Cultivation Archives - Green Market Report

StaffNovember 11, 2021
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3min7940

GrowGeneration Corp. (NASDAQ: GRWG) reported third-quarter 2021 revenues of $116.0 million, versus $55.0 million in the same period last year. This beat the Yahoo Finance average analyst estimate for revenue of $114 million. GrowGen also delivered a net income of $4.0 million, or $0.07 per share based on a basic share count of 58.5 million. This missed the analyst estimate for earnings of $0.09 per share.

“The GrowGen team delivered a strong third quarter, with revenues up 111%, compared to the same period last year in a difficult macro environment,” said Darren Lampert, GrowGen’s Co-Founder and CEO. “Same-store sales at 25 locations increased 15.7% from the prior year. At present, we have 62 retail locations in operation. We increased our inventory positions across all key product categories to get ahead of price increases, as well as expanded more private label purchases. Our private-label and proprietary products reached approximately 8.7% of our overall sales in the third quarter. Our online marketplace, including Agron, is on pace to reach $35 million of revenue for 2021. We opened two locations in the Los Angeles metro area, and for next year, we are looking to open 15 to 20 locations.”

Same-store sales at 25 locations open for the same period in 2020 and 2021 were $59.2 million in third-quarter 2021, versus $51.2 million for third quarter 2020, a 15.7% increase year over year. GrowGen reported that private label sales, inclusive of Power Si and Char Coir, were 8.7% of revenue, compared to 2.1% for the same period last year. E-commerce revenue, inclusive of Agron revenue, was $10.5 million, compared to $3.9 million for the same period last year.

The company is in a solid place with cash and short-term securities as of September 30, 2021, at $93.0 million.

Mr. Lampert continued, “In order to position the company for 2022 and beyond, we have made several strategic decisions. Most importantly, we have organized the management team to focus on key deliverables. Over the past several months, we have brought on key leaders including Paul Rutenis, our Chief Merchant, to lead the private label and proprietary brands, Dennis Sheldon to run technology and supply chain, and Becky Gebhardt to run e-commerce and marketing. Tony Sullivan, our COO, will lead our effort to open new locations and retail operations. At present, we are on track for full year revenue of $435 to $440 million in 2021.”


Kaitlin DomangueNovember 3, 2021
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8min15070

Cannabis is the fifth most valuable crop in the United States, effectively beating cotton. 

Farmers grew $6.175 billion worth of cannabis last year. That’s enough to fill 57 Olympic-sized swimming pools. Or, you can fill more than 11,000 dump trucks, stretching more than 36 miles. And that’s only across 11 adult-use states, not even including medical marijuana! 

With a crop this huge, you’d expect more data to be collected. The USDA Research Service keeps track of all non-cannabis crops, but they don’t account for cannabis produced in legal states because it’s illegal at the federal level. 

That’s why Leafly is stepping in to try and keep track of what’s being grown in the United States. Their new Cannabis Harvest Report for 2021 proves just how valuable American cannabis is to consumers and farmers alike. Leafly does the same thing with cannabis jobs, which are not tracked by the Department of Labor. 

Quick Data for the United States

  • This report analyzes 13,042 cannabis farms across 11 adult-use states. All of the states in the report have an active recreational program and operational retail stores.
  • Cannabis’ value in the United States is beating cotton, rice and peanuts. Cotton was worth $4.7 billion in America last year.
  • Corn, the nation’s leading crop, was valued at a whopping $61 billion last year. Corn, soybeans, hay, and wheat are the four crops that beat cannabis in value.
  • Cannabis is the #1 most valuable crop in Alaska, Colorado, Massachusetts, Nevada, and Oregon. 
  • Cannabis is currently worth between $500-$3,000 per wholesale pound across the United States. 

Alaska

  • The cannabis crop is worth more than twice as much as all other agricultural products combined in Alaska, including livestock and crops. 
  • Alaska’s 356 licensed cannabis farms produced 21 metric tons of cannabis during the fiscal year ending June 2021, which was worth $104 million wholesale.
  • Hay, Alaska’s second most valuable crop, generated $9 million annually during the last fiscal year. 

California

  • There’s an estimated seven cannabis farm licenses for every adult-use store in California, creating a lopsided cannabis market in the state. There’s more product than there are stores to sell it. 
  • California harvested 514 metric tons of cannabis last year, yielding a wholesale crop of $1.66 billion. Big numbers, but Colorado farmers are growing more cannabis than California farmers and bringing in approximately the same amount of money.

