Hemp Market Sizes and Analysis - HIA Presentation

Hemp Market Sizes and Analysis - HIA Presentation
Copyright © Frontier Financial, Inc The State of Hemp Sean Octavius Murphy Director of Hemp, New Frontier Data Founder, Hemp Business Journal
Copyright © Frontier Financial, Inc
Copyright © Frontier Financial, Inc • Global Market Overview • U.S. Market Overview • Rise of CBD Processing / Wholesale • Hemp M&A and Investments • Applied Economic Theory: Forecasting Industry Development • Conclusions & What to Watch for in 2019 State of Hemp
Copyright © Frontier Financial, Inc Hemp Industry Sector Breakdown 1. Food - Dairy - Bread - Grains - Beverages - Snack Foods - Packaged and Prepared Foods - Condiments 2. Supplements 3. Personal Care 4. Consumer Textile 5. Other Consumer - Pet Food - Household Cleaners - Paper - Jewelry/Crafts - Other 6. Industrial Applications - Automotive - Green building - Industrial Textiles - Bedding Materials - Bio-fuels - Bio-plastics - Oil Wells - Other 7. Hemp-Derived CBD
Copyright © Frontier Financial, Inc Where does the data come from? 1. Data Partners and Collaborators • Trade Associations • Companies, Non-Profits • Government Agencies, Depts. of Agriculture, University Research 2. Point of Sale * 3. Import / Export 4. Surveys and interviews with executives, experts & industry leaders
Copyright © Frontier Financial, Inc 22,000 6,700 18,600 Licensed – 102,000 Planted – 75,000 7,800 2018 Estimates 3,185
Copyright © Frontier Financial, Inc • Montana increases from 542 acres to 22,000 with just 56 farmers growing. • 22 states growing in 2018 if you include California which is not yet state regulated. • California had a number of groups planting under existing state law by claiming affiliation with research institution but without CA Dept. of Food and Ag. (CDFA) licenses. • More states coming online in 2019 including Arkansas, Florida, Kansas and Oklahoma (Michigan & Wyoming seem less likely) • Feds are cracking down on some of the projects. CDFA regulation process has been painfully slow. • North Carolina is also coming along strong and South Carolina emerging Cultivation State Analysis Highlights
Copyright © Frontier Financial, Inc The Story of the Three Channels 2018 • Hemp CBD: $325-$350 million • MJ CBD: $250-$300 million • Epidiolex: sales begin 2022 • Hemp CBD: $900 million - $1.3 billion • MJ CBD: $800 million - $1.1 billion • Epidiolex: $400-$600 million Updated Estimates (October, 2018) (pending EOY 2018 data analysis)
Copyright © Frontier Financial, Inc Hemp CBD Channel Size
Copyright © Frontier Financial, Inc Not Blurry Not Blurry Blurry Blurry Not Blurry
Copyright © Frontier Financial, Inc CBD Oil (variable potency) Source Getting From Hemp to CBD Hemp CBD Concentrates CBD Isolate (99%+ purity) Extraction Finely Ground Shucked With Sticks/Stems Extracted “Juice” Purification • Technology • Capacity • I.P. • Scaling Extracted “Crude” CBD Oil (customized purity)
Copyright © Frontier Financial, Inc Hemp Wholesale Pricing Full Spectrum Oil (60%+ CBD) CBD Isolate (99.8%+ CBD) THC Free CBD Distillate (60%-80% CBD) CBG Isolate (99.8%+ CBG) $2K-$4K/Kilo $5K-$8K/Kilo Fall 2018: Assumes a one time order of 1-10 Kilograms $14K-$18K/Kilo $20K-$34K/Kilo
Copyright © Frontier Financial, Inc Let’s talk Pharma. CBD as a Drug.
