China will emerge as the cannabis cultivating super power producing flower for as little a 10 cents a gram, a leading producer believes.
Speaking at the Cannabis Investor Forum in the City of London Oliver Zugel, Executive Chairman and co-founder of Colombian producer Foliumed, elaborated on how he sees the cultivation industry developing in China.
“Hemp outdoor cultivation in the U.K. is a short-lived business with just one crop a year, in Colombia we can get up to five harvests a year but the Chinese will be beating us on price within a few years.
“Cultivating under lights is not sustainable, the carbon footprint of such operations is horrible, something like three per cent of all California’s electricity is taken by the cannabis industry.”
Colombia is one of the lowest-cost producers in the world with cannabis flowers being produced for around 50 cents per gram compared to $1.50 in Canada. Mr Zugel believes a global glut of CBD will drive prices down and described the current situation where CBD extract can be produced for $1.50 a gram and sold for $400 – in countries such as Germany – as unsustainable
“There is no other business like this at the moment, it makes no sense.”
He then turned his fire on those in the industry making unsubstantiated medical claims. “Now CBD can cure hair loss, impotency then there are the beauty claims; the medical science needs to keep up, but these things are are not scientifically proven, and do no favors to the business.
Markus Hoffman, Vice President of cannabis firm Jacana, says further research is vital to the continued success of the industry as it has had ‘a lost 80 years’.
Dramatic Price Falls
He contended: “No one can tell me what a cannabis plant does to humans; there are 140 cannabinoids and we understand two (CBD & THC), what about other 138?”
Panelists in a discussion on the ‘future of operating cannabis businesses’ supported the idea that it’s not the size of a business, but the ability to innovate that consumers appreciate. Jay Czarkowski, a Founding Partner of U.S. firm Canna Advisors, believes that cultivation will shift outdoors leading to ‘dramatic’ price falls.
His company has helped launch cannabis businesses in 18 U.S. states and he expressed his frustration at the federal illegality of cannabis in America.
“When that changes and the U.S is allowed to exports, look out Canada – its companies have still to make a profit and it’s a market of 36 millio while the U.S. in ten times its size.” But ,he went on to say that all investors should be looking to U.K. and Europe for a market which is twice the size of the United States.