Last week, cannabis and hemp cannabis markets were news of the cannabis giant Tilray Inc. (NASDAQ: TLRY) acquired Manitoba Harvest for $ 419 million ($ 319 million). Manitoba is the world's largest producer of hemp foods, with products in more than 16,000 retail stores across North America.
Especially for Tilray, the move is a significant step in its bid to claim its position in the US hemp market. In the broadest sense, the acquisition reflects the growing trend that cannabis operators seek to acquire hemp companies to secure claims on the ever-expanding hemp CBD market, creating the conditions for an increasingly competitive and dynamic year for the hemp industry
The Hanf Business Journal estimates that the revenue generated by the hemp CBD market will increase from $ 390 million in 201
Due to the Farm Bill of 2018, hemp and its derivatives are now treated as agricultural products rather than controlled substances. Agricultural products have far fewer financial and regulatory barriers for companies that want to keep the hemp market in check, while cannabis companies seeking additional revenue from segments such as hemp food have many opportunities.
Hemp CBD can be considered a hot commodity in today's market, but regulators in the United States and Europe have been slow to agree. In the United States, states are against companies that sell food products containing CBD, and the US Food and Drug Administration (FDA) continues to send warning letters to companies that market CBD supplements as health products.
Similar in Europe The hemp CBD market is currently experiencing its own obstacles. More recently, the European Food Safety Authority has classified CBD as a novel food additive, which means that companies producing CBD-based foods or extracts need to assess their products before placing them on the European market.
Hemp foods that do not contain CBD are not subject to the same restrictions. This makes Tilray's acquisition all the more significant: while US and EU regulators are delaying regulatory decisions on CBD, Tilray will generate revenue from existing Manitoba products. Once the CBD problem is solved, Tilray is better positioned to move towards hemp CBD.
Other cannabis companies have adopted similar models as Tilray. One company that has bridged the fence between hemp and cannabis is Elixinol Global (OTC: ELLXF).
Elixinol Global is the parent company of three companies: Hemp Foods Australia, Elixinol (which sells CBD) products) and Nunyara (a medical cannabis company seeking approval in Australia). Last year, Elixinol Global sales increased 121% to approximately $ 26 million. The vast majority of this growth was driven by the sale of CBD products.
Two of the other largest cannabis companies (except Tilray) seeking to grow the hemp CBD market are Aurora Cannabis (NYSE: ACB) and Canopy Growth Corp . (NYSE: CGC).
At the end of last year, Aurora announced the acquisition of the largest European hemp company Agropro UAB and its sister company Borela UAB (which processes and sells hemp) for $ 9.5 million. Although little has been heard about Aurora's hemp plans, there are rumors that the company is conducting "serious discussions" with Coca-Cola to develop a range of CBD beverages. If these rumors turn out to be true, Aurora could immediately become a powerful force in the hemp industry.
Instead of an existing hemp company like Aurora and Tilray, Canopy Growth seems to be laying the groundwork for building its hemp infrastructure. At the end of last month, Canopy announced that it had obtained a license to grow and process hemp in the state of New York. Canopy has committed $ 500 million to its hemp production capacity and hopes to expand its hemp footprint to two more states.
While regulators continue to focus on how CBD can be regulated, the cannabis industry is betting heavily on hemp CBD. While no clear market leader has emerged in this area, one thing is certain: the hemp and cannabis segments are increasingly interlinked.