Colorado 

  • Colorado farmers produced an estimated 627 metric tons of cannabis in 2020, according to the Colorado Enforcement Division’s 2020 year-end report
  • Colorado has 1,245 cannabis farm licenses.
  • Colorado’s cannabis was valued at $1.03 billion last year.

Oregon

  • Oregon has an estimated 1,319 cannabis farm licenses, which produced 344 metric tons of cannabis last year.
  • The crop was valued at $602 million last year.
  • It’s the most valuable crop in Oregon, beating hay, wheat, potatoes, and cherries.

What’s a pound worth? 

Leafly found that using Nevada’s rules set forth by state regulators to be the most clear-cut way to break down just how much a pound is worth in the United States. 

Nevada taxes cannabis farmers according to a pre-set “Fair Market Value at Wholesale.” Flower is $2,398/lb, small bud is $1,696/lb, flower approved for extraction is $568, trim approved for extraction is $546, trim is $550, wet whole plant is $297, and immature plants are $51. Leafly rounded up and adapted Nevada’s numbers to create a per-pound formula. Every pound of dry, harvested cannabis yields: 

Flower, ½ pound: $2,400 x ½ = $1,200 

Smalls, ¼ pound: $1,700 x ¼ = $425 

Trim, ¼ pound: $550 x ¼ = $138 

Each harvested dry pound of cannabis equals $1,763 of wholesale crop value. 

Let’s treat cannabis farmers like other farmers

Cannabis farmers did not receive any of the $35 billion in emergency pandemic aid to American farmers in 2020, nor do they get to claim any of the $10 billion already given in usual farm subsidies, despite generating billions of dollars in legal revenue to U.S. states each year. 

  • There’s an entire council dedicated to iceberg lettuce in Arizona, but no such council or research group exists for cannabis, which is Arizona’s second most valuable crop generating $360 million in revenue each year.
  • Strawberry farmers pay no cultivation tax in California, unlike cannabis farmers who pay $9.65 per ounce just to cultivate. 
  • 19 towns have banned cannabis farming in New Jersey, including processing and retail. 

Leafly’s annual reports continue to shed light on the dollar value cannabis brings to state governments and communities, while simultaneously not being awarded the same benefits as other farmers in the United States. 


Julie AitchesonNovember 1, 2021
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5min9730

Hemp Benchmarks has released its October report, with notable points including a 4% decline in observed prices for delta-8 THC distillate for the fourth consecutive month while sales numbers for this controversial cannabinoid made from hemp remain robust. This mirrors an overall dip in rates for CBD distillate, which is at an all-time low despite larger-volume deals. Newcomer delta-10 THC makes an appearance in the Hemp Benchmarks’ report for the month of October, though it is still unfamiliar to many consumers. 

Delta-10, closely related to delta-9, is one of the THC compounds found in hemp and cannabis that is responsible for making consumers feel high or euphoric. While delta-9 is more likely to have an effect on pleasure and memory and delta-8 is often used as a relaxant and sleep aid, some claim that delta-10 enhances energy, creativity, and productivity. (Little is factually known about how this cannabinoid functions in the body or what its effects are.) Unlike delta-9, delta-10 is only found in trace amounts in plant material and requires large amounts of plant matter and significant processing to extract a potent quantity. It exists in the same legal grey zone as delta-8 when derived from hemp and therefore is typically available in states where recreational use is illegal, though this is starting to change. According to Hemp Benchmarks, delta-10 THC Distillate averaged $3,580 per kilogram in October, which is more than four times the average price for delta-8 THC distillate. 

The FDA issued warnings about Delta-8 THC in September, which remains especially popular in states where recreational marijuana use is illegal. Since then, restrictions or all-out bans on delta-8 are being initiated that will likely affect sales of delta-10 as well. Both South Carolina and Texas have taken steps to articulate state-specific policies, with South Carolina Attorney General Alan Wilson issuing an opinion that the state’s Hemp Farming Act “does not provide an exception for, and does not legalize, delta-8 THC or any other isomer of THC in itself.” 

The Texas Department of State Health Services released an October update which specified that “all other forms of THC, including Delta-8 in any concentration and Delta-9 exceeding .3% are considered Schedule 1 controlled substances.” This is not settling well with some Texas retailers, who pushed back and petitioned for a temporary restraining order against the ruling. The restraining order was denied by a state district judge, rendering delta-8 illegal in Texas, at least for the time being. Meanwhile, the Michigan Department of Agriculture and Rural Development issued its own statement that beginning on October 11 “it is illegal for businesses to manufacture, possess, transfer, inventory, sell or give away delta-8 THC or THC-O acetate (a synthetic cannabinoid said to be more potent and have longer-lasting effects than regular THC) without proper licensing from the Marijuana Regulatory Agency.”

