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Retailers See Promise in CBD and Hemp Products

CBD Hemp oil, Doctor holding a bottle of hemp oil, Medical marijuana products including cannabis leaf, cbd and hash oil, alternative medicine

• The CBD market is moving towards mainstream retailers and is projected to be over $20 Billion in sales by 2024.
• The potential of CBD and Hemp products appears to be endless due to newly emerging scientific data.

Dennis Mitzner Contributor

Thanks to the passing of the Farm Bill in late 2018 – containing a provision legalizing hemp, a species of non-psychoactive cannabis that CBD can be extracted from – Hemp and CBD are on major retailers’ radar. 

The CBD market is moving towards mainstream retailers and is projected to be over $20 Billion in sales by 2024. Walgreens, Sprout, CVS, Ulta Beauty, GNC Holdings, Urban Outfitters are just a handful of retailers offering or looking to offer, CBD products to consumers.

According to Christina Hartwell from Little Mary and Jane â€the industry is on the verge of moving beyond merely CBD and exploring the full spectrum of Hemp (Cannabis Sativa L).”

The potential of CBD and Hemp products appears to be endless due to newly emerging scientific data.

“The industry is on the verge of moving beyond merely CBD and exploring the full spectrum of Hemp (Cannabis Sativa L). Scientific studies thus far have been somewhat limited due to the stumbling block of THC due to potential adverse side effects and regulations. However, the studies being done on full-spectrum Hemp and the multitude of Cannabinoids in the plant are promising, CBN is beginning to come to the forefront and is potentially more beneficial for treating Insomnia and Anxiety than Isolated CBD,” Hartwell added.

Retailers jumping in

Several retailers for natural supplements are expected to have CBD on their shelves. Dillards Department Store, a chain with a total of approximately 292 stores in 29 states, is beginning to roll out several Hemp Depot while labeled CBD products. Kroger announced in July another 1,000 locations in 22 states where their grocery stores will begin to carry CBD products. 

“Because of the tremendous range of products in which CBD is a fit, we expect to see it on shelves, literally, everywhere. Wholesale order numbers are climbing dramatically, which is one of the first signs of significant market expansion. When we started, we were taking orders for small companies ordering 500 units at a time. Large company orders are projected to reach 100,000+ units in the next 18 months which is going allow wholesalers like Hemp Depot to manufacture products on a larger scale, thereby reducing CBD product prices by the end of 2020 to a forecasted $20 – $30 as with standard vitamin supplements,” said Andy Rodosevich, CEO and Co-Founder of Hemp Depot.

In July, adding to the momentum, Toronto-headquartered Abacus Health Products announced new retail purchase orders from CVS for its line of CBDMEDIC pain relief and skincare products, sold to consumers via retail chains and the company’s e-commerce platform. 

“We are encouraged to see the continued interest and growth in CBDMEDIC among leading retailers throughout the United States. In particular, the fact that CBDMEDIC products are now being positioned in-line demonstrates the acceptance of our over-the-counter products within the traditional pain relief and skincare categories and we look forward to seeing the continued growth in the number of retail locations in which CBDMEDIC is available,” said Perry Antelman, the CEO of Abacus Health Products, maker of CBD CLINIC and CBDMEDIC.

Also in July, Green Growth Brands announced a deal with American Eagle to begin selling its CBD-infused body-care products — including muscle balms and lotions — in nearly 500 of American Eagle’s stores and online, with sales expected to begin in October. This follows apparel retailer Abercrombie, which just last month announcing its plans to sell GGB’s products in more than 160 stores across the U.S.

“The cultural conversation around CBD is growing and I think we are beyond CBD being only for early adopters. The push to major retail outlets like Kroger, Walgreens, and CVS seem to support that, said Paul Miller from Lokus Nutrition.

Risks remain

The FDA is in the midst of creating guidelines for CBD manufacturers and will likely eliminate some manufacturers currently participating in the CBD boom and open the door to some large scale, mainstream manufacturers. The details of the FDA regulations will inform the specifics of how large the OTC piece of the CBD pie becomes. 

“We’ve seen major chain retailers like CVS, Walgreens, and Whole Foods start to include CBD in their product mixes. The larger the entity, the more likely they are to stick with topical products until the FDA provides clarity,” said Kate Heckman from Stratos CBD.

When it comes to CBD oils, presently only 10% of demand is being filled by present growers, the industry has increased by 200% from 2017 to 2018, about 618 million in sales last year with projected 22 Billion by 2022.