Copyright © Frontier Financial, Inc Hemp as a Food (without CBD)
Copyright © Frontier Financial, Inc Hemp as a Dietary Supplement
Copyright © Frontier Financial, Inc Leading Hemp CBD Product Types • Extracts • Personal Care • Vapes • Capsules • Pet
Copyright © Frontier Financial, Inc Labeling: Hemp vs. CBD
Copyright © Frontier Financial, Inc The Big Canadian LPs
Copyright © Frontier Financial, Inc Canopy Growth: Sign of the M&A Times $4 billion | now 38% $200 million | 9.9% Warrants | up to 50% $330 million | 100% “We are in the cannabinoid business, not the cannabis business.” Jon Cooper, CEO, ebbu 10/17 8/18 Next 3 Years 10/18 Green Hemp Industries Ltd.1/18 $630K in stock | 100%
Copyright © Frontier Financial, Inc “We love hemp as a door opener. Because hemp is a very inexpensive way to get CBD out. Because (at our scale) your ingredients are basically free.” Bruce Linton, CEO, Canopy Growth
Copyright © Frontier Financial, Inc • Great companies at a fair price, not fair companies at a great price • Enduring competitive advantage • Trying not to be stupid vs. trying to be smart The Tao of Munger
Copyright © Frontier Financial, Inc Hemp Supply Chain Investing Genetics/R&D/Seed Cultivation & Equipment Processing Brokers/ Distribution Consumer Brands Retailers Agtech: Increase efficiency, potency, scaling, reduce risk Better have competitive advantage and/or be vertically integrated. To scale or to premium niche, that is the question Got dominant brand? Best of Breed in Channel or online? Mass Market? Land Ancillaries (Picks and Shovels, Insurance, other technology) DEA, FDA, USDA State Level Banking / Processing Public Markets Our good friends, interpreters, advisors and the industry muscle…. the not so blood sucking lawyers
Copyright © Frontier Financial, Inc • Monopoly Market • Oligopoly – dominant players, high cost structures, fixed prices and output, may collude or compete, high barriers to entry • Monopolistic Competition – many players, lower cost structures, differentiation, competition but not perfect substitutes • Perfect Competition Economic Structures – Which will Prevail?
Copyright © Frontier Financial, Inc Eco Extracts Third Party / Toll / White Label Processors
Copyright © Frontier Financial, Inc Vertically Integrating Companies
Copyright © Frontier Financial, Inc “In Portland, You Can Drink CBD-Infused Beverages From Morning Till Night. So We Did.” Matthew Singer Sita Fidler
Copyright © Frontier Financial, Inc “We strive to mix the pleasure of craft cocktails and well made food with the numerous benefits of CBD oil.”
Copyright © Frontier Financial, Inc Is this what peak hype looks like?
Copyright © Frontier Financial, Inc Examples of “Blurring” Supplying products for clinical trials • Chemotherapy induced nausea and vomiting • Dravet Syndrome and severe epilepsy • PTSD
Copyright © Frontier Financial, Inc • Farm Bill 2018 – Committee • Epidiolex’s Go-to-Market: Scheduling and successive FDA actions • “Big Hemp” entering the CBD market • Canadian LPs entering the Hemp Industry; Marijuana companies entering the hemp industry. • CW Hemp’s IPO; CVSI stock; Public Markets. Good and legitimate companies rising to the top and illegitimate companies falling off the radar. What to Watch For – Looking back
Copyright © Frontier Financial, Inc What to Watch For –2019 • Farm Bill and the Great American Hemp Revolution • The Regulators: FDA, DEA, USDA (CDFA and other state level activity)) • Will the three CBD Channels square-off or play nice? • Big Hemp makes its move with some swash out of illegitimate and/or small players • Global industry expansion; keeps eyes on China • Continued M&A activity, how will companies deploy growth capital and scale—who will execute and rise in size and who will be gobbled up?
Copyright © Frontier Financial, Inc Purchase Today! NewFrontierData.com Save 15% with code SupplySide15 $299

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