Despite this ongoing controversy, growers are dedicating larger portions of their operations to hemp cultivation for extraction and conversion to synthetic cannabinoids as the demand for them continues to rise. The swift rate at which new cannabinoids are being synthesized and new restrictions being issued around their sale and use bodes ill for stability in this corner of the market, though there is no arguing that demand is high, prompting producers to race ahead in search of the next big thing in synthetics.


Debra BorchardtOctober 26, 2021
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8min8710

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) is buying Illinois-based Innovative Growers Equipment Inc. for approximately $58 million. The deal is expected to close in early November 2021. At the same time, Hydrofarm also released preliminary third-quarter results and gave guidance for the full year of 2021.

Third Quarter Earnings

Hydrofarm reported that its net sales will range between $121.0 million to $124.0 million for the three months ending September 30, 2020 versus last year’s $96.7 million. This is increase of approximately 27% was driven entirely by M&A growth. The net income is expected to range between $13.3 million and $18.3 million, versus last year’s net income of $2.7 million for the same time period. The adjusted EBITDA is estimated to be between $14.4 million to $16.4 million versus last year’s $7.4 million, an increase of approximately 108%. 

Bill Toler, Chairman and Chief Executive Officer of Hydrofarm said, “We believe a short-term oversupply has put downward pressure on cannabis growing activity predominantly in California and Canada. In addition, sales activity in highly-populated states such as New York, New Jersey, Virginia and Connecticut, which have passed new adult-use legislation within the past year, has not yet gained full momentum. We expect sales in these states to improve as they begin to more aggressively implement revenue-generating cannabis legislation as part of their respective state budgets. Despite the disruption, we continue to believe our long-term growth algorithm remains intact and that we are uniquely positioned to capitalize on the unprecedented expansion of Controlled Environment Agriculture. We remain convinced that we have only scratched the surface of the long-term opportunity in front of us.”

Outlook

Hydrofarm lowered its outlook from a range of $565 million to $590 million of net sales to approximately $470 million to $490 million. The original forecast of adjusted EBITDA of approximately $80 million to $90 million was reduced to adjusted EBITDA of $47 million to $53 million, or approximately 10% to 11% of net sales for the full fiscal year, up from approximately 6% in the prior year.

The company said that the expected increase in year-over-year adjusted EBITDA was due primarily to “(i) anticipated higher sales of proprietary brands which represented a higher proportion of total sales in the Q3 2021 period due to the company’s four completed acquisitions of proprietary branded product companies and (ii) anticipated higher gross profit and gross profit margin in the third quarter of 2021 primarily resulting from the aforementioned mix change to higher-margin proprietary brands. Those increases were partially offset by higher selling, general and administrative expenses as company further built-out its growth platform versus the same period in the prior year.”

Hyrdofarm said in a statement that since it recently completed four acquisitions with the closing of one additional acquisition pending in the fourth quarter, the company estimates that on a pro forma full-year basis as if all five acquisitions had occurred on January 1, 2021the company would have expected to generate between approximately $580 million and $600 million of net sales and $85 and $95 million of Adjusted EBITDA.

ICE Acquisition

Hydrofarm said that the addition of the IGE commercial equipment product range complements its existing lineup of high-performance, proprietary branded products. 

“We are excited for IGE to officially join the Hydrofarm family,” said Toler. “With their manufacturing capabilities and strong line of customized CEA solutions for commercial growers, including benching and racking systems, made-in-America LED lighting solutions, and other equipment and services, IGE is a solid addition to our growing portfolio and will further solidify our position as the acquirer of choice in the CEA industry.”

Hydrofarm said it will fund the acquisition using a combination of cash, the company’s credit facilities, and approximately $11.6 million in HYFM common stock. 

“Our success in the indoor growing market is rooted in our premium quality products and high level of service to our customers,” said Chris Mayer, President and CEO of Innovative Growers Equipment Inc. “Hydrofarm is a longtime customer of ours and we have been selling Hydrofarm’s superior line of lighting products for many years. We admire their deep understanding of indoor growing and look forward to joining the Hydrofarm team.”

