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Canopy Growth to increase their investment into US Hemp production

2019-11-03 10:21:14 Business


Canopy Growth is set to expand its already large investment into the American Cannabis sector.

Canadian-Based Canopy Growth had previously announced a $100 million USD to begin the production of hemp in New York, after they received licensing rights from government officials to start off the New Year. Seeing the huge potential for growth Canopy have now seized the opportunity to increase their initial investment up to $500 million USD by adding a hemp production facility in two to three other US states as legalization comes into full swing. Bruce Linton CEO for Canopy Growth said in a recent interview

“We’ll do it state by state right now, because what has to happen is the state needs to regulate what is permissible for CBD,” Linton stated. “So we'll probably have three or four states that have big populations and progressive leadership who want to have hemp become part of their actual job creation industrial platform.”

Canopy’s Move into investing into hemp processing in New York has been the company’s first big push into cannabis extraction and processing outside of their home of Canada. Making moves of this magnitude have made Canopy Growth a major interest by investors, as they are the first company who are actively seeking use of the space since the passage of the New York farm bill earlier this year. The farm bill has made the growing and processing of hemp legal at a federal level, although the technicalities of production are still to be dealt with on a state by state basis.

Hemp is in the same family as marijuana, and has been the center of attention for its higher levels of CBD/Cannabidiol, which is the non-psychoactive ingredient found in cannabis plants. Consumers cannot get high from CBD in the same way as they do from THC but it is proven to alleviate a range of medical issues including some forms of anxiety and also insomnia.

CBD sales have been steadily risen as its use in creams, tinctures and even infused beverages have gained popularity in the pharmaceutical sector. Brightfield Group, a well-informed cannabis sector research firm, has set estimates that the CBD market will grow to become a $22 billion USD market by the year 2022, but that’s not all that interests Canopy CEO Linton.

“When you think hemp, you should think about the protein, you should think about the fiber, and you should think about the CBD,” Linton said. “And so when you start covering all those categories, it doesn't take too long until you can see, ‘Wow there is a lot of potential yield on this.’ And so putting the money in means that you're actually creating an intent to be there for long enough to do the science and get the reward.”
With pharmaceutical company’s sourcing CBD for CBD infused drinks, and other products, the huge benefit that canopy growth will see are the very useful by products that come from being a large scale producer of hemp. One of the many utilizations of hemp, can be seen from a startup company that is using the waste from hemp production to produce alternative plastics for cannabis companies packaging. It’s unclear exactly how Canopy will utilize the by-products at this time, but it would be a very efficient way to increase their earnings, by making sure there is no waste from the production line
Canopy Growth has also been expanding their horizons through acquisitions. Canopy recently bought out Evergreen, a Colorado based cannabis researcher in November of 2018 for a hefty $530 million USD. This enabled Canopy to gain control of over 50 cannabis related patent fillings, which could open up a wide array of options for the company’s future.

Bruce Linton revealed that the intellectual property it received as part of the deal gave Canopy the potential “to vastly reduce the cost of CBD production.” The savings made in that department could prove extremely valuable as the company’s focus on hemp processing and production is becoming a very significant part of Canopy’s future moving forward.

Joshua Lee – Bradshaw Management

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