Hemp Report III 2018-01-23T16:02:44+00:00

hemp-report-banner-primary

Hemp Report III | January 2018

International formed the United States Hemp Corporation, LLC (USHC) as a subsidiary to become a best of breed incubator of premier hemp brands and products in the United States. In March 2014 we published the Hemp Report I and in April 2015 we published the Hemp Report II. This is our third hemp report to provide company and hemp industry stakeholders information about USHC’s growth and progress in this dynamic market.

Since 2014, USHC has been a pioneering force in the development of the U.S. hemp and legal medical cannabis industries. We are proud to have incubated several leading hemp consumer brands – including Kush Cakes, Chillo, C+Swiss, RMH Brownies, and CannaEnergy – and offer a unique set of services to businesses looking to capitalize on opportunities in the U.S. hemp and medical cannabis industries.

us-hemp-corporation_logoUSHC primarily provides companies in our Hemp Incubator with product marketing services, and USHC has developed an additional set of services to foster overall market growth and promote the company’s brands. These services include:

  • Go-to-market consulting and research
  • Brand management
  • Product development outsourcing
  • Food science testing
  • Third-party manufacturing coordination
  • Warehousing and order fulfillment

The U.S. Hemp Industry

The U.S. Hemp industry is a young, fast growing market. USHC was formed to capitalize on the emerging opportunities in this market as discussed by Representative Comer at the Hemp Industries Association Conference.


In August 2017, Representative Comer introduced the Hemp Farming Act of 2017 and USHC continues to support the lobbying efforts of the HIA, Vote Hemp and industry stakeholders committed to removing hemp from the Controlled Substances Act (CSA). While the hemp industry is different than the marijuana industry, USHC continues to operate across both industries leveraging partnerships and opportunities for Hemp Incubator companies and brands. While the industries have very different legal and regulatory frameworks (and supply chains) hemp and marijuana are both participating in the rise of the CBD-based products market.

According to Hemp Business Journal, the total CBD industry across hemp-derived, marijuana-derived and pharmaceutical sales is projected to reach $1.1B by 2020, and $1.8B by 2022. With such a large, fast moving industry, USHC has positioned the Hemp Incubator to target the entire CBD-based market including products operating in the hemp-derived, marijuana-derived and pharmaceutical categories.

Category Focus: Hemp-Derived Cannabidiol

Hemp Business Journal estimates the total CBD industry—including both hemp and marijuana-derived sources—grew to $360mm in sales in 2017 representing a 37% growth rate. Of the total CBD market, hemp-derived CBD sales reached $178mm in retail sales driven by Internet sales and penetration into the Natural Products Industry.

USHC performed product testing in 2016 and 2017 and in many ways “stayed on the sideline” given risks in the legal and regulatory environment with the FDA and DEA. USHC has leveraged its experience through Dewmar’s executive team to understand the FDA perspective and strategy on CBD-based products and is proceeding accordingly with companies and brands in the Hemp Incubator.

Additionally, Hemp Business Journal projects that large retailers (Walmart, Target, WholeFoods, etc.) will begin to carry hemp-derived CBD products in 2019 or 2020. As a subsidiary of Dewmar International, USHC is in prime position to capitalize on the distributions channels it already has in place through Dewmar International. Leading hemp brands are beginning distribution into larger natural and speciality market retailers, like Lucky’s Market, under the label terminology “Full Spectrum Extract” (or Oil).

Currently, U.S. hemp wholesalers are capitalizing on exporting opportunities to Central and South America, and branded hemp products are vying to be the first to hit the shelves of large retailers. According to Bob Hoban, managing partner at Hoban Law Group, there are “kilos upon kilos” being exported to South America of hemp-derived CBD but a broad product market “chill” has been in place the last 12 months because of the DEA’s new drug code (7350) for Marijuana Extracts. This new drug code has spread misinformation and confusion with the public, regulators and law enforcement.

Pharmaceutical sales will be driven by GW Pharmaceutical’s upcoming new drug, Epidiolex, with projected sales starting in Q4 of 2018 or early 2019. For sales, Hemp Business Journal forecasts Epidiolex will generate between $15 million to $3 million in late 2018 and $190mm in 2019. USHC continues to leverage the experience and expertise of Dr. Marco Moran in the pharmaceutical category and will look to take advantage of opportunities as they arise.

There is a lot of pent-up curiosity among practitioners and consumers regarding hemp-derived CBD as a dietary supplement. Larger and more main stream retailers are interested in trying these products and testing their effectiveness for concerns such as pain or sleep—two areas where Dewmar International has a wealth of experience and product expertise. Initial data is showing a large percentage of practitioners who order a CBD product once are continuing to order again, which is a good sign of the potential future success in the Natural and Specialty products market.