$125 Million Loan

Hydrofarm also announced that it has entered into a new $125 million senior secured term loan facility. The Term Loan bears interest at a rate of either LIBOR (with a 1.00% floor) plus 5.50%, or an alternate base rate (with a 2.00% floor) plus 4.50% and matures on October 25, 2028. Hydrofarm intends to use the net proceeds from the Term Loan to fund the cash portion of the IGE purchase price and for general corporate purposes, which may include, among other things, repaying any outstanding balance under the company’s existing revolving credit facility and funding future M&A opportunities. Should additional capital needs arise, Hydrofarm can, per the terms of the Term Loan agreement, seek to upsize the facility. JPMorgan Chase Bank, N.A. acted as sole lead arranger and bookrunner for the Term Loan.


Debra BorchardtAugust 30, 2021
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6min23750

As hemp prices continue to fall, farmers are leaving. When the Farm Bill of 2018 passed, farmers rejoiced at the ability to legally grow hemp. Visions of massive demand for CBD products caused farmers to plant thousands of acres. Indeed, it seemed a sure-fire thing. Seemingly overnight numerous products on retailers’ shelves had some version with CBD included. Body products, foods, and supplements all touted the benefits of having CBD added. Then it all fell apart as several problems combined to crash the market.

The problems ranged from a lack of guidance from the FDA, falling prices, less demand for CBD than expected, weather-related issues, and a pandemic. The crops planted in 2019  led to a glut of biomass that persists today. Farmers that were unable to make any money have left the business leaving only the truly committed. 

Price Crash

The glut of biomass caused the prices to slide as the market worked its way through the supply. Hemp Benchmarks’ latest August report wrote, “CBG Biomass and extracted CBG products also saw their observed wholesale prices continue to slide this month. In regard to Crude CBD Oil, Hemp Benchmarks observed USDA Certified Organic and THC Free product that helped to buttress the category’s spot price somewhat, but this month’s assessed price for Crude saw an overall decline on an increase in the frequency of reported deals settling under $100 per kilogram.” Indoor-grown CBD flower is down 3% from July, greenhouse-grown CBD flower has dropped 5% from July and only outdoor grown CBD flower saw its price rise by 7% from July according to the Benchmarks data.

One example of the drastic fall in prices comes from North Dakota, where Veronica Michael told the Hemp Benchmark, “When we first started extraction [in the spring of 2019], crude had been around $1,400 [per kilogram],” she remembered. “I got a call from two buyers in the last two weeks. One was in Colorado and one was in Washington. Both were offering from about $80 to $120 [per kilogram] for crude. That’s ridiculously low. When you look at distillates and isolates, the numbers aren’t good either. People want to buy distillates and isolates for less than we can make them for unless you’re a really big producer. It makes me nervous and scared for the future.”

Farmers Leaving

Hemp Benchmarks reported that it counted 10,881 hemp farming licenses issued nationwide for the 2021 season, down 45% from 19,799 hemp cultivation licenses documented in 2020. Brett Eaton, CEO and founder of Green Cherry Organics in Fort Collins, Colorado Told Hemp Benchmarks that “24 of the 28 hemp farmers he works with regularly are not planting hemp this year. Eaton’s company created the first USDA-certified organic hemp greenhouse in the United States. It also sells its CBD products and clones nationally, and works with hemp farmers in 11 different states.”

With no one to buy the hemp or prices so low that it doesn’t cover the expense of growing, many farmers returned to more traditional crops whose prices have soared. Corn and wheat crops affected by droughts have seen prices at three-month highs. The droughts in some areas contrast with overly heavy rains in other areas. The market has also seen a shift where hemp is being planted. Colorado hemp acres have fallen from 2020 to 2021, while Texas and Illinois have dramatically increased planting. Oregon, which has been a big state for hemp farmers, is seeing those acres face the criticism that the hemp plantings are masking actual illegal THC heavy cannabis farming. 

Outlook

For now, the outlook remains challenging. Many of the farmers cited in the August Hemp Benchmark report said that if the FDA would settle the issues around hemp regulations the market could recover. However, the FDA seems to be punting back to Congress and isn’t moving to take a stand. No one can do anything about the weather or pandemic forced quarantine issues. The industry could be helped by consolidation, but that doesn’t look to be happening. The THC side of the cannabis industry is awash in M&A deals, but the hemp side has just seen businesses close versus being acquired or merging. 

