A Major Hemp Producer in the US
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Hemptown Organics Corp. is a hemp company that grows some of the highest-cannabinoid producing plants in the US. After an impressive first year that resulted in revenue generation, Hemptown is scaling its operations to meet the demands of the growing hemp and CBD market. Hemptown is also preparing for what the company considers to be the future of cannabis: cannabigerol (CBG).
The passing of the US Farm Bill in December 2018 legalized hemp and its derivatives by removing it as a Schedule 1 drug from the controlled substances list, creating a booming CBD and hemp market. According to BDS Analytics and ArcView Market Research, the opening of the hemp market could generate over $20 billion in CBD sales in the US by 2024. With the passing of the Farm Bill, hemp companies are allowed to apply for federal grants and crop insurance, unlike their cannabis counterparts, allowing them to scale their operations quickly.
Hemptown has acquired premium hemp genetics that yield between 12 percent and 15 percent full spectrum CBD and other cannabinoids. The high-yield genetics help increase Hemptown’s margins as the industry adapts to price compression and commoditization. The company intends to grow over 500 acres of rare, high-CBG genetics in 2019, making Hemptown one of the largest producers of CBG in North America. CBG has numerous benefits, such as antifungal and antimicrobial properties, and is currently being tested as a treatment for psoriasis and eczema. It also has the potential to be used as a cosmetic additive.
The company uses proven farming methods, proprietary combine harvesting technology and state-of-the-art drying facilities to produce high yields that meet US Hemp Authority standards. Within 2018, the company was able to dry and store up to 110,000 pounds of hemp and expects to produce up to three million pounds of hemp in 2019 through its three facilities in the US.
As a multistate operator, Hemptown has operations in Oregon, Colorado and Kentucky. Oregon is home to the company’s 40,000-square-foot extraction facility in Central Point, Oregon that is built to CGMP and ISO standards. The company is in the middle of expanding its extraction facility to accommodate an expected increase in yield. Hemptown also has over 1,500 acres of cultivation space across the three states. The company expects to produce over three million pounds of biomass and generate over US$100 million in revenue by the end of the year.
Hemptown’s initial product line includes flower, pre-roll, biomass, distillate and isolate and has an average margin between 76 percent to 88 percent. The company is currently working on expanding its product line in the near term. The company is also in discussions to acquire FDA-approved assets that are able to produce pharmaceutical-grade products and consumer packaged goods.
Hemptown Company Highlights
- Hemptown is a multistate operator with distributed production across Oregon, Colorado and Kentucky.
- The hemp market could generate over $20 billion in CBD sales in the US by 2024.
- To position the company for growth, Hemptown is focusing on developing CBG products, which may have cosmetic and pharmaceutical applications.
- The company has dried and stored up to 110,000 pounds of hemp and expects to reach three million pounds of hemp in 2019.
- Hemptown expects to generate over US$100 million in revenue in 2019.
- The company’s hemp products meet US Hemp Authority standards.
- Hemptown currently has over 1,500 acres of cultivation space across three states as well as a 40,000-square-foot extraction facility in Oregon.
- The company has a diversified product line that has average margins between 76 percent to 88 percent.
- Hemptown is a founding board member of the California Hemp Council.
- Management notably holds 50 percent of the company shares.
Hemptown’s Business Model
Hemptown is focused on becoming a leader in the “novel cannabinoid” market as compared to the CBD hemp market. The company uses standard operating procedures (SOPs) and mechanized farming to ensure that it has control of its crop quality and yields across all of its operations.
Premium genetics and CBG
Cannabigerol (CBG) is the precursor cannabinoid to CBD and THC. CBG has numerous benefits, such as antifungal and antimicrobial properties, and is currently being tested as a treatment for psoriasis and eczema. It also has the potential to be used as a cosmetic additive.
