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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.”

Low-Cost Colombia

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.

Over the past several years, US alcohol consumption rates have declined rapidly, leaving consumers to find new alternatives.

Notably, the cannabis industry is directly correlated with US alcohol consumption decline; Investment-bank firm Cowen & Co. reported that as of 2016, legal adult-use cannabis US states witnessed binge drinking rates fall by 9% below the national average, and 11% below non-cannabis states.

However, newly added states such as California and Nevada had higher rates of alcohol consumption and lower rates of cannabis use. Regardless, Cowen expects the rates to shift in both alcohol and cannabis consumption in those specific states. As a result, Cowen said it is reasonable to assume that as more states continue to legalise adult-use cannabis, alcohol binge drinking rates will continue to falter.

Alcohol consumption falling

Furthermore, the Centers for Disease Control and Prevention estimated that 17% of the US population engaged in binge drinking, meaning that one in six reported doing so four or more times a month. In states that legalised adult use, the number of binge drinking sessions per month was 9% below the national average.

For instance, the state of Washington, which was the first state along with Colorado to legalise recreational use, has seen alcohol consumption rates decline over the past several years. As of 2018, Washington reported that just under 15.6% of adults were reported having four or more drinks on one occasion in the past month compared to the national average of 17.4%, according to America’s Health Rankings UnitedHealth Foundation.

In particular, many millennials have opted to consume cannabis over drinking alcohol. According to a MarketWatch article, a millennial said that she prefers to consume cannabis over alcohol because it saves her more money and doesn’t cause the intoxicating effects of alcohol.

According to a Yahoo News poll in 2017, it was concluded that the majority of the 55 million marijuana users in the US are millennials, and as the number of alcohol consumption rates decline, the cannabis industry is expected to directly benefit as more users turn towards cannabis-based alternatives.

According to data compiled by Grand View Research, the global legal marijuana market is expected to reach $66.3 Billion by the end of 2025 while expanding at a CAGR of 23.9% during the forecast period.

While the US is experiencing declining rates of alcohol consumption, Canada seems to be unchanged. Canadian provinces with the highest rates of legal cannabis consumption don’t appear to be drinking less under legalisation.

Brock University business professor Michael Armstrong notes that the reason alcohol consumption is still relatively high in the country is that consumers are used to the characteristics associated with drinking. Having beverages that are based on water-soluble THC would better drive the marketplace forward. Nonetheless, many consumers still tend to prefer consuming traditional flower or vaping extracts and concentrates instead of imbibing cannabis-based drinks.

According to Statistics Canada, 5.3 million or 18% of Canadians ages 15 years and older reported using cannabis in the first quarter of 2019 compared to 14% who reported using just one year earlier.

While cannabis-infused beverages are expected to be a large market driver in the near future, the flower segment is still projected to account for the majority of the market.

Monday, the Alabama Political Reporter talked with Gail Ellis with the Alabama Department of Agriculture and Industries about industrial hemp and complaints from hemp farmers that their state licenses are too restrictive.

Ellis told APR that it is illegal in Alabama for a farmer to sell hemp material to the general public or to anyone without a hemp license.

The Alabama Political Reporter asked about the legality of smokable hemp products being widely marketed in the state.

Ellis said that all of those products are presently illegal as are the hemp gummy bears and other chewable hemp products.

The 2018 Farm Bill make industrial hemp legal throughout the country. After the product was legalized by the federal government farmers applied for and received licenses from the Alabama Department of Agriculture and Industries to grow hemp in Alabama in 2018. These are the first farms to grow hemp in Alabama legally in approximately 80 years. While hemp historically has been used to make paper, rope, building materials, wood substitutes, etc.; most of the hemp being grown in Alabama today are being grown for their flowers which produce cannabidiol when pressed or run through a centrifuge.

Ellis shared a directive from the Department.

“A licensed grower can legally sell unprocessed hemp to a licensed processor/handler. However, even licensed growers or licensed processor/handlers are prohibited from selling unprocessed hemp (i.e. buds, cigarettes, smokable hemp, hemp tea bags, etc.)”

Marketing the seeds, plants, or flowers to anyone other than a licensed grower or processor is also presently illegal, according to Ellis

“Dried hemp in the form of floral and bud material is considered unprocessed. As such, it is illegal to sell to the unlicensed public (i.e. individuals, gas stations, online, CBD stores, etc.). Industrial hemp material can only be handled/processed by those with an Industrial Hemp processor/handler license.”

“Licensed Growers are allowed to sell harvested hemp material to other licensed growers and/or processor / handlers in Alabama OR to licensed growers and/or processor / handlers in other states.”

“For CBD store owners who also happen to have a current Hemp Processor/ Handler license, the y would be legal to possess the dried floral/bud material; however, they would still be prohibited from selling unprocessed hemp to the public. Customers for smokable (unprocessed) hemp would not be licensed to handle hemp, so individuals purchasing such products would be in jeopardy of being arrested.”

The Alabama regulation was written by Gunter Guy Jr.