One thing that could help with the 2019 glut is that some of the remaining product is now turning brown and moldy. That suggests that at some point CBD brands will need to buy new CBD products and with fewer farmers planting less acreage, prices would surely rise. Still, the hemp farming industry is clearly becoming one for long-term players. It is not the quick turn on investment that the THC cannabis industry enjoys. 


StaffAugust 9, 2021
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7min13020

Village Farms International, Inc. (NASDAQ: VFF) (TSX: VFF) announced its financial results for the second quarter ended June 30, 2021. Total sales grew 166% to $34 million in the quarter versus last year’s $14.1 million for the same time period. Village Farms net income grew 270% from $800,000 in 2020 to $3.2 million in the second quarter of 2021.

“We are so proud to report another record quarter for Pure Sunfarms’ retail branded sales, which grew 22% sequentially – the fourth consecutive quarter of 20%-plus growth – which contributed to total net sales growth of 38% sequentially, once again outpacing the broader retail cannabis market as we continue to gain national market share,” said Michael DeGiglio, CEO, Village Farms. “Importantly, we are also reporting a 192% sequential increase in adjusted EBITDA for Pure Sunfarms this quarter to C$9.1 million, a record since our Retail Branded Sales launch, and further evidence of the importance of our large-scale, low-cost cultivation capabilities combined with an exceptional management team and the right brand and product strategy.”

Produce Takes A Beating

The company reported that produce sales decreased (4%) with higher production volumes offset by lower pricing as the tomato industry experienced one of the lowest pricing environments for tomatoes-on-the-vine and beefsteak varieties in the past ten years versus strong pricing due to elevated demand amidst pandemic-related restrictions in the second quarter of 2020. Village Farms said there were indications that pricing is moving back to historical levels, however, year-over-year comparisons remain challenging.

The produce adjusted EBITDA was a loss of ($3.9) million, which excluded a $1.4 million incremental electricity expense in Texas due to temporarily elevated pricing for a five-day period in February (more than 100- times higher than the prices observed in early 2021 and historical February pricing). Texas experienced an unprecedented winter storm which resulted in power supply constraints.

DeGiglio added, “We expect our Produce business to normalize toward the end of this year with indications that prices are trending back to historical levels, as production volumes have improved throughout 2021. Our Texas produce greenhouse operations, with a replacement value in excess of $300 million, and located in one of the best growing environments for cannabis in the continental United States, represent one of our potential pathways to participate in the U.S. high-THC cannabis market. We continue to operate and manage these facilities for this optionality.”

Cannabis

Village farms said its cannabis was the top-selling brand* of dried flower products with the Ontario Cannabis Store (by kilograms sold and dollars sold) for the quarter ended June 30, 2021, and remained the top-selling brand of dried flower products with the OCS (by kilograms sold and dollars sold) for the 21-month period since its retail branded sales launch in October 2019. The company also claimed it was the top-selling Licensed Producer of dried flower products with the OCS (by kilograms sold and dollars sold) for the quarter ended June 30, 2021, and was the top-selling brand of dried flower products in Alberta for the quarter ended June 30, 2021, and monthly since October 2020 (by dollars sold). Market share performance data cited has been calculated by Pure Sunfarms from sales information provided by Buddi retail store data from over 300 retailers across Alberta and British Columbia as of June 30, 2021.

Consolidated Results

The consolidated results include all three of the company’s operating segments, which include produce, cannabis and clean energy, along with all public company expenses. The remaining 41.3% interest in Pure Sunfarms was acquired by Village Farms on November 2, 2020; for the three and six months ended June 30, 2021, the operating results of Pure Sunfarms are consolidated in the Consolidated Statements of Income (Loss), and for the three and six months ended June 30, 2020, Pure Sunfarms’ results are included in equity earnings from unconsolidated entities in our Consolidated Statements of Income (Loss).

Sales for the three months ending June 30, 2021, were $70 million as compared to $47 million for the three months ended June 30, 2020. The increase in sales was primarily due to the inclusion of Pure Sunfarms’ Q2 2021 revenues of $24 million and an increase in produce supply partner sales of $1.8 million, partially offset by a decrease in our own produce sales of ($3,676) and VFCE power sales of ($151). The produce supply partner sales increase was due to higher volumes of pounds sold of tomatoes, peppers, cucumbers and mini-cucumbers.

Net loss for the three months ended June 30, 2021 was ($4.5 million) as compared to ($119 million) for the three months ended June 30, 2020. The increase in net loss was primarily due to a lower gross margin from the produce operations and higher corporate share-based compensation, partially offset by an improved operating profit for Pure Sunfarms in the three months ended June 30, 2021 as compared to June 30, 2020.