Hemp Incubator: Products to Watch in 2018

Hemp Incubator        Branding Evolution

Kush Cakes

Kush Cakes remains the flagship brand and product within the Hemp Incubator. USHC sources premium hemp based protein powder from industry wholesale leader Hemp Oil Canada. Given USHC’s focus on the U.S. hemp industry, we will look to the U.S. market in 2018 to source the hemp protein for Kush Cakes.

Kush Cakes is protected from competition by its proprietary formulas and has been carried for years by leading U.S. distributors, including Walmart.com. Kush Cakes manufacturing and distribution continues to grow. The product is primarily distributed to smoke shops and head shops across the United States, and our bakery continues to improve the efficiency of its manufacturing line to bake Kush Cakes at tremendous scale and a great profit margin. For reference, our bakery produced 50,000 Kush Cakes the last week of December 2017. We’re excited to have the capacity in place to scale Kush Cakes to ten times the production we did in 2017—to record highs in 2018!

The market for Kush Cakes is split between two diverse demographics: younger urbanites who embrace the resurgence of the new legal cannabis landscape and older adults who grew up using cannabis in the 1960’s and 1970’s who are drawn to the tie-dye graphical meaning of their era. Given the Kush Cakes brand position we will continue to go deeper and wider into this demographic. In 2016 and 2017 we shipped Kush Cakes to Europe and Mexico and we aim to further develop these distribution channels and international markets in 2018.

The market opportunity is not limited to Kush Cake’s existing demographic. There are over 70 million Baby Boomers in the U.S. and our polling suggests many are looking for healthy comfort foods. USHC is currently analyzing the market and developing a new recipe and brand for a “healthy brownie” to target health-conscious Baby Boomers (including Veterans).

Pharmacist Made

Pharmacist Made was designed in late 2016 and 2017 as an infused product brand. By leveraging the USHC team’s expertise across the hemp-derived CBD, marijuana-derived CBD and pharmaceutical markets, we concluded in 2017 that the brand’s go-to-market strategy needed a substantial brand management and field marketing team in place prior to the brand’s official release. We are now watching the legal and regulatory development in the industry very closely and will be launching the brand in accordance with any major industry legal or regulatory updates. Our aim is to become a household  name in legal marets and not just  ‘make a quick buck’ with our high profit brand. We are currently developing the following ‘functional foods’ and infused products for release in select state markets in 2018 and 2019.

      • Infused Brownie (CBD:THC ratio)
      • Infused Brownie (THC Dominant)
      • Gummy Edibles (THC Dominant)
      • Gummy Edibles (CBD:THC ratio)

Our focus in 2018 is to watch for legal and regulatory development with the DEA and FDA, and then proceed accordingly with a multi-faceted approach that includes launching the Pharmacist Made brand into select markets while continuing to expand distribution for Kush Cakes into new markets.

USHC at Hemp Industry Events

Throughout 2016 and 2017, USHC team members attended industry-leading conferences, events and business expositions to help Hemp Incubator brands understand the legal, regulatory and marketing framework of CBD (Cannabidiol). The attendance and participation at these events increased USHC’s network of industry consultants, experts and advisors, and has led to new partnerships and opportunities.

      • Hemp on the Hill – A hemp industry lobby event hosted by Rep. Polis, Rep. Massie, Rep. Commer, Rep. Blumenauer and Senator Wyden.  This unique event brought together policy makers and business leaders in industrial hemp and demonstrated the varied uses of hemp and its economic benefit to the United States.

 

      • MJIC: Science of Medical Cannabis – A member of the USHC team presented at MJIC on the use of CBD in medical cannabis. The event was held in San Diego and was attended by companies in the marijuana industry, both medical and adult use.
      • Expo West – The preeminent tradeshow and exposition in the Natural Products Industry. A member of the USHC attended and visited booths of many of the hemp companies exhibiting at the show. The presentation on CBD and +CBDoil by Stuart Tonc and Josh Hendrix (of CV Sciences) was of particular insight.

 

      • NoCo Hemp Expo – Several USHC team members attended to develop existing relationships and form new ones with hemp brands to be included in the Hemp Incubator. NoCo is the largest hemp-centric tradeshow and exposition in the world.
      • Hemp Summit – The leading business focused event in the hemp industry for executives, investors and entrepreneurs. One of USHC’s team members was a speaker.
      • MJAC2017 – The Investor Hub cannabis conference was held in Los Angeles, CA. Dewmar’s President, J.D. Houston, was a speaker on Forecast, Create, Manage & Grow the Cannabis Economy.

 

      • NBJ Summit – The leading event for executives in the natural products industry. NBJ Summit was held at Ranchos Palos Verde Resort outside of Los Angeles where USHC team members attended to learn high-level strategy concerning developments in the natural products industry.