“A lot of people want to get into this arena. Some of the problems we are working on are Standardization of the industry, Genetic variations, for patents and Lab Certification. It is the wild west, with little or no standard dosages or diagnosis for the public to rely on,” said John Sation, Clinic Director, and research Coordinator from Hair & Scalp Clinics.

The recent FDA warning letter to Curaleaf on July 26 serves as a wake-up call to the industry about statements in marketing or social media that imply that these products can be used to treat medical conditions. 

“It’s in the best interest of the industry to be careful and conservative with any label claims being made. With the passing of the 2018 Farm Bill, each state department of agriculture must submit a state management plan to the USDA outlining how various aspects of hemp cultivation and processing will be managed within their jurisdiction,” said Dr. Sean Callan, CEO of Precision Botanical.

While the opportunity is real, risks remain. According to David Gross from Strategic Value Partners, players in the space should tread carefully as the regulatory framework is currently only taking shape. 

“Don’t be first here. By all indications, the FDA appears poised to take aggressive and decisive action, as evidenced by the Curaleaf warning letter, against companies who manufacture, distribute, and retail CBD products. Moreover, the Drug Enforcement Agency (DEA), Department of Agriculture, and financial regulators (i.e., FDIC, OOC, and Federal Reserve) remain unknowns. In the near-term, any benefit you might receive from being first is far outweighed by the business and reputational risk of a potential FDA action or a multi-state federal raid at your warehouses.”

Source: https://www.forbes.com/sites/dennismitzner/2019/08/06/retailers-see-promise-in-cbd-and-hemp-products/#3e264909411f

SPONSOR: Spyder Cannabis Inc. (TSX-V: SPDR) An established chain of high-end vape stores in Ontario, Canada. The company has an aggressive expansion plan already in place that will focus on Canadian retail and US Hemp-Derived kiosks in high traffic areas. Click here for more info.

New normal in US Congress: Marijuana hearings, reform bills & how they could affect the MJ industry

By Jeff Smith

• Cannabis has gone from the butt of jokes on Capitol Hill to milestone hearings and the introduction of landmark legalization reform packages that offer the potential to pave the way for billions of dollars in new business opportunities nationwide.

• The current situation is in stark contrast to just a couple of years ago, showing how far and how quickly marijuana reform has come in Washington DC – even if it doesn’t appear at the moment to have a good chance to pass the full Congress.

The Marijuana Business Factbook estimates that from 2018 to 2023, sales of legal cannabis in the United States could grow by nearly 200%, but those estimates also suggest legal sales represent a fraction of the estimated total potential demand for cannabis in the United States.

Demand for recreational cannabis is roughly $50 billion-$60 billion when black-market demand is included, according to the Factbook.

Federal legalization obviously would offer licensed MJ businesses inroads to take a bigger bite of the overall demand.

How times are changing in DC around MJ

Just a few months ago, the consensus was that the federal marijuana legislation most likely to pass would be narrowly focused, such as a bill to help veterans or spending bill amendments to protect state-legal cannabis programs.

Now the leading House measure appears to involve a comprehensive bill that would legalize marijuana nationwide.

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 could open massive business opportunities for legal cannabis firms around the country, similar to the federal legalization of hemp, if it passes. But that’s a big “if.”

Experts point out major reform before 2021 has long odds because of resistance in the Republican-controlled Senate.

But here’s the new normal:

• Cannabis reform garnered milestone congressional hearings this year in both the Democratic-controlled House and the Republican-controlled Senate.
• A U.S. House committee approved a cannabis banking bill, sending the measure toward the full chamber.
• House Judiciary Committee chair Jerrold Nadler introduced the MORE Act, a comprehensive bill that would legalize marijuana nationwide by removing it from the Controlled Substance Act.

House Democrats are in effect saying that marijuana reform no longer needs to be modest, said Douglas Berman, director of Ohio State University’s Drug Enforcement and Policy Center.

“I have this ever-growing sense that more progressive advocates for marijuana reform think the momentum is on their side and that they don’t have to be content with a set of modest reforms or even an industry-friendly reform that doesn’t expressly seek to address the social equity parts of the story,” Berman noted.

Nadler’s bill, for example, not only would legalize cannabis nationwide, but through a 5% rec MJ sales tax, it would fund programs to help individuals and communities disadvantaged by the federal marijuana prohibition.