Julie AitchesonAugust 3, 2021
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5min22680

July 2021 saw record-setting temperatures in parts of the country, alarming spikes in Delta variant Covid infections, and large numbers of Americans returning to summer vacationing after having last summer’s dreams of ocean breezes and lakeshore barbecues dashed by the pandemic. It was also a notable, if not promising month for hemp. Hemp Benchmarks, a division of New Leaf Data Services and leading provider of financial, business, and industry data for the North American hemp markets, recently issued its report for July, which touches on some of the most high-profile talking points of the hemp market to date.

Wholesale cannabis prices have been experiencing a steady decline overall, with the exception of Crude CBD Oil and Broad Spectrum CBD Distillate. These products saw modest price rises in July but still fell short of the prices they topped out at a few months ago. There have been increases in transaction frequency and volume for CBD Biomass and extracted CBD products thanks to strong demand for delta-8 THC, which is synthesized from these products, but this has not been sufficient to move the needle on prices. Despite a steady demand, assessed prices for Delta-8 THC Distillate and Smokable CBD flower both dropped for the second month running, with indoor and greenhouse-grown products earning higher rates from buyers.

Delta-8 Demand

You might wonder why, with its steady-and-still-growing demand among consumers, Delta-8 THC has not been the rising tide that lifts all boats in terms of hemp sales. It may be due in part to state-by-state regulations and restrictions regarding its sale and use. As of July 1, The Connecticut Department of Consumer Protection established that businesses may no longer offer or sell products made using hemp or hemp-derived products with any concentration of THC, including deltas-7,8,9 and 10. A Senate bill signed into law on June 22, 2021 affirmed that products containing deltas-7,8,9 and 10 may only be sold by licensed cannabis retailers or medical marijuana dispensaries. New York has instituted similar restrictions. Delta-8 is also facing some opposition in states with legal cannabis markets as it is cheaper to manufacture than cannabis, is not taxed, and is cheaper to produce.

On the agricultural side, there has been an ongoing decline in the amount of acreage devoted to hemp production in 2021 due to farmers downsizing operations, fewer startups, and those who have cultivated in the past choosing not to grow this season. Meanwhile, existing hemp acreage endured threats posed by extreme weather conditions and the continued onslaught of Covid-19. 

In better news, fiber hemp is getting increased interest from farmers this year as a less volatile corner of the hemp market, being less prone to fluctuation due to changing regulations governing its use. Innovations in the industry abound as interest surges, such as the development of more precise and efficient processing equipment and proprietary technologies that meet the unique needs of customers. This is not to say that no hurdles exist, including developing cultivars that produce higher yields to make fiber hemp economically viable for farmers and the lure of growing other more financially rewarding row crops over hemp. And while there is less controversy around fiber hemp as opposed to hemp grown for CBD products, there is still a strong need for uniformity of regulation between states and better infrastructure in order for this market to flourish. 

The overall decline of the hemp market points to dramatic consolidation, a trend borne out by new data from The Brightfield Group revealing that the number of brands in the CBD industry has dropped from 3,500 at the end of 2019 to 2,000 today. Still, with new innovations on the rise and Delta-8’s stubborn but steady ascendance, there is hope that the rebound of the hemp market will not be a matter of “if” but “when”.

 


Debra BorchardtJuly 29, 2021
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9min21680

Delta-8 and smokable flower are the two products keeping hemp framers alive. The regulatory loophole that has allowed Delta-8 to be sold legally is also causing legal confusion. Delta-8 is a cannabis product that can be derived from hemp, but still give the consumer a light psychotropic experience. Some states have issued restrictions around the product, while others haven’t addressed it at all. Either way, the demand has been a blessing to hemp farmers who planted lots of acres in 2019 expecting a surge in CBD products, only to see the market contract and prices plummet. 

Hemp Benchmarks reported that after rising 4%in May, the average per-kilogram price for delta-8 THC distillate fell 1% in June to $1,215. “Notably, both the low and high ends of observed transaction data – $900 and $1,650 per kilogram – were up compared to May.”

In Georgia, Reginald Reese of Green Toad Hemp Farm told Hemp Benchmarks that delta-8 THC was here to stay. “The beauty of it is, Georgia refused the [delta-8] ban,” he said. “We have the right as licensed hemp growers to use every part of that hemp.” Reese also told Hemp Benchmark that he believes efforts to ban delta-8 THC are part of a “full-court press” from the businesses participating in licensed, state-legal marijuana industries, which do not want the competition. 

