts showing up in over-the-counter pain meds. Or sun tan lotion. That’s just not going to happen with THC.
8. Hemp foods are awesome – Agricultural hemp food products such as hemp milk, hemp cereals, hemp protein, and hemp seed oil are flying off the shelves in the US and around the world. Hemp foods accounted for a half billion dollars of trade in the US in 2015. As they say, the rising tide floats all the boats. CBD, or “hemp extract,” will have hemp foods to thank for a major boost in brand equity.
9. Grown organically – Agricultural hemp can easily be grown organically since it doesn’t require chemical pesticides and fertilizers. Organic farming is friendlier on the environment and better for consumers. More and more health-conscious consumers are demanding that their health supplements be organically produced.
10. Fewer security issues – Agricultural hemp growers have far fewer security concerns. Because hemp is not psychoactive, it is useless as a recreational drug. No one is going to break into a hemp field and steal a truckload of hemp.
11. More medicine – Agricultural hemp is far higher in CBD content than marijuana. CBD can account for as much as 40% of the plant’s extract. Agricultural hemp has been bred for it’s total lack of THC content (partially to avoid dealing with drug laws). If you want THC-free CBD, you have no choice; you have to extract it from hemp.
12. More legal – CBD made from marijuana has THC in it and is therefore illegal in the eyes of the federal government and many states. On the other hand, hemp extract has less than 0.3% THC and gets more attention from the FDA than from the DEA. (However, at the moment, US retailers outside of states where medical marijuana is legal can only sell CBD that has been imported to the US. That may change over the next few years.)
13. Less expensive to produce – CBD is responsible for many of the medical benefits provided by cannabis but, as it turns out, CBD can be extracted more efficiently from hemp, at far less cost, and with far fewer regulatory issues than from marijuana. On profit margin alone, CBD is a better bet.
14. Available nationwide, now – Imported CBD from hemp can be purchased in all 50 US states. If you can’t find it in a store near you, you can purchase CBD online at Amazon and myriad health food specialty retailers. No need to wait for medical marijuana laws to come to your state. No medical red tape to deal with. Buying CBD is as simple as buying vitamin C, B, and D.
15. More stable market – Agricultural hemp prices are likely to remain high for years to come, while marijuana prices are already starting to fall. Current global demand for industrial and agricultural hemp exceeds global supply, and will continue to do so for many years to come as this amazingly versatile product is put to more and more uses and it’s food and medicine derivatives are consumed by more and more people.
16. Far more flexible – Recreational and medical uses aside, agricultural hemp is infinitely more useful than marijuana. Hemp can be used in everything from plastic to cars to plywood. Even entire houses can be built with hemp. Researchers are now making fuel from hemp. If for any reason CBD supply hits a ceiling, which I can’t see happening for many years, a good hemp crop is still going to be worth a lot of money. On the other side, if prices for marijuana drop substantially, growth in marijuana production goes down with it.
17. Hemp is an actual commodity – Agricultural hemp is a global commodity and as such will be traded more and more on commodity exchanges in the coming years. In fact commodity exchanges such as Seed CX are being created specifically for hemp products. For the other team, it’s highly unlikely that marijuana or its derivatives will be traded as a commodity any time in the near future.
18. The government is chilling out – The Us Farm Bill, about which I won’t go into details, allowed some US states to grow agricultural hemp. Since then, hemp acreage has been exploding. More and more states are allowing and even encouraging hemp farming.
19. Hemp makes healthy soil – Agricultural hemp is the perfect crop for keeping farmland healthy, and even for cleaning up polluted land. Hemp can absorb toxic substances from the soil and neutralize them. Hemp’s cleanup abilities have been proven in combat so-to-speak. The first time hemp was used for environmental rehabilitation was after the 1986 Chernobyl nuclear disaster in Ukraine.
20. CBD has a very small footprint – This is a big one. A ton of CBD will fit in the back of a pickup truck. An ounce – 28 grams – of marijuana costs about $300, give or take, and takes up about a half a cubic foot of warehouse space. 3.5 grams of CBD is worth about the same and takes up about a half a cubic inch. You would think at first blush that you need 12 times as much space for the weed, but one cubic foot is 1,728 cubic inches! (12″ x 12″ x 12″) So you’ll need to make a whopping 1,728 trips in that pickup truck to transport an equal value of pot. The same does not hold true for THC. Hemp is a far greater mass producing plant than marijuana. Marijuana might need a good 5-10 times the land area to produce an equal batch of CBD or THC extract. Indoor land area, I might add.
21. No drying time – Hemp doesn’t need to be dried and cured and groomed for sale like marijuana buds. Hemp can be turned into CBD immediately upon harvest, saving space, time, and money.
22. Simple storage – No armed guards and barbed wire will be required to guard your inventory. A large indoor freezer with a small security system will do just fine.
23. Pharma interest – Pharmaceutical companies are clamoring to patent the next CBD-based drug, while at the same time probably being at least a little urked by the fact that, in places where medical marijuana is legal, prescription drug use is falling.
24. Cosmetic market interests – The cosmetics industry is a $42 billion dollar business in the US. I will make a bet that the vast majority of cosmetic product categories will contain CBD in the not-too-distant future. I will also bet that not a single cosmetic product will contain THC.
25. Pet care market interests – Pet foods was a $25 billion industry in the US in 2015. As word spreads, pet owners are going to want the benefits of CBD for their pets, and vast numbers of pet foods will start adding a dash of CBD. I will bet that virtually no big brand pet foods or supplements will contain THC.
26. Wall Street interest – Wall Street is bullish on hemp. And there are scores of great minds pondering the future of the hemp market right now. As more and more hemp companies go public, more and more experts will be thinking about how to maximize hemp company profits.
27. Big business interests – Up until recent years, most CBD producers were mom and pop operations. But big business has been slowly getting into the game. They will be pouring a lot of money into CBD PR campaigns and trade show booths, opening more and more minds to CBD.
28. Insurer interests – Use of medical cannabis reduces use of prescription medication. This one is a no-brainer. Insurance companies are going to be far more CBD-friendly than 420-friendly.
29. Government interests – Just like with the insurance companies, reducing use of prescription drugs saves Medicare and other social programs a lot of money in reduced prescription drug use and higher general productivity. Candidates for office can make or break their campaign depending on which side they take in the marijuana debate and what promises they make regarding legalization and deregulation.
Combine all these factors and you have the perfect storm for a CBD-fueled “Liquid Gold Rush.”
And here’s Reason Number 30 which is specific to wholesale producers:
30. Wholesale is a no-brainer – Wholesalers generally have little or no mass consumer branding to do. Little market research. No focus groups. No boutique design firm to design pretty consumer labels. No fancy packaging facility. Very little advertising. Fewer and simpler moving parts and distribution channels.
It’s like my Dad always says “Why be on the Team, when you can own it.”
Regards-
The Wolf
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