Marijuana entrepreneurs are paying close attention, and industry experts attribute the shifting ground to:

• Strong public support for reform. Some polls find it exceeding 60%.
• Democrats have control of the House and, thus, the committees that set the schedules for hearings.
• The Democratic presidential lineup includes near unanimity that marijuana should be federally legalized.
• A strategy exists among Democrats that it’s better to ask for more than less to build negotiating leverage for eventual reform.
• There’s a growing consensus that comprehensive cannabis reform must include elements of social justice and equity as well as reinvestment in communities most affected by the war on drugs. Progressives in the Democratic party have expressed that attitude, and recreational marijuana legalization discussions in Illinois, New Jersey and New York have reflected it as well.

Addressing MJ banking/tax conundrums

Large industry groups including the American Bankers Association and the Credit Union National Association increasingly are pushing for specific reforms, such as the SAFE Banking Act, which would enable financial institutions to serve state-lawful cannabis businesses without fear of federal prosecution.

“It’s really the voices of these groups that have given the momentum and traction to the issue in the Senate,” said Saphira Galoob, CEO of the Liaison Group and executive director of the National Cannabis Roundtable.

U.S. Rep. Earl Blumenauer, a longtime advocate for marijuana reform from Oregon, told the media that Nadler’s bill will represent the “path forward” to fixing cannabis policy in the House.

That’s because most major reform measures must go through the House Judiciary Committee, and Nadler controls which bills get considered.

Many experts doubt he’ll want committee votes on bills other than his own.

The House Judiciary Committee may mark up his reform bill and vote on it by as soon as September, after lawmakers return from their summer recess, Blumenauer and others noted.

The Nadler bill would resolve major industry issues such as access to banking and tax equity.

But Berman said he would be surprised if the Republican-controlled Senate considers the Senate version of Nadler’s bill, which is sponsored by Sen. Kamala Harris, a California Democrat running for president.

Experts say major reform still faces high hurdles in the Senate.

Senate Majority Leader Mitch McConnell, a Kentucky Republican, “has unilateral control of the Senate schedule,” St. Louis-headquartered investment firm Stifel noted in a recent cannabis industry update.

“His statements have suggested personal opposition to marijuana, and we believe his political calculus favors keeping his senators off the record with many Republicans facing re-elections in areas without more progressive marijuana policies,” the report added.

That seemed to be the case when the Senate Banking Committee recently held a landmark hearing on cannabis banking.

Committee Chair Michael Crapo from Idaho was the only Republican present of the 13 Republicans on the committee.

The future role of SAFE and the STATES Act

The prevailing view by many experts is that major reform becomes even less likely as the 2020 election draws near.

But it’s hard to predict political dynamics.

If President Donald Trump or McConnell wants reform for political reasons, then it could occur, Berman said.

So if Nadler’s bill becomes the leading House bill, what happens to other cannabis-related legislation, such as the STATES Act, which would protect state-lawful cannabis businesses from federal interference but wouldn’t legalize marijuana nationwide?

Blumenauer, who earlier this year predicted that the House would pass SAFE, said that measure would be unnecessary if Nadler’s bill goes through the House.

STATES, which has no social equity component, has “interesting support” and “still has the opportunity to be the catalyst in the Senate,” Blumenauer said.

STATES also has some implicit support from U.S. Attorney General William Barr.

Neal Levine, CEO of the Cannabis Trade Federation, lauded Nadler’s bill.

But the industry group still is backing the STATES Act as well, Levine told Marijuana Business Daily.

Jeff Smith can be reached at [email protected]

Source: https://mjbizdaily.com/new-normal-us-congress-marijuana-hearings-reform-bills-how-could-affect-cannabis-industry/

SPONSOR: Spyder Cannabis Inc. (TSX-V: SPDR) An established chain of high-end vape stores in Ontario, Canada. The company has an aggressive expansion plan already in place that will focus on Canadian retail and US Hemp-Derived kiosks in high traffic areas. Click here for more info.

5 Essential Cannabis Trends You Can’t Afford to Miss

New research indicates these events will drive the global cannabis market.

• Until recently, the cannabis market was dominated by THC products, but now CBD is on everyone’s lips. What happened? In 2018, two regulatory events changed the direction and growth trajectory for the cannabis market. Troy Dayton and Roy Bingham

Figuring out where the cannabis industry is heading next is no easy task. The industry is filled with a seemingly daily deluge of noise and breaking news. But there are a handful of trends and events you should keep an eye on. Arcview Market Research in partnership with BDS Analytics has discovered key data points that reveal some of the big industry levers shaping things to come.

1. CBD will take center stage.

Until recently, the cannabis market was dominated by THC products, but now CBD is on everyone’s lips. What happened? In 2018, two regulatory events changed the direction and growth trajectory for the cannabis market.