Smokable Flower Grows

The other product that has been welcomed by the farmers is smokable flower. The Benchmark reported that as of June 2021, the number of square feet registered for indoor or greenhouse hemp production – which is typically for the purpose of producing smokable CBD flower – is up significantly relative to last year. “Hemp Benchmarks has documented over 168.2 million square feet registered for indoor or greenhouse production. This figure is up 328% compared to over 39.5 million square feet recorded in June 2020 and up 85% from over 90.8 million square feet ultimately documented by the end of last year.”

It seems farmers are leaving the outdoor growing and focusing on indoor growing in order to fulfill smokable flower demand. The Benchmark report documented that smokable CBD Flower has maintained its value in the U.S. hemp wholesale market better than perhaps any other hemp-CBD product. “Flower grown indoors or in greenhouses also typically commands a premium price compared to that cultivated outdoors.”

The Benchmark report said that smokable CBD Flower saw its average price decline in June after cresting above $300 per pound in May. “Despite some reports of still-stagnant demand for CBG, the price for smokable CBG Flower rose 15% in June to average $326 per pound, exceeding the price for its CBD counterpart. The significant increase in the assessed price for CBG Flower this month follows an over 50% jump observed in May.” This shift away from biomass and towards flower farming could potentially stabilize the biomass market. A reduction in supply could help wholesale prices. 

Grasshoppers?

The problems affecting hemp crops this season could end up helping reduce the glut of hemp inventory. Excessive heat and drought in the western part of the U.S. have affected hemp farmers. Wildfire threats and water reductions have also conspired to challenge hemp farmers. And if that wasn’t bad enough – it seems grasshoppers love warm, dry weather. 

Last year, farmers fought grasshopper infestations and it looks like this year conditions are ripe for an even bigger outbreak. The Hemp Benchmarks June report noted that the U.S. Department of Agriculture is said to be taking steps to mitigate damage to crops and rangelands by spraying pesticides in areas where infestations are likely to occur, including roughly 3,000 square miles of Montana, which is home to significant hemp production, primarily for grain. 

Less Hemp Acreage

Hemp Benchmarks reported that there is less hemp being grown as farmers head into the 2021 season. Several reasons have caused the less than stellar outlook for the market. A glut of biomass and CBD caused a plunge in prices reducing the profitability of the crop. Farming more mainstream products have become a better investment. The hemp market has also been affected by a lack of regulatory guidance has also caused farmers to back off from planting more acreage. 

Hemp Benchmarks said it has documented the following hemp production licensing and acreage data for 2021: 

  • 8,298 licenses issued (down 8% from 9,066 counted in June 2020; down 58% from 19,799 ultimately documented for 2020); 
  • 107,702 acres registered for outdoor production (down 55% compared to 236,732 acres documented in June 2020; down 75% from 429,300 ultimately documented for 2020).

CBD Collapse

It seemed that almost every product on the retail shelves had some form of CBD in it. Food, beauty products and supplements popped up on every retail counter. The future looked bright for hemp farmers, but the demand didn’t follow at the expected levels. Thousands of CBD companies sprang up overnight and the flood of products created a confusing and competitive landscape. 

A new Brightfield Group report says that the CBD industry has lost more than 1,000 players in the past 12 months—some through corporate consolidation and others to bankruptcy. Hemp Benchmarks also quoted farmers who said that there was a lot of low-priced inventory on the market due to bankrupt companies. Earlier this year the Phoenix Business Journal reported. that Integrated AG, the parent company of Integrated CBD, filed for Chapter 11 bankruptcy protection on Jan. 20 and disclosed over $20 million in outstanding debt. 

Despite all the negative news, last month California-based Kadenwood, a privately held CBD consumer packaged goods company, completed a $30 million cash Series B capital raise. The company said it will use the money to buy advertising and acquire more companies. Kadenwood said the raise also includes a $20 million media campaign to raise brand awareness, bringing the total value to $50 million.


StaffJuly 28, 2021
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4min17530

GrowGeneration Corp. (NASDAQ: GRWG ) is at it again and the latest acquisition is HGS Hydro, the nation’s third-largest chain of hydroponic garden centers, with six stores across Michigan and a seventh store slated to open in the fall of 2021. This transaction is expected to close before the end of the fiscal year-end 2021. Founded in 2015 by Rocky Shaeena, HGS Hydro is the largest chain of hydroponic garden centers in the state of Michigan and generated approximately $50 million in revenue in 2020.

