Santa Fe Farms of New Mexico has bought a Colorado hemp-genetics firm to establish a line of propietary genetics.

High Grade Hemp Seed of Longmont, Colorado, will retain its name and location but will become a subsidiary of Santa Fe Farms, which grows hemp on about 200 acres but does not have its own line of genetics.

The companies said in a statement that they’ll prioritize developing hemp varieties “that will adapt to climate change,” in addition to looking for market opportunities.

Both firms are privately held, and terms of the acquisition were not announced.

Hemp-derived CBD giant Charlotte’s Web Holdings is positioning itself to enter THC and marijuana markets.

The Boulder, Colorado, company says it has signed a five-year, $8 million purchase agreement option with a marijuana company started by its founders, Stanley Brothers USA Holdings Inc.

The deal allows Charlotte’s Web to take over the marijuana business after the U.S.  legalizes marijuana nationwide for a total price to be determined based upon revenue and EBITDA figures.

Charlotte’s Web CEO Deanie Elsner says the company made the deal because of signs that federal marijuana reform is nearing.

“Consumer attitudes, market trends and laws surrounding cannabis and its role within the wellness category continue to trend positively,” Elsner said in a statement.

Stanley Brothers founders Jared and Joel Stanley are also members of CW’s board of directors but will step away from those positions to oversee the future acquisition.

Stanley Brothers USA Holdings makes cannabis products that don’t qualify as legal hemp but are lower in THC than many formulations in adult-use cannabis markets.  The company has operations in Colorado, California and Florida.

Charlotte’s Web trades on the Toronto Stock Exchange as CWEB.

(This opinion column appears in the February issue of Marijuana Business Magazine.)

Everyone in the hemp industry knows the story of Charlotte’s Web: A group of well-meaning brothers working under Colorado’s medical marijuana system developed a cannabis strain that worked miracles on a sick little girl named Charlotte.

Word spread about the awe-inspiring results of this low-THC, high-CBD extract. CNN paid Charlotte and the Stanley brothers a visit in 2013, and the story made the brothers rich and changed minds around the world about the value of a plant formerly sneered at by mainstream medicine.

It’s an inspiring story.

But what many folks in the hemp industry don’t know is how it happened, or how those well-meaning caregivers spread word of their product’s healing properties without inviting class-action lawsuits or the wrath of the U.S. Food and Drug Administration, which reminds CBD entrepreneurs at every turn that they can’t make medical claims.

Media Might

The secret behind the shocking business success of the company that became Charlotte’s Web Holdings is available to every creator in the hemp industry. It’s free and as close as your local newspaper. I’m talking about the press.

As we examine liability concerns in the cannabis industry, I want to share how the press can be your secret weapon in gaining global recognition without spending a dollar on advertising or hiring a lawyer to shield you from FDA sanctions.

The story of Charlotte Figi is a great example.

Charlotte and her caregivers didn’t start sharing their CBD story on prime-time television. Instead, a local newspaper reporter in Colorado Springs, Colorado, was the first to tell their story.

The caregivers and Charlotte’s family were completely honest about the girl’s disease and her treatment at a time when many parents would be considered criminals for giving their children an illegal drug.

And in an age when people guard their medical privacy and look at the media with suspicion, Charlotte’s advocates invited a local reporter and photographer to come see her progress firsthand.

What happened next was no surprise to folks who work in journalism.

Free To Tell It Like It Is

The local newspaper report about Charlotte Figi caught the attention of larger newspapers in Denver. More reporters started inquiring about this little girl, and they were again welcomed to find out more and share the story.

Media attention grew until the Denver correspondent for The New York Times wrote a piece about the Figis. That’s when CNN sent a team to Colorado Springs.

CNN does great work, but the network doesn’t have the manpower to discover every sick child experiencing a shocking medical outcome. Global media outlets read about those cases in newspapers.

