The increasingly popular cannabis/hemp derivative cannabidiol (CBD) recently received its most important seal of approval, opening up the market to a potential wave of new CBD-infused products. Effective September 28, 2018, the US Drug Enforcement Administration (DEA), CBD has been downgraded from a Schedule I drug to Schedule V, allowing for FDA-approved drugs to contain the cannabinoid.
According to industry experts at the Brightfield Group, CBD is growing faster than cannabis in the US. In fact, the prediction is that CBD will soon become a $22 billion industry.
In the wake of the reclassification, there has been a mad rush by the market to companies providing CBD-infused food and beverage options, including India Globalization Capital Inc. (NYSE: IGC), New Age Beverages Corp. (NASDAQ: NBEV), Phivida Holdings Inc. (CSE: VIDA) (OTC: PHVAF), The Tinley Beverage Company Inc. (CSE: TNY) (OTC: TNYBF), and CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP).
The DEA’s announcement came only two weeks after rumours began to swirl over leading soft drink bottler Coca-Cola entering the cannabis-infused drink market. The mainstream appeal of CBD products isn’t just restricted to the US, as Walmart Canada is pondering the possibility of selling cannabis products north of the border as well.
Many companies are working towards providing the thirsty marketplace with new products to guzzle down. While North American markets are just beginning to open up to an array of CBD selections, the European Union has already rolled out the welcome mat.
Companies like CROP Infrastructure have begun to seize on the opportunity, entering through an exclusivity deal for products in Italy. To ramp up the supply chain, CROP recently announced the leasing of an 87,120 sq ft greenhouse facility in the country through a joint venture with XHemplar. CROP is shoring up its operations for low-cost and high-quality pure CBD isolate and CBD products to be sold domestically as was as into the European CBD market.
Unlike fellow cannabinoid THC (Tetrahydrocannabinol), CBD (Cannabidiol) doesn’t deliver a high. With the non-psychoactive (or more aptly safe-for-work) nature, combined with the multiple benefits being touted, CBD’s mainstream appeal is set to explode.
DRINKING UP CBD’S POTENTIAL
India Globalization Capital Inc. (NYSE: IGC)
Shares in Maryland-based company India Globalization Capital Inc. skyrocketed to $13 upon the announcement of its CBD-infused drink, at the beginning of October. However, the stock has come back to earth, now trading at around $5 as the market has settled in on the company’s new direction. But the company’s value is still over 100% up from where it was at the beginning of September. But the key driver was the recent announcement of a distribution and partnership agreement for new products including a sugar free, energy drink named “Nitro G.”
New Age Beverages Corp. (NASDAQ: NBEV)
Small distributor of health-oriented drinks, New Age Beverages Corp., saw its shares surge more than 400% after announcing plans to unveil CBD-infused drinks at an upcoming industry event. Though shares have corrected a pair of times in the past month, NBEV is still trading over 360% higher than it was at mid-month in September. Over the last three years, New Age Beverages has consistently been growing itself through the acquisition of several beverage brands, including Xing in 2016, and Maverick Brands and Marley in 2017. But the company never grown in value as much as it did through the announcement of its new CBD drinks line, which seems to have broken the ceiling open for the company and its shareholders.
Phivida Holdings Inc. (CSE: VIDA) (OTC: PHVAF)
Bolstered by an all-star board filled with beverage and distribution moguls, Phivida has built itself as a premiere brand of CBD infused functional foods, beverages and clinical health products for global distribution. The company has already completed its first run of production, which includes 15,000 units of Vida+ tinctures and 3,000 units of Vida+ capsules. Upon the DEA announcement regarding CBD and Schedule I, Phivida was quick to applaud the decision, as well as to announce the launch of its Oki line of functional beverages, that will run with the Vida+ product lines, both of which are not subject to FDA approval. Oki will be available to consumers in up to 2,400 locations within the US, within a market that’s valued over $4.1 billion in retail stores.