“We are excited to add HGS Hydro to our portfolio of stores before year-end, with its impressive leadership and commercial teams. The addition of HGS Hydro will propel Michigan to GrowGen’s second-largest state behind California. Michigan is one of the fastest-growing states for medical and recreational cannabis sales.” said Darren Lampert, GrowGen’s CEO. “We look forward to building on HGS Hydro’s experience as we continue to expand our commercial footprint. This acquisition represents our continued focus on purchasing ‘best of breed’ hydroponic operations in the U.S. and strengthening our management team with seasoned veterans from our industry.”

When completed, the transaction will also bring the total number of GrowGen hydroponic garden centers in Michigan to 14 and the total number of stores to 65. The new GrowGen locations will include Shelby TownshipSouthfieldSterling HeightsHazel ParkWalled LakeAlbion, and Imlay City, Michigan. GrowGen will announce its second-quarter results on August 12.

“The combination of HGS Hydro and GrowGeneration will further solidify GrowGen’s leadership position as the nation’s largest chain of hydroponic garden centers. As one of the pioneers of our industry, we are excited to bring our years of experience, insight, and relationships to the GrowGen team to assist in the Company’s continued growth and success,” said HGS Hydro’s CEO Rocky Shaeena.

“At HGS Hydro, my biggest priority has always been serving our loyal customers and providing an abundance of inventory at all times.  We have grown tremendously as a company in the past, and I believe merging with GrowGeneration will help us continue to grow with the best service and selection possible for our customers,” said Chris Kiryakoza, HGS Hydro’s COO.


StaffMay 6, 2021
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5min23020

While millions of Americans are getting ready to enjoy the summer for the first time in over a year, the cannabis industry is already gearing up for the upcoming fall harvest. Taking place between October and early November, the period is called Croptober, and it is a time when roughly 80%-85% of the cannabis industry’s outdoor cannabis is harvested. 

The reason why the industry harvests the majority of outdoor cannabis during this specific period has to do with the plant itself. Cannabis is an annual plant, which means it lives out its entire life cycle in a single growing season. 

Planted in the early Spring, the cannabis plant starts to produce buds in Fall as the days start to shorten, typically becoming ready for harvest around mid-October. For outdoor cultivators, this is the only time of the year they will harvest their crop, so it is both a time of celebration and great stress.

In many of the parts of the country where cannabis cultivation is big business, like the fabled Emerald Triangle in Northern California, Croptober has taken on an air akin to many of the harvest festivals celebrated throughout the world. 

Cannabis farms often give tours, parties are thrown, and while consumers can’t pick buds off the plant like apples, there is an influx of cheap high-quality cannabis. It is this celebratory atmosphere that first attracted Case Mandel, the Co-Founder of Cannadips, to set up shop in Humboldt County.

“I first visited Humboldt County in 2003 when I right out of High School,” Mandel recalls. “There were so many beautiful farms and incredible cultivators. I was completely astounded.”

Cannadips CBD manufacturers a smokeless CBD pouch that works as a dipping alternative. With a retail footprint of 6,000 stores, Cannadips CBD is one of the area’s largest hemp manufacturers.  Cannadips also manufactures a cannabis pouch in Humboldt County as well.

Looking to draw more attention to the season, Cannadips recently announced its first annual Croptober Getaway Sweepstakes where five winners are given an all-expenses-paid trip to Humboldt County to experience some of California’s most prominent cannabis farms and experience Croptober first-hand. The winners will also be treated to a party at the historic Arcata Theater Lounge, as well as a relaxing tour of Humboldt Count’s redwood forests and beaches. 

“Humboldt is not what they see on Netflix’s Murder Mountain or Dateline NBC, it’s the Emerald Triangle, we are excited to share its shine.”

The contest runs from May 1 to June 30, and those interested in signing up can register on the Cannadips website. Four of the winners will be chosen through a random drawing, with one winner to be announced every two weeks. The fifth winner will be the person with the best Instagram post with the #Croptober2021 hashtag.

“This type of access would never have been possible in the last twenty years,” says Mandel. “These Croptober winners won’t be touring corporate cannabis monocrops, they’ll be exploring the best outdoor sun-grown cannabis from some of Humboldt’s best cultivators.  It is refreshing we can share the amazing innovation and craft legally that has made our region famous.”

 


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