You can review every news story ever written about Charlotte Figi. None of them tiptoes around CBD’s effects on the girl or use vague, lawyer-approved language like “may help support a healthy lifestyle.”

And none of the stories mentions any scary-sounding side effects of taking huge quantities of CBD (and yes, there can be some, even if they are rare).

Charlotte’s Lesson

The story of Charlotte’s Web should inspire everyone making healing products from cannabis.

Forget the slow-moving FDA. Forget the constant vigilance of label language and making sure customer testimonials don’t pop up on your site.

Instead, find out the names of your local newspaper reporters. Read their work and share it on social media. That gets a reporter’s attention faster than the fanciest news release.

And when you have a patient or a client finding amazing results from your products, get those folks in touch with a local reporter.

You can’t make medical claims. But reporters can share the story of your experience with no chance of government sanction. Sometimes those local newspaper stories turn into priceless global media exposure. Just ask the Charlotte’s Web pioneers.

As you may know, Charlotte died last year. Let her story inspire you to keep seeking the healing properties of the cannabis plant — and let the Stanley brothers’ experience show you how to avoid liability concerns while still letting everyone know how miraculous this plant can be.

Kristen Nichols is editor of Hemp Industry Daily. She can be reached at [email protected].

This story first appeared at Marijuana Business Daily.

Cultivation facility design and engineering firm Urban-Gro priced an initial public offering on the Nasdaq exchange to raise $54 million before expenses.

The IPO put up 5.4 million shares of the Lafayette, Colorado-based company at a price of $10 per share.

Urban-Gro also works in the non-cannabis indoor cultivation industry.

“To date, a large number of our clients have been cannabis producers, and we will continue to do substantial work for those clients, but we have added a focus on non-cannabis crops as we seek to address a broader market,” Urban-Gro noted in a regulatory filing dated Feb. 10.

The company will use the proceeds of the IPO “to support organic growth, to expand in the European (controlled environment agriculture) market, for general corporate purposes, including to fund potential future investments and acquisitions of companies,” as well as to repay debt, according to a news release.

Urban-Gro shares trade on the Nasdaq under the ticker symbol UGRO.

A Canadian hemp producer says it has acquired the water rights necessary to pursue its plan to grow hemp in northwestern Colorado and process the hemp into construction components for affordable homes on the same land.

Global Hemp Group says it has acquired control of Western Sierra Resource Corp. of Steamboat Springs, Colorado, and its water rights.

Terms of the acquisition weren’t announced. Global Hemp Group said last month that it planned to issue 10 million purchase warrants to Western Sierra’s parent company, Prescient Strategies Group, and to loan Western Sierra $3,842,269 as part of the deal.

Global Hemp Group CEO Curt Huber told Hemp Industry Daily that he plans to acquire land and develop a parcel where hemp could be grown, processed into construction components, and then used to build affordable homes all in one place.

“We can’t conceivably build enough houses to solve the (affordable housing) problem, but we can certainly put a dent in it,” Huber said.

Global Hemp Group trades on the Canadian Stock Exchange as GHG.

(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the hemp industry. Julie Lerner is CEO of PanXchange, a commodity trading platform and benchmark price provider.)

Basing the multibillion-dollar, pie-in-the-sky forecasts for the U.S. addressable market for CBD on retail shelf prices disturbs me.

It’s as illogical as quoting the U.S. wheat market in terms of bags of flour at the supermarket. Estimating the market this way grossly distorts the market fundamentals, especially considering that with regard to cannabinoids, a little bit of hemp goes a very long way.

As the CEO of a pricing and trading platform that is highly visible across the industry, I was terrified to put our estimates out last year because it was dramatically more bearish than the general market consensus.

This year is no different. We look at supply and demand using three different methodologies, and we still lack hard data concerning sales and processing stats. But the supply chain needs forecasts to aid it in making prudent decisions for the year ahead.

Let’s start with the positive: CBD consumer packaged goods is a profitable market sector, though today, it’s far more of a high-margin, low-volume specialty market.

