CannabisNewsWire
Editorial Coverage: The legalization of cannabis in Canada is
about to bring big changes not just for medical cannabis companies
but for hemp growers as well.
- The law legalizing recreational cannabis in Canada will come
into force on October 17.
- This will create new opportunities for hemp growers to produce
the plant for CBD extraction.
- Hemp growers will now be able to profit from all parts of the
plant.
- Cannabis companies are experimenting with growing techniques,
expanding their businesses, and seeking supply agreements in
preparation for the change.
Marijuana Company of America Inc. (OTC: MCOA) (MCOA
Profile), which grows industrial hemp in Canada, will
now be able to sell leaves and flowers as well as other parts of
its plants, and is preserving this year’s crop in preparation for
the change. In the United States, Isodiol International,
Inc. (OTC: ISOLF) is raising the profile of the industry
through a celebrity partnership and the expansion of its retail
chain. Aurora Cannabis, Inc. (OTC: ACBFF) has been
acquiring financing to fund a program of expansions and takeovers,
preparing the way to dominate the American market.
Organigram Holdings, Inc. (OTC: OGRMF) and
Emerald Health Therapeutics (OTC: EMHTF) have both
set up a string of supply agreements, giving them quick access to
the Canadian recreational market come October.
To view an infographic of this editorial, click here.
Transforming Canada’s Cannabis Industry
On October 17, cannabis will become legal in Canada. Under the
provisions of the Cannabis Act, Canadians will be able to buy and
consume cannabis for recreational as well as medical purposes.
Careful licensing, together with clear rules around cultivation and
processing, will ensure that a previously illegal industry becomes
a well-regulated part of the legal economy. As Prime Minister
Trudeau said when the law was passed, “It’s been too easy for our
kids to get marijuana — and for criminals to reap the profits.
Today, we change that.”
The Cannabis Act promises to be a great boon to the Canadian
economy. Since 2014, the Canadian medical cannabis industry has
grown to include over 100 licensed companies,
many of which will be able to expand their sales and research under
the new rules. In a year’s time, further rules will
come into force that allow the sale of concentrates and edible
cannabis products, creating a cannabis food and drink industry. But
one of the biggest changes will take place within the industrial
hemp industry.
Cannabis without the High
While the term “cannabis” is most often used to refer to plants
with psychoactive effects, it actually covers a broader range of
crops. One of the most historically prevalent varieties of cannabis
is industrial hemp, a form of cannabis grown by companies such as
the Marijuana
Company of America (OTC: MCOA).
Industrial hemp is distinct from more controversial forms of
cannabis — marijuana — in that it does not contain
tetrahydrocannabinol (THC), the active ingredient that gets users
high, but rather it contains cannabidiol (CBD), which has recently
grown in popularity due to its variety of medicinal benefits. Hemp
was used for hundreds of years to produce fibers for cloth and rope
and was widely grown in North America. But for most of the past
century, it has been out of production thanks to broad-ranging
anti-cannabis legislation.
The past few years have seen a resurgence for industrial hemp.
Legislation created for the cultivation of medical marijuana has
created the opportunity for companies such as MCOA to grow hemp in
Canada. In the United States, the 2014 Farm Bill created legal
space for trial crops of hemp. That bill’s 2018 successor appears
set to make it entirely legal in
the United States, allowing farmers to grow a highly profitable
new crop.
The passing of the Cannabis Act will further improve the
potential of hemp in Canada, as it will allow producers to extract cannabidiol (CBD).
Cannabidiol is an active ingredient that’s commonly found in high
concentrations in certain varieties of industrial hemp. It doesn’t
have the psychoactive properties of THC but has been shown to have
beneficial effects on health. As a result, it’s used in a growing variety
of health and wellness products, including MCOA’s brand
hempSMART.
Using the Whole Plant
Up until now, Canadian hemp producers have been limited in what they can do with the plant. The seeds
could be extracted and used; fibers could be turned into textiles;
and leftover elements known as hurds could be turned into either
animal feed or construction materials. The use of leaves and
flowers was specifically prohibited.
The Cannabis Act allows for a broader range of uses. Health Canada has proposed the introduction of new
industrial hemp licenses to make this a reality. Under the
proposed system, industrial hemp producers will be able to sell the
whole plant or any of its parts to other licensed operators within
the hemp industry. They could even process it themselves,
extracting CBD oil as well as seeds, fibers and hurds.