First, the Food and Drug Administration’s (FDA’s) approved GW Pharmaceutical’s seizure medication, Epidiolex, the first CBD pharmaceutical-grade drug. 

Second, hemp (the cannabis plant high in CBD and low in THC) was legalized for commercial production across the U.S. 

Pharmaceutical companies have since unleashed numerous studies and clinical trials — racing to isolate treatments for a diversity of diseases – from cancer to sleep disorders. And, due to less government restrictions placed on CBD, cannabis dispensaries no longer hold domain over the sale of cannabis products. 

Over time, fortune 500 companies will stampede into the CBD market. In many U.S. markets, general retail stores are now free to stock hemp-based products. And as creams, craft beer, and other CBD infused products make their way onto grocery store shelves in growing numbers, licensed dispensaries will be pushed to stay competitive. 

Just how big is the U.S. CBD market expected to get? 

Our research shows that CBD spending will grow from $1.9 billion in 2018 to a forecast of $20.1 billion by 2024. Include THC sales in the number, and the total U.S. cannabinoid market will soar from $10.5 in 2018 to $44.8 billion as we turn the calendar to 2024. 

This is a 49 percent compound annual growth rate forecast for cannabis and hemp-derived CBD products.

2. Eased regulations will be a catalyst for the cannabis market.

Fear of federal prosecution, the inability to easily use every-day banking services (including depositing money), and little clarity around CBD as a food additive, has been deadweights for the U.S cannabis industry. However, two ground-breaking pieces of legislation are working their way through the legislative labyrinth that should remedy these problems.

First is an amendment to the STATES Act that will exempt the state’s legal activities from the Controlled Substances Act (which classifies cannabis as a Schedule 1 substance). The STATES Act would effectively ease federal cannabis prohibition by ceding the regulation of cannabis to the state level. Secondly, the SAFE Banking Act — which would allow federally chartered banks the ability to accept money from state-legal cannabis businesses.

On the CBD front, the FDA is under pressure to regulate and confirm the rules of the game. Once these guidelines are announced, they are likely to be the trigger for mass adoption of CBD.

3. Canada is still a significant player, but there are clouds on the horizon.

Canada’s historic legalization of adult-use cannabis last year quickly spawned the world’s largest cannabis companies. Our research indicates that by 2024, the Canadian adult-use market will expand to almost $4.8 billion from $113.5 million (in the partial year of 2018).

In the short term, limitations on distribution and the marketing of edibles and concentrates are likely to hamper growth. However, regulations are expected to ease in October. But it will take suppliers several months, maybe even years, to catch up with the product selection and branding strategies, which are the chief drivers of U.S. market growth.

The success of the continued retail roll-out and the federal election in October could potentially dampen the Canadian growth story. Should the liberals be ousted at the polling booths, a change in government policy may curtail the growth trajectory.

4. Other countries will get in the game. 

The global expansion of medical cannabis is attracting investor attention. Our research shows that the international markets’ contribution to global legal sales will rise from 4.7 percent to 13.2 percent between 2018 and 2024. That’s a not inconsequential 33 percent compound annual growth rate through the period.

Internationally, Germany leads the pack, making Europe the leading region. But Uruguay’s pioneering legal adult-use, Luxembourg, Mexico, and New Zealand could also have adult-use sales by 2024.

Reforms in Asia and Africa are also afoot. Patients in South Korea and Thailand will gain access to medical cannabis treatments — albeit highly restricted. And Lesotho, South Africa, Zambia, and Zimbabwe are all in various stages of program development.

But, as a consequence of the opening up of these markets, there may be a shift in the migration of production to regions like Africa and Latin America. Canadian LPs could be left with stranded assets

5. Money will flow to M&As, as companies specialize and rationalize operations.

In two short years, an industry starved for funding is now seeing billion-dollar deals. But the availability of money is becoming less significant. Now it’s about how it will be spent.

Vertically integrated companies are buying out other operations for scale, and the start of a trend towards diversification and specialization is underway.

Over the medium term, a second wave of M&A to ‘rationalize assets’ (i.e. match a firm’s investment in various types of assets to its projected requirements, for achieving optimum ROI) may follow. Companies in maturing industries usually work out what they are best at and divest operations to those better suited to operate these.

Once federal prohibition ends, it’s also no stretch to imagine the mainstream industry giants stepping in and buying out cannabis companies. Courageous entrepreneurs will be richly rewarded for having built attractive take-out targets.

Source: https://www.mysanantonio.com/business/article/5-Essential-Cannabis-Trends-You-Can-t-Afford-to-14113323.php