Canadians attack the American hemp market

You must have noticed, The United States has legalized hemp thereby paving the way for a market estimated to be worth more than $6.1 billion in 2023, according to Hemp Industry Daily’s. In addition to industrial applications of hemp in textiles and construction, it is primarily hemp-derived CBD products that are booming. They are emerging as a leading consumer trend as consumers become more educated about the plant's benefits in food and in cosmetics. Armed with their expertise and capital, Canadian cannabis companies are already investing in what is shaping up to be the market with the highest growth potential in 2019.

Well-known and lesser-known

Canopy Growth, a Canadian leader, has made a grand entrance into the U.S. hemp market. The company announced a $200 million investment Canadian dollars (approximately 130 million euros) to build facilities for processing hemp into manufactured products in New York State. The company cannot grow its own hemp and must purchase it from American farmers. It will nonetheless produce high-value-added products for the vast U.S. consumer market. In addition to this physical presence, the company has also lent 9 million Canadian dollars to Greenhouse Juice (Toronto) to develop a line of cannabis-infused beverages for the Canadian and U.S. markets. Tilray, another Canadian producer and industry leader announced its intention to acquire LiveWell Canada, a Canadian company that produces hemp-derived CBD products, noting that these products will be distributed throughout North America.

Village Farms International, a Canadian agricultural company that grows vegetables in greenhouses, for its part, announced its intention to enter the U.S. market hemp-derived CBD products and to list on the Nasdaq. The company already has operations in the United States and is currently awaiting a production license from Health Canada. Finally, True Leaf Pet, a Canadian company that produces hemp-based treats for pets has hired a former executive from Petco, the U.S. pet retailer, and has joined a coalition of the U.S. hemp industry to make hemp legal in animal feed.

The reaction of American entrepreneurs

For Canadian companies, the legalization of hemp in the United States is a boon. Many companies have already capitalized on the legalization of recreational cannabis in Canada and already possess the expertise, infrastructure, and capital needed to capture a significant share of the U.S. consumer market. However, this competition doesn't seem to be a cause for concern Rick Weissman, President of High Falls Extracts and High Falls Agriculture, a hemp cultivation and processing company based in the same region as Canopy’s future mega-facilities: “We could say, «Oh, the giant is going to run us over,» but you know what? It just forces us small players to be much more creative and adaptable so we can find our own way.».

In terms of pricing, competition from major Canadian players is likely to exert downward pressure, but estimated demand is so high that this impact may also be minimal. In any case, American hemp entrepreneurs remain enthusiastic and seem to have come to terms with the idea of Canadian competition. Gregory Dramkhler, director of product development for Farmacy Bliss, a CBD producer in California, explains, «It’s slowly but surely becoming a regulated national market, and when that happens, a lot of money comes into play. We expect to see many large companies entering the U.S. market.».

Source : Hemp Industry Daily