 

Roy Bingham (far right) CEO of BDS Analytics discussing CBD at NBJSummit

 

      • HIA Conference – The HIA Conf was held in Lexington Kentucky where members of the Hemp Industries Association exhibited their products and leading speakers in the industry informed attendees of the latest developments in the industry.

 

      • Supply Side West – Supply Side West is the leading wholesale ingredient tradeshow in the world. USHC attended the event to ‘take the temperature’ of the market on CBD as a food and dietary supplement ingredient.

 

USHC’s Cannabis Related Initiatives under Dewmar International

As a subsidiary of Dewmar International, USHC continues to collaborate and leverage its team of experts to target opportunities in the broader hemp and medical cannabis markets. The following are sectors where Dewmar and USHC work together to expand brand awareness and assist companies in the Hemp Incubator.

      • Strategic Investments into Genetics and Hemp Seed

USHC has identified that access to certified seed continues to be a major problem in the emerging U.S. Hemp industry and represents incredible opportunity for investment and business ventures. On advisement by USHC team members, Dewmar International invested in New West Genetics. New West Genetics has made significant progress in 2017 including entering into a seed licensing deal with potential revenue of $3 million over 3 years. The company’s proprietary RELY™ hemp seed is the first United States hemp-bred seed to pass a Colorado Department of Agriculture trial. RELY™ was planted in five diverse regions including variations in altitude and weather pattern. The result of the trial reached a successful endpoint when the THC content never exceeded .2% (two-tenths of a percent THC). In a Colorado seed lab test, the RELY™ seed resulted in 99% purity, 99% germination and 0% weeds.

Opportunities are considerable to import hemp seed and become what some might call a “benevolent Monsanto” in the nascent U.S. hemp industry. USHC team members have indemnified Bija Hemp as the leading hemp seed importer and will look to form partnerships accordingly in 2018 and 2019 as the hemp seed market develops.

      • Education & Media

USHC continues to promote the benefits of the entire cannabis plant (for example, the fact that hemp is environmentally friendly, leeching toxins and pollutants out of ground water and soil).

Part of USHC’s education and media mission is to educate the public about veteran causes  pertaining to hemp and medical cannabis. We are proud to be investors in Weed for Warriors (video) and continue to support the Twilight Brigade.

Every day, veterans are being prescribed harsh pharmaceutical drugs that are extremely addictive and have been linked to thousands of Veteran suicides. Veterans represent 7% of the American population, yet account for 20% of national suicide rate. An estimated 22 veterans commit suicide per day. Medical cannabis has been shown to help with PTSD, cancer, chronic pain, sleep disorders, crohn’s disease, migraines, addiction withdrawal and has statistically lowered the suicide rate and improve palliative care in states where it is legal.

Kush Cakes is to be featured on a new business reality show called The Collective, which we will be sharing more about this with stakeholders in 2018 and 2019.  These activities, further explained in the CEO Message, are expected to help grow revenue as well as build the company’s brand.

  • Intellectual Property

Capitalizing on Dr. Moran’s expertise in pharmacology and healthcare, Dewmar launched a subsidiary, Cannabis Intellectual Property Holdings, LLC, to acquire patents related to the medicinal use of cannabis compounds. The USHC team works with Dewmar to expand its patent portfolio for IP involved in the treatment of lung cancer, Parkinson’s disease and PTSD with cannabinoids.

  • Private Partnerships for Cannabis Market Development

To strengthen its competitive edge in the bid for cannabis cultivation in Louisiana and Arkansas, Dewmar has also partnered with key private commercial organizations. Most recently—and most notably—the company has entered into memoranda of understanding with MJardin and GHD. The USHC team works alongside Dewmar to leverage its relationship with MJardin and GHD to capitalize on opportunities across the hemp and medical cannabis industry.

To learn more about these USHC initiatives as a subsidiary of Dewmar International, please visit the CEO Message.

Thank you for reading and we look forward to a great 2018. Upward and Onwards for USHC and the U.S. Hemp Industry!

Dr. Marco Moran, CEO

—-

Sign-up below and be the first to receive future press releases, President Messages and other important updates from Dewmar International BMC, Inc. If you contact the company seeking news and updates of this nature you will be directed back to this sign-up form. 

* indicates required

Safe Harbor Statement This message may include predictions, estimates, opinions or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Among others, these risks include the failure to meet schedule or performance requirements of the Company’s contracts, the Company’s liquidity position, the Company’s ability to obtain new contracts, the emergence of competitors with greater financial resources, general economic conditions and the impact of competitive pricing. In light of these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements.

us-hemp-corporation_logoDewmar International Logo