Still, over time, we anticipate that while some products will continue to command high premiums, the mass market will move to a much higher volume at lower consumer prices.

Even this publication, which estimated the 2020 hemp-derived CBD market at $1.9 billion, just predicted that the market would reach $6.9 billion by 2025.

Yet 2021 is a different story.

We came into the 2020 crop year with an abundance of supply from the 2019 crop year. In 2019, the farmers took the hit, with biomass prices falling 84% over six months from their high in July 2019. Since then, inventory has been building across the entire supply chain, in large part because growers chose to enter into tolling agreements.

How tolling works

There are two types of tolling agreements.

The simplest is when the grower pays $1-to $5 per pound of biomass and, in return, receives the extracted product (usually crude oil or sometimes distillate).

In other arrangements, the grower pays for tolling, but instead of receiving the product, agrees to share the profits when the processor sells the extracted product.

Tolling is an excellent way to preserve the hemp crop’s quality, especially if the product has yet to find a home. But throughout 2020, the industry quietly began stuffing these extracted products everywhere – from the farm to the processor, to the consumer packaged good white-labeler and fully integrated player.

Quoting the total addressable market for CBD products in terms of retail shelf prices is grossly distorting one key element of the hemp market.

Consider:

• PanXchange estimates that total production from 2019 to 2020 decreased from 250,000 acres to 103,000 acres. If we were to take Brightfield Group’s 2020 estimate of the CPG market at $4.7 billion, the most aggressive of analysts, the entire U.S. cannabinoid market would require only 4.4% of the 2020 biomass. This equates to only 2,819 planted acres based on PanXchange’s estimate. Using Charlotte’s Web financial statements, it seems that to reach $95 million in revenues in 2020 (equal to 2019 revenue), only 873 kilograms of distillate was needed to fulfill its entire supply chain in 2020. This amount equates to only 57 acres from the 2019 growing season.

Depending on Charlotte’s Web’s actual extraction efficiency, our estimates are likely a bit low; however, we are not that far off.

Moreover, further analysis of the company’s public data reveals that the inventory build mentioned in its financial statements may exceed 30,000 kilograms of distillate and other extracted material.

Growers, please take a moment to absorb these figures. The inventory build is real and significant that we believe it’s dangerous to grow and toll and hope the market picks up again. It will eventually, but the current inventory is staggering.

Tolling biomass to preserve quality is shrewd if you know you can’t sell it immediately. But if you do not have a buyer secured for your 2021 crop, you may want to sit this crop year out.

Otherwise, we fear that you’ll be holding that inventory for many, many months.

Julie Lerner can be reached at [email protected]

To be considered for publication as a guest columnist, please submit your request to [email protected] with the subject line “Guest Column.”

Molson Coors Beverage Co. says it has launched CBD drinks in Colorado through TRUSS CBD USA, its joint venture with HEXO Corp.

The beverage line will be available in three flavors – Grapefruit Tarragon, Strawberry Hibiscus and Blueberry Lavender under the name, “Verywell,” Molson Coors and HEXO said Wednesday.

The companies first partnered in 2018 to launch beverages in Canada through another joint venture called Truss Beverages, which sells non-alcoholic cannabis-infused drinks.

“Our joint venture with Molson Coors Canada saw Truss Beverage Brands become the No. 1 choice for consumers in Canada, and we are expecting similarly great results in the U.S.,” said HEXO CEO and co-founder Sebastien St-Louis.

Production and distribution for the Colorado CBD beverages will be kept within state lines because Colorado is one of the few states with an established regulatory framework for hemp-derived CBD in food and beverages, the companies previously said.

The companies did not elaborate on where in Colorado the drinks would be sold. Pete Marino, president of the emerging growth division for Molson Coors, told Bloomberg that Colorado will be a testing ground for the new brand.

Molson Coors trades on the New York Stock Exchange as TAP. Hexo Corp. trades on the Toronto Stock Exchange as HEXO.