- Posted October 8, 2013 by
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The Economics of Hemp Makes Extraordinary Sense
California Gov. Jerry Brown recently signed SB 566 into law, which will allows for the cultivation of non-psychoactive industrial hemp in the state. The bill was authored by Sen. Mark Leno who said that, “In the past year, the conversation to legalize the cultivation of hemp has gained momentum at the federal level, and it is only a matter of time before a farmer’s right to grow hemp is restored.” Citation 1
California is still awaiting federal approval, but this important step comes in the wake of the Department of Justice’s (DOJ) memo establishing its prosecutorial priorities to not conflict with state laws. Traditionally, enforcement discretion has been deemed a sign of abuse of power. Citation 2 However, in this instance, the DOJ was responding to a wider conflict that existed between the federal Controlled Substances Act (CSA) and the various levels of state legalization.
Sen. Leno stated on his website that the bill “would permit growers in the Golden State to cultivate industrial hemp for the sale of seed, oil and fiber to manufacturers and businesses that currently rely on international imports for raw hemp products.” Citation 3 This is the type of common sense legislation that’s needed across the nation. Hemp agriculture creates jobs, provides needed products for nutrition and medicine, and hemp itself is a renewable and versatile source of natural raw materials for manufactures of building materials, bio fuels, textiles, foods and hundreds of other industries.
I recently spoke with Chris Boucher, VP of Product Development and Imports at US Hemp Oil and hemp industry pioneer. US Hemp Oil is a subsidiary of Medical Marijuana, Inc (MJNA ) and CannaVest (CANV), which produce many products containing the cannabidiol (CBD), a cannabinoid derived from the hemp plants seeds and stalk. CBD was recently highlighted in Dr. Sanjay Gupta’s CNN documentary, WEED, which demonstrated its abilities as an astonishingly successful treatment for childhood epilepsy.
Chris spoke about the company being past the research and development phase and increasing production to support sales. Gov. Brown’s support for SB 566, along with federal government approval, could mean a California winter hemp crop of 160 acres this year. Eliminating or reducing import expenditures could have a huge impact on costs, which translates in to increased profits and reduced prices for consumers.
HempMedsPX, the marketing arm for MJNA and CANV, had Chris’ efforts focused on its new product lines Cibdex™ and Cibaderm™; however, it was clear that US Hemp Oil was positioned to be supplier of raw or semi-processed materials (such as hemp oil) to well-established consumer products manufactures such as the Procter & Gambles of the world. Hemp-based CBD has strong analgesic and antioxidant properties and, as a natural compound, fits well into any company’s health and wellness product lines.
A close analog to hemp or high CBD hemp strains is aloe or aloe vera. Aloe, a genus of over 500 species, is mostly known only because of aloe vera, a widely-used plant species found only among cultivators and thought to be extinct in the wild. Similarly, hemp varieties that are grown for their high CBD content are cultivars of expert design, and will be in high demand as a commodity as awareness of the many benefits of hemp, CBD, and other cannabinoids increasingly come to light. The reintroduction of hemp to the agricultural community alone is substantial, but the larger impact would be on an struggling economy that would benefit immensely from the integration of a product with a multitude of utility.
With the numerous stalemates in congress, it’s hard to believe that progress is actually being made on the legalization of hemp agriculture in the US. The reality is that both marijuana and hemp are already grown in the US, but not on a large scale and not legally (yet) at the federal level.
Chris likened growers to hobbyists due to the lack of ability to plant and cultivate hemp on a large scale. You can read my full interview with Chris here: “Hemp Veteran Chris Boucher Shares His Insight on the Industry and the New Hemp CBD-Infused Cibaderm Product Line at Natural Products Expo East in Baltimore”.
Hemp is a commodity that literally built this great nation, but was cut out of our economy by corrupt, fear-mongering politicians and focused (instead of free market) capitalism. Its reintroduction represents an economic stimulus that is natural to our economy—much like the plant itself. If you are looking for investment opportunities for the long term, you may want to take a closer look at the companies mentioned in this article.
Disclosure: I am an investor in MJNA and (OTC: CANV) and this article was written on behalf of Medical Marijuana, Inc.
Citation 1 - Website link: http://www.huffingtonpost.com/2013/10/03/california-hemp_n_4033632.html
Citation 2 - Website link: http://en.wikipedia.org/wiki/Enforcement_discretion
Citation 3 - Website link: http://sd11.senate.ca.gov/news/2013-09-27-governor-signs-senator-leno-s-industrial-hemp-bill
Perry M. Coleman also write for MJ Market Watch