Lisa Varner is a Moody artist, jewelry maker, and hemp/cannabis activist.

Varner is also a leader of Alabama Hemp Love networking, a group of like minded business people in Moody seeking to raise awareness on the hemp issue.

Varner says that she uses cannabidiol oil (CBD) which is derived from industrial hemp.

“I use it for relaxation and to ease migraine headaches,” Varner said. She has been under a doctor’s care for this in the past but the side effects of the migraine medicines available were far worse than the actual ailment. Lisa says she stopped using man made medicines opting instead for natural alternatives; hemp being the best she has found thus far. “With hemp I miss 2-3 days per year due to my migraines without it 5-7 are often lost due to my condition..”

“I am a naturalist. I rarely eat cooked food,” Varner explained. “I am not for corporations altering my medicines and my foods.”

Warner also sells jewelry that she makes from hemp plants. She expressed concerns that the way that the Alabama Department of Agriculture is interpreting the hemp laws will put her jewelry business in jeopardy.

“Anything that you can make from a tree, you can make with hemp,” Varner said. “And anything you can make from petrochemicals, you can make from hemp.”

Patrick Leberte is a licensed hemp grower in Moody, who also owns Hemp 205, a CBD store.

Leberte said that he put most of his money into his farm and startup business thinking he could sell the flowers

“There is no law against it,” Leberte told APR. When Alabama’s hemp crop was ready to harvest the Department changed the rules.

A source close to the hemp industry told APR that the flowers are 30 percent of the hemp business and that the rule on flowers has hurt the profitability of Alabama hemp growers, who already did not have a good crop because of the August and September drought.

“The raw hemp is the best way you can use CBD,” the source speaking on condition of anonymity told APR. “Processing takes out some of the CBG and turpentine.”

“The flowers are more soothing than the oil,” Varner told APR. While CBD oil is working for her, other people need the flowers, and some persons need marijuana.

Varner said that she favors marijuana legalization as well as the full legalization of hemp in all its forms.

While hemp and marijuana look very similar; hemp has a much lower THC content than marijuana. THC, Tetrahydrocannabinol, is the chemical component in marijuana that produces the “high” and the hallucinogenic effects.

St. Clair County District Attorney Lyle Harmon (R) said that the four hemp farms in St. Clair County were all inspected and were found to have less than .3 percent THC. Anything above that would be illegal and have to be destroyed.

Leberte said that poor weather and late planting due to a delay in getting his seed tested resulted in his first hemp crop being stunted so it had to be destroyed.

An Auburn University ag extension agronomist told APR the hemp plant does not flower until decreasing daylight, September and October, thus the plants have to be kept alive through the long summer. She said that it would be foolish to attempt to grow hemp for CBD without overhead irrigation.

Hemp is such a new crop for Alabama that researchers are not even sure what are the best soil pH and fertilization recommendations are for the plant here. The Alabama Department of Agriculture and Industries is currently accepting applications for hemp growers for the 2020 growing season.

APR asked Leberte if hemp should be like corn: a farmer can plant it if he wants to and he can harvest and sell it to anyone, even the general public, that will buy the product.

Leberte said no; that hemp should be regulated similarly to tobacco to keep it out of the hands of kids.

Ellis said smokable and eatable hemp products and even CBD have not been approved yet. USDA still has to give approvals and so does FDA (the U.S. Food and Drug Administration).

The hemp industry source told APR that some farmers are talking to an attorney about suing the state to allow the direct sell of hemp to consumers, especially the flowers themselves.

Ellis said that the rule has not changed from day one and if growers had read their application they would have seen that selling the flowers to the public was forbidden.

Ellis warned that many stores across the state are selling products that are not legal. There is still an issue of who has jurisdiction; but once that is resolved some people who are selling unprocessed hemp products “Could be going to jail.”

APR asked if hemp cigarettes should be taxed like tobacco cigarettes.

Ellis thought said she thought so, “But that is an issue for the Alabama Department of Revenue.”

Chey Lindsey Garrigan is an economic developer, commercial real estate broker, registered lobbyist and political operative with ties to the national hemp and cannabis industries.

“This will only be solved by the Alabama legislature,” Garrigan told APR. “Legislation will have to be introduced and passed in the 2020 legislative session to fix this. CBD and hemp have benefitted the lives of millions of Americans and the Alabama farmer should not be hindered by their own state government when growing a natural product that is widely available in almost every other state.

“When my father passes, I will be moving someplace else if the state does not get off overregulating the hemp plant,” Varner said.

Two months after online cannabis directory Weedmaps promised it would stop listing illicit marijuana businesses, the Irvine-based company has laid off 25% of its workforce.

More than 100 people across the country, from a writer in Orange County to a policy expert in Massachusetts, were affected by the recent cuts.

“Today was my toughest day during my tenure as CEO,” wrote Weedmaps’ leader, Chris Beals, on Twitter as he announced the cuts.

Beals declined to discuss if, or how, the layoffs were connected to the financial hit that Weedmaps presumably faces if it follows through on a promise to drop hundreds of unlicensed advertisers from its site by the end of the year.

