This document summarizes an industrial hemp bioactives presentation given to the Senate Cannabis Hearings. It discusses the agricultural production and market perspectives of industrial hemp bioactives. Key points include that farmers require the bioactives market for price stability, bioactives extracted from hemp grain at 1% can generate $1000/acre, and that regulated bioactive derivatives are important to support farmers and processors. The document argues that applying cannabis excise taxes to industrial hemp bioactives would cripple the crop's viability for Canadian agriculture.
4. Industrial Hemp Bioactives- The market analysis
⢠Markets driven by global meal and oil markets are unreliable
⢠Farmers require the bioactives market to create stability
⢠At 1 percent bioactives (1 kg/ acre ) fractionated from milled grain at
.35 cents a mg each .1 cents a mg generates 1000$$ an acre gross
⢠3000 $$ an acre is the value at which the most highly capitalized land
can justify growing and processing hemp for bioactives rich
derivatives
⢠Farmers must keep the hemp bioactives supply chain within the IHR
and NHP and food spaces in order to avoid a federal excise tax of
between .4- .7 cents a mg (C45 details how this is calculated) .
5. Industrial Hemp Bioactives- The competitive analysis
⢠The USA .35 cents a mg market value is based on large shipments of
Chinese 99 percent pure CBD landing in Canada for .5 cents a mg CDN
and large scale USA processing selling domestic product at .35 cents a
mg USD.
⢠Yes there is a current supply chain field to table spread retail at 3-15
cents a mg but that price is rapidly collapsing to 1-3 cents a mg over
this next 18 months.
⢠Industrial hemp has its own niche as it is not economical to create
high concentration extracts from .5-2.5 percent bioactive hemp
derivatives
⢠Innovative products not in the market yet are better suited for hemp
6. Industrial Hemp Bioactives- The 2018 scenario
⢠Oilseed contracting companies have outsourced foreign hemp so
contracted acres will drop from 130,000 acres to 45,000 acres , based
on planting seed sales to date.
⢠Licensed Producers are experimenting with small acreages of hemp
for the cannabis supply chain; itâs a very bad fit for LPs.
⢠Many farmers who have been supplying the black market this last
decade are looking to move to a mainstream market.
⢠Innovative farmers have IP which enables them to neutralize what the
rest of the industry and regulators perceive as legal issues. NAFTA
supports the notion that regulations which diminish IP value result in
direct liability for those who knowingly or unknowingly interfere
⢠Existing distribution couples with unmet needs to fulfil the market
10. Industrial Hemp Bioactives- The economics
⢠Industrial hemp is a low cost of goods sold supply chain which can retail
products for a retail price less than the excise tax for cannabis
⢠1 cent a mg retail equals 10,000 an acre for a vertically integrated
agricultural product supply chain âŚ. There is wiggle room for additional
price downside while supporting all phases and players of the seed to plate
chain.
⢠65 mg as an essential nutrient consumed as food or supplement by 25
million of 36 million Canadians requires 625,000 acres of hemp and
generates 6.25 billion of farm and processing and distribution income.
⢠A market driven IHR domain regulated , lightly regulated, bioactive rich
derivative environment is imperative. Application of Cannabis Excise Tax
to industrial hemp bioactives will kill any chance for farmers and ag
processors to grow a viable main stream crop. .4-.7 cents a mg taxation
of a product worth .35-.7 cents is an execution style head shot to the
future of industrial hemp in Canada.