It’s a change that will create a more efficient and profitable
industry, as parts of the plant will no longer go to waste. And
growing interest in CBD as a wellness ingredient could lead to a
significant rise in income for hemp farmers. Companies such as
MCOA, whose operations cover the whole industrial chain from hemp
production to the sale of CBD products, will be able to build
solid, sustainable supply chains that maximize profits at every
step.
This is all before taking into account the possibility of agricultural subsidies. There is
currently disagreement within Canada over whether cannabis growers
will be eligible for subsidies under existing rules, but with the
arrival of cannabis-based foods and beverages next year, lines will
become increasingly blurry. MCOA and its joint venture partner,
Global Hemp Group Inc., have received financial support from
Canadian government agencies to research hemp cultivation. As the
commercial landscape changes, hemp producers may soon find
themselves eligible for even more government help.
Sowing the Seeds for a Growing Industry
MCOA’s growth in the Canadian hemp sector comes through its
establishment of a high-yielding CBD hemp cultivation project in
New Brunswick (NB). This collaboration with Global Hemp Group has
revived hemp cultivation in the region 20 years after a previous
effort failed.
The joint venture partners are in process of completion of the
first phase of what is known as the Hemp Agro-Industrial Zone, or
HAIZ. The aim of the HAIZ is to provide a steady supply of hemp by
building a local industrial cluster, guaranteeing a market for
farmers and leading to year-round jobs for others in the region.
Through trial crops and careful measurement of the results, the
project is providing valuable data on important issues such as
pests, fertilizers and growth rates.
Recent developments at the site include the installation of drying equipment in preparation for
processing. In the short term, this will allow the company to
effectively store its current harvest until it can be sold and
processed under the rules coming in October. In the longer term, it
will increase its options for growing, processing and selling hemp.
The joint venture partners are currently in the process of
negotiating off-take agreements with extraction companies to sell
the biomass produced during the October harvest in New
Brunswick.
MCOA and its partners in New Brunswick have been finding
ingenious ways to improve techniques impeded by decades outside the
law. This year, the team in NB experimented with a modified bean
harvester to strip leaves and flowers from the plants without
picking up much straw. Based on the results, this technique is
being extended to the entire 125-acre project.
Cannabis Cultivation Creates New Industry
In less than two decades, a whole new industry has grown up
around the cultivation of hemp and other forms of cannabis. Even
with restrictions still tight in much of the world, companies are
finding ways to legally profit from these crops.
Isodiol International, Inc. (OTC: ISOLF) has
become an important and active voice for the industry, employing former NFL player Marvin Washington as a
director and spokesperson. The company has developed a variety
of cannabis and CBD-derived products, tapping into the medical and
vaping markets. Its KURE Corp subsidiary provides a strong retail
front and has recently set its sights on further expansion through
new and acquired shops.
A prominent player within the industry, Aurora Cannabis,
Inc. (OTC: ACBFF) is making the most of a young market to
rapidly expand its business. A $150 million loan from the Bank of
Montreal is giving it a short-term financial boost to get ahead of
the long-term game. It’s this sort of long-term thinking that has
led the company to acquisitions such as the takeover of MedReleaf, increasing Aurora’s market
share. Some commentators have compared this strategy with that of
Amazon, focusing on market dominance as the route to profit.
Organigram Holdings, Inc. (OTC: OGRMF), a
medical cannabis company, is preparing to expand into Canada’s
recreational market in October. The company has established a
number of agreements with other companies, most recently the Nova
Scotia Liquor Corporation, to supply its products to stores. These
agreements will ensure that the legal recreational market quickly
grows from a principle to a reality.
Emerald Health Therapeutics (OTC: EMHTF) is
also setting up supplier agreements to give it a place in the
recreational starting lineup. Its partners include the Newfoundland
Labrador Liquor Corporation and Ontario Cannabis Retail
Corporation.
The Canadian cannabis industry is set to experience a
transformation on October 17, one that will prepare companies to
expand as laws change elsewhere in the world. From medical cannabis
companies to hemp growers, many business enterprises are likely to
profit from this change.
For more information on Marijuana Company of America, visit
Marijuana
Company of America, Inc. (OTC: MCOA)
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