Why Hemp Could Become the Next Biggest Cash Crop and How to Profit
March 30th, 2018
Exclusive, News, Top News
Hemp is one of the oldest plants that has been in continuous use throughout history. In 1977, Carl Sagan went so far as to suggest that hemp could have been the world’s first agricultural crop, leading to the development of civilization as we know it. Hemp was also America’s largest cash crop for over 150 years following the Revolutionary War. In fact, the Declaration of Independence was drafted on hemp paper.
In 1957, hemp was banned in the United States due to concerns about its psychoactive cousin, marijuana. The War on Drugs began in 1986 and imposed mandatory minimum sentences and raised federal penalties for the possession and distribution of drugs. In 2001, the Hemp Industry Association and other companies took legal action against the Drug Enforcement Administration and a three year legal battle led to re-legalization of hemp. In Canada, growing Industrial hemp was re-legalized in 1998, creating an instant market for hemps foods. With imminent revised MMJ and Industrial Hemp regulations in 2018, full crop utilization of Industrial Hemp will allow companies to not only harvest Industrial Hemp for its nutritional value but begin to harvest the crop to extract Cannabidiol (CBD). This gives Canadian companies an advantage in the sector as Hemp remains illegal to grow in the United States except for research and development purposes.
Naturally Splendid Enterprises Inc. (TSX-V: NSP) (OTCQB: NSPDF) (FRK: 50N) aims to become a leading provider of plant-based functional foods and ingredients with a focus on hemp-based products. Investors interested in capitalizing on the hemp revolution may want to take a closer look at the stock given its innovative technology and growing product lines.
Hemp’s Tremendous Value
Hemp is unique in that every part of the plant can be used and it’s extremely easy to grow in every state. In fact, the growing season is so short that farmers can plant hemp after harvesting their other crops. The plants deep roots help create ideal growing conditions for future crops, while its dense foliage chokes out weeds. These attributes make it a perfect cash crop for farmers throughout the United States and around the world.
In the past, hemp was world’s standard fiber with unmatched tensile strength. After removing the fiber-bearing cortex from the rest of the stalk, hemp can be used to make any fiber-based or cellulose-based product. The fiber was used to produce over 5,000 different textile products before prohibition. With recent advances in processing, these end uses could be rapidly expanded to applications like replacing many plastics.
Hemp seeds are also very nutritious. In addition to a healthy dose of omega-3 fatty acids, the seeds are a better source of high-quality protein than chia seeds or flaxseeds. They’re also a great source of vitamin E and minerals like potassium, magnesium, calcium, iron, and zinc. In recent years, the plant has become an important source of cannabidiol (CBD) – the non-psychoactive cousin of tetrahydrocannabinol (THC).
Researchers have taken a growing interest in CBD due to its beneficial influence on the human endocannabinoid system, which is responsible for regulating a variety of physiological and cognitive processes. A growing body of research has found that CBD could help relieve pain, reduce inflammation, reduce anxiety, protect the brain, and even regulate blood sugar levels, making it a potentially valuable alternative to conventional pharmaceuticals.
Developing Consumer Products
There are many companies developing hemp-based consumer products, nutraceuticals, and pharmaceuticals. Unfortunately, many of them have experienced limited success due to issues with bioavailability and formulation. Pharmaceutical companies have found that the effects of cannabinoids are reduced by first-pass metabolism in the liver, while consumer products companies have difficulty combining CBD oil with common products.
Naturally Splendid’s HempOmega™ and encapsulation technology has the potential to solve these problems. The homogenous powder or emulsion is created from microencapsulated hemp seed oil ( or any plant-based input ) and can be combined into a wide range of existing products, such as food, beverages, supplements, pet foods, livestock feed, cosmetics, and much more. The innovative technology has been commercialized and is produced in a state of the art manufacturing facility in Canada that exceeds food, cosmetics, and drug manufacturing standards.
The company manufactures three in-house product lines, including NATERA®, CHII™, and ElevateMe™. Management launched NATERA®CBD and NATERA® Skincare last year to augment its existing product lines and bulk ingredient sales. CHII™ provides a full line of hemp food products sold online across North America, while NATERA® and ElevateMe™ has an established presence in over 1,200 retail stores, including Costco, Whole Foods, and Sobeys.
The company’s manufacturing facility is also equipped to provide co-packaging and private-labeling opportunities. As a provider of bulk ingredients, this setup means that the company can quickly formulate and manufacture private label products on behalf of larger brands, which opens up a big door to partnership opportunities. The company also has the flexibility to further develop in-house brands, such as its Pawsitive FX pet line, NATERA® and future brand extensions, plus many other new innovative brands/products currently under development.
Naturally Splendid Enterprises Inc. (TSX-V: NSP) (OTCQB: NSPDF) (FRK: 50N) is well positioned to become a leader in the burgeoning hemp industry. With its expanding capabilities in their manufacturing facility in Pitt Meadows and the addition of a Dealer’s License in 2018, the opportunity to build on revenues has never been greater.
The company generated $7.3 million in 2016 revenue mostly in exports, however saw a contraction in exports in 2017. The Company continues to strengthen its retail presence and distribution. Management aims to continue to grow revenue through an increased retail presence in North America as well as expanding opportunities in countries such as Australia where hemp regulations have recently changed and NATERA® is already in an estimated 150 retail stores.
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