In a press release, Beals blamed the layoffs on a slower-than-expected embrace of legal cannabis by new states over the past year. He also cited a tightening of the tech and cannabis capital markets, which he said has made it tough to land investments to support his company’s growth. And he said states such as Massachusetts that recently have legalized marijuana have been too slow to issue licenses to support a stable industry.

“In our own home state of California, three years after Proposition 64 legalized recreational use (of cannabis), it is disheartening to see 75% of cities and counties not allow cannabis retail sales and California lag behind other legalized states,” Beals said.

Weedmaps is one of the most influential cannabis companies in the world. And it got there in large part by promoting unlicensed shops and delivery services, which it’s done since launching its Yelp-like service in 2008.

The company held to that business model even after California voted in 2016 to legalize recreational cannabis. In early 2018, the state’s Bureau of Cannabis Control sent Weedmaps a cease-and-desist letter telling the company that it was breaking state law by selling advertising space to unlicensed operators, who have a financial advantage over their licensed competitors because they don’t pay taxes or spend money on other costs associated with operating legally. Weedmaps fought back at the time, citing protections for technology companies.

Illegal shops are still listed on Weedmaps.com, even though Gov. Gavin Newsom signed a bill in July that lets state regulators fine unlicensed parties up to $30,000 per violation for each day that they’re defying state cannabis laws.

By operating in defiance of state law, Irvine-based Weedmaps has maintained market share in the world of online marijuana advertising. Competitors, such as Leafly, voluntarily dropped illicit businesses nearly two years ago.

In August, shortly after Newsom said the state could issue daily fines, Weedmaps announced that it would phase out its unlicensed ads by the end of the year.

Meanwhile, illicit cannabis operators continue to thrive, cutting into the tax revenue that California expected to receive from the new industry — money that is earmarked for cannabis-related research, education programs and more.

Unlicensed cannabis companies also pose public health threats. This year, people using unregulated vaping products have suffered lung problems connected to 33 deaths and 1,479 hospitalizations across the country. Some of those patients have said they purchased products at stores they found via Weedmaps.

When pressed for updates on removing illicit shops from Weedmaps, Beals said Thursday that the company has “stopped allowing new advertisers on the platform without providing license information.” Beals said Weedmaps has made “good progress on existing advertisers updating license information or coming off the platform,” and added that the company is “confident we will have completed the transition by the end of year.”

Last week, a map on the website showed ads for dozens of dispensaries in several Southern California cities — from Anaheim to Whittier to Ontario — where cannabis retailers are outlawed.

One former employee believes that in addition to the pending loss of revenue as the company culls unlicensed advertisers, the company also has taken a financial hit from its sponsorship of the Museum of Weed project in Los Angeles — a claim that Weedmaps officials dispute.

In November, when the museum was announced in partnership with Vice Media, the plan was to open in early 2019. At the time the museum was not described as a temporary exhibit. But in June, when Weedmaps announced an opening date for the delayed project, it was billed as a pop-up exhibit to run Aug. 1 through Sept. 29. Beals said Thursday that the company opted to extend the museum’s run through the end of October “given the success we were seeing,” and added that it was always intended to be a temporary project.

Other employees said they were shocked by the layoffs, even though they expected some adjustments as the company changed its business model. Some said security guards were waiting to immediately escort pink-slipped workers out of the Irvine headquarters, while others were notified they’d been laid off via email. Employees said they received a couple months of severance pay.

Beals said engineering, product and design teams were least affected by the layoffs, since that’s where Weedmaps will be focusing its efforts going forward. He said the company aims to expand software it is creating to help cannabis business stay compliant with local laws and to streamline operations.

“We will continue to grow and drive forward,” Beals said.

You've probably heard by now that marijuana offers investors an incredible long-tail growth opportunity. Having already more than tripled worldwide sales in the past four years to nearly $11 billion, lofty projections call for weed sales to head considerably higher in the years that lie ahead. Plus, with the black market being as large as it is, there's clearly demand waiting to be tapped by legal channels.

Because cannabis legalization is currently a patchwork of state-level regulatory regimes, every state’s cannabis market is unique. No one set of rules applies everywhere, and, in states with both medical and adult-use markets, the regulations are often different for each type of sale.

This situation can make life complicated for medical cannabis dispensaries looking to shift to adult-use shops. While adult-use opens access to an exponentially larger customer base, that opportunity comes with new laws, systems, compliance requirements, and other variables.

Lawmakers are scrambling to keep pace with the ever-changing landscape of the cannabis and hemp industries here in Florida. As proponents of legalization lay the groundwork for a 2020 vote on adult use — more commonly known as recreational marijuana — officials are still trying to get a hold on the cannabis and hemp industries.

New cannabis technologies have the potential to transform the industry as advanced cultivation techniques and testing practices improve.

New cannabis technologies, including quality control and contamination testing along with other health and safety practices, are key to building and maintaining consumer trust in the legal cannabis industry.