The Tinley Beverage Company Inc. (CSE: TNY) (OTC: TNYBF)
Late in the summer, Toronto-based Tinley Beverage Company launched its latest cannabis-infused cocktail called Moscow Mule. However, the company has been relatively quiet in terms of news, despite the DEA’s announcement regarding CBD. The first batch of Moscow Mule was set for production back in late August, with the first production totaling 2,000 bottles for the California market. If all went according to the company’s projections, production for the new product commenced late in September. Moscow Mule joins the company’s product line, that also includes its Hemplify hemp extract drinks, that are available in more than 100 stores in Southern California.
CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP)
In near perfect timing, CROP announced that its CannaDrink product will utilize HempOmega powder, created from microencapsulated hemp seed oil. CannaDrink will now be available in all other jurisdictions containing HempOmega where CBD products are not yet approved. However, the CannaDrink/HempOmega announcement came out very close to the major announcement of the DEA to reclassify CBD away from being a Schedule I drug. CROP’s new cannabis-infused line of soft drinks (CannaDrink) will be a zero calorie, non-GMO, ketogenic-friendly line of soda pop, tea, and coffee variations. The company looks to have secured ample supplies of CBD isolate, through its latest announcement of a toll processing deal on its hemp-CBD farm in Nevada that will provide ISO certified CBD isolate as a finished product, which will also be infused into the company’s CannaDrink and other company brands.
CBD DRINK OPTIONS GOING GLOBAL
Less than a week after the US DEA announcement on CBD, CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP) had a well-timed CBD announcement of its own—that it is set to infuse its CannaDrink functional beverage with Naturally Splendid’s HempOmegatm.
The move was in line with CROP’s steady accumulation of CBD presence around the world, including boosting its Nevada CBD farm to 1,865 acres, and leasing an 87,120 sq ft greenhouse facility in Italy through a joint venture with Xhemplar. Work has already begun on upgrading the Italian site’s security which includes cameras and fencing.
“This will allow for low-cost and high-quality pure CBD isolate and CBD products to be sold domestically as well as into the European CBD market. The joint venture’s CBD products will be branded under the XHemplar and CROP brands Tiffany CBD and Hempire Italia,” said CROP Infrastructure CEO, Michael Yorke.
He added, “This is a major increase in our European footprint. Not only will this expand our growing capacity and quality control, but, very importantly, the build-out of an extraction facility will allow CROP to provide European markets with quality CBD isolate.”
But the company’s CBD isolate supply is not restricted just to Europe. CROP recently announced a significant toll processing deal for the company’s dried hemp-CBD biomass at its Nye County hemp-CBD farm in Nevada. The deal involves the biomass being sent to a processor that will provide a finished product of ISO-certified CBD isolate—officially giving CROP CBD isolate supplies on two continents.
Now with an impressive footprint in both North America and Europe, CROP is moving forward on producing and distributing its line of soft drinks and edibles. In addition to its CannaDrink beverage line, CROP is working with Naturally Splendid to develop a “Hempire” branded hulled hemp seed and protein powder product line. CROP and Naturally Splendid are currently testing a variety of flavors and formulations created by NSP specifically for the Hempire Brand that will be enhanced with NSP's HempOmega™.
The partnership is being touted by Naturally Splendid, boasting the potential for CROP’s line of products. "We are pleased to be working with CROP to create quality, white-labelled hemp products for the Hempire brand as well as providing our proprietary HempOmega™ ingredient for CROP's innovative CannaDrink functional soft drink line,” says Naturally Splendid CEO Mr. Douglas Mason. “
“CannaDrink is formulated to deliver superior omega nutrition, by utilizing Naturally Splendid's proprietary HempOmega™ it provides 'first mover advantage' for Naturally Splendid and CROP to formulate cannabis formulated beverages and edibles as HempOmega™ has been approved for product fortification without the concern or restrictions of cannabinoid formulated beverages and edibles.”
Michael Yorke believes in the potential market on CBD and hemp in his company’s products. He adds, "We believe in the nutritional spectrum and health benefits of both hemp and CBD so adding a consumer goods vertical was a logical progression as consumer data shows strong trends in plant-based foods and nutritional products. We see it as a tremendous opportunity for CROP Infrastructure's branding & IP portfolio."
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