Cannabis Companies Combine for US Hemp Play

As the cannabidiol (CBD) from hemp market continues to entice cannabis companies, a new partnership for this market was created between two public players in the space.

Invictus MD Strategies (TSXV:GENE), an owner of a Canadian licensed producer, confirmed on Monday (January 7) it will form a joint venture with relatively newcomer CannAmerica Brands (CSE:CANA), a cannabis brands company pursuing the US market.

The two will create this new venture alongside CBDistribution Company (CBDC).

According to the details of the partnership, Invictus will provide a C$5 million credit set to be used as the funding for working capital and operations.

George Kveton, CEO of Invictus, said this new partnership will offer his company a chance to expand beyond the Canadian cannabis market.

CannAmerica is set to participate in the extraction and post processing segment of the production with expertise on dosing and the formulation of concentrates.

“[CannAmerica] will contribute operational expertise, will source the property, extraction equipment, staffing and manage operations,” said the company. “CBDC will contribute the sourcing of Hemp Biomass procurement, branding, marketing and the commercialization of the finished product, including but not limited to CBD Isolate.”

This move is boosted by the signing of a new US$867 farm bill that legalized the hemp industry in the US. Cannabis companies are starting to target the CBD derived from hemp market thanks to this new bill.

A CNBC report indicated the approval of this bill could create a US$20 billion industry by 2022.

Dan Anglin, CEO and co-founder of CannAmerica, said this move accelerates the timetable for his company to come into the CBD-derived from hemp market in the US.

CannAmerica went public on the Canadian Securities Exchange in October; since then, the share price of the company has declined 17.65 percent.

Following Monday’s announcement, the market deemed the move favorable for Invictus, which saw its stock raise in value 7.14 percent. Shares finished the day at a price of [C$price].

However, CannAmerica declined sharply during the trading session by 10.71 percent to a price of C$0.75.

The passing of the farm bill has opened the floodgates for companies in the space to set out roadmaps for plans in this emerging marketplace.

“There is no bigger event than this for the CBD industry,” Michael Yorke, CEO of CROP Infrastructure (CSE:CROP), said in a statement to shareholders.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Invictus MD Strategies is a client of the Investing News Network. This article is not paid-for content.