To harvest CBG, a grower has to cut its cannabis in the budding phase to extract low quantities of CBG. However, Hemptown uses premium genetics when growing its hemp, which yields between 12 percent and 15 percent full spectrum CBD and other cannabinoids. The high-yield genetics help increase Hemptown’s margins as the industry adapts to price compression and commoditization. The company intends to grow over 500 acres of rare, high-CBG genetics in 2019, making Hemptown one of the largest producers in North America.
Moving forward, Hemptown intends to build out its farming operations and extraction facilities to help meet the demands of the global cannabis market, which is expected to reach US$66.3 billion by the end of 2025. To this aim, the company will offer a variety of products, including dried flower, oils and extracts. Hemptown is also in the process of acquiring FDA-approved assets that will allow the company to develop pharmaceutical-grade products.
SOPs and mechanized farming
Hemptown uses proven farming methods as well as its proprietary combine harvesting technology and state-of-the-art drying facilities to produce high yields. Through these methods, the company is able to meet the US Hemp Authority standards consistently. Within 2018, the company was able to dry and store up to 110,000 pounds of hemp and expects to dry and store up to three million pounds of hemp in 2019.
Hemptown has three facilities where it acquires and grows hemp. Across the three farms, Hemptown has 1,500 acres of land and expects to add 100 acres in California in 2020. The company expects to harvest one million pounds of CBG in 2019.
The company was founded in Oregon, and its flagship hemp cultivation farm is located in Oregon’s portion of the Emerald Triangle, a unique microclimate that supports outdoor grows. The property is currently 500 acres in size, but the company plans on increasing that to 1,000 acres in 2020.
The Sterling, Colorado facility is a joint venture operation, where Hemptown controls 500 acres of the 1,000-acre property. The company also intends to increase its position to 1,000 acres in Colorado.
Hemptown also sources its hemp from 19 contract farming partners in Kentucky, enabling the company to grow its presence throughout the US without spending a significant amount of capital. Through its agreements in the state, Hemptown controls up to 600 acres of hemp cultivation and intends to increase its capacity to 1,000 acres in 2020.
Hemptown currently has a 40,000-square-foot extraction facility in Central Point, Oregon that is built to CGMP and ISO standards. The company is in the middle of expanding its extraction facility to accommodate its expected increase in yield.
Rod Wolterman — Founder and Chairman
Rod Wolterman founded Hemptown’s Oregon operation in 2016. He has extensive experience in the cannabis sector, having been active within the sector since 1998, when Provision 215 was approved to legalize medical cannabis at scale in California. He has acted as a private equity investor in numerous medical cannabis dispensaries and cultivation operations in Southern California.
John Cummings — CEO
John Cummings led the compliance and special projects efforts for Kings Garden, one of the largest vertically-integrated operators in the state of California. He spent a year in Europe (Macedonia) launching the continent’s first GMP and ISO accredited cultivation and manufacturing facility. He is an experienced professional with over 20 years of finance, marketing, sales and project management experience
Michael Townsend — President
Michael Townsend has worked in corporate finance for over 25 years. He is the founding partner of Altus Capital Partners, a boutique investment bank in Vancouver, British Columbia, Canada. He has been involved in raising over $180 million over the past 10 years. He co-founded Patriot One Technologies Inc. and Body and Mind Inc.
Ross Westbrook — COO
Ross Westbrook is a veteran entrepreneur with over 27 years of experience as a senior executive of agricultural companies in complex, highly-regulated markets. He personally farmed 180 acres for over 20 years. He also coordinated sales programs for more than 100 independent growers over a 20-year span. He has been active in the emerging cannabis CBD industry, marketing five independent CBD product lines directly to consumers in Southern California markets.
Bruce Trent — VP Global Sales
Bruce Trent has over 35 years of domestic and international experience in the beverage industry, with companies including Red Bull, Coca-Cola, TalkingRain and Hemp2o. His experience and specialty is building sales, marketing, distribution and retail account teams and gaining distribution nationally by penetrating all retailers in all channels. He was a key member of the executive team that took Red Bull from $0 to over a $2.5 billion in sales.
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