CBD-fortified products are offering a brand-new opportunity for players in cannabis industries across the world.

Global organizations such as the World Health Organization (WHO) and the World Anti-doping Agency (WADA) have recently declared CBD to be safe and are reclassifying it for broader uses. Specifically, the WHO officially recommended in December 2017 that CBD not be internationally scheduled as a controlled substance and, in 2018, WADA removed CBD from its list of prohibited substances.


In addition, positive shifts in cannabis regulations across multiple countries and regions including Canada, the US, the European Union, Japan, South Korea, Australia, New Zealand and South America have created new markets overnight. When combined with expanding research and development projects, consumer demand for safer, more natural products and treatments, as well as significantly improved quality of CBD-fortified products, there emerges a truly unique opportunity in the global functional food market.

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Naturally Splendid (TSXV:NSP) is working to build a portfolio of high quality conventional and organic hemp, CBD and plant-based products, servicing the North American, European, Asian and Australian markets.Send me an Investor Kit

The role of CBD

Why the big fuss over cannabidiol, more commonly known as CBD, is now well-recognized for its therapeutic value as an anxiety and pain reducer amongst a widening list of other health benefits. Consumers are becoming better educated about the role of this non-psychoactive cannabis compound in promoting optimal health. In turn, CBD-fortified products — especially hemp-derived CBD food products — are becoming more mainstream. Not just a subsector of the cannabis market, CBD consumer product sales are making a big splash in the $250 billion global functional foods market.

Functional foods are fortified or enriched with nutrients that provide health benefits beyond everyday nutrition and consist of a broad range of product categories including meal replacement bars and supplements, beverages and protein shakes as well as pet food products. The wide variety of CBD-fortified products and the possibilities for new product categories provide companies focusing on CBD fortified food products with ample opportunity for growth in a newly emerging market.

Why hemp-derived CBD-fortified products

CBD-fortified foods go hand-in-hand with the rising demand in the health and wellness market. CBD interacts naturally with the body’s endocannabinoid system to boost the immune system. Several studies, including a 2013 review published in the British Journal of Clinical Pharmacology, showed that CBD can reduce nausea, suppress seizures as well as provide relief from pain, depression, anxiety, Crohn’s disease, PTSD and insomnia amongst other indications.

The increasing prevalence of lifestyle-induced chronic diseases and the rising awareness of consumers about the health benefits of both CBD and functional foods is driving growth in this sector.

Global consumer trends are increasingly moving toward healthier, more environmentally-sustainable food choices including plant-based ingredients such has hemp-derived CBD. Hemp is an excellent source of CBD and makes for an excellent ingredient in fortified foods. Although it is a form of the cannabis sativa plant, hemp contains less than 0.3 percent THC — eliminating the psychoactive effects associated with cannabis. As such, consuming hemp-based products gives you the health benefits of cannabis without the high associated with marijuana.

Besides providing a good source of CBD, hemp is also high in protein (25 percent), and has the ideal ratio (3:1) of omega-3 and omega-6 essential fatty acids. Omega fatty acids are important nutrients for all systems of the body to function normally, including the skin, respiratory system, circulatory system, brain and organs. Like CBD, omegas are known to reduce inflammation, which is the source of many illnesses including arthritis, stroke and heart disease. Hemp also contains important minerals such as iron, magnesium, folate, copper, manganese in addition to insoluble fiber. The combination of these anti-inflammatory compounds, occurring naturally in hemp, is creating the foundation for new product development across a wide range of markets and demographics.

CBD market trends and changing hemp regulation

The global health and wellness market reached a reported $3.7 trillion in 2016 and is expected to grow by 17 percent over the next five years. The US$250 billion global functional food market is projected to reach more than US$440 billion by 2022, and CBD-fortified food products should play a significant role in the growth of both markets.

In Canada, the new Cannabis Act legalizes the extraction of CBD from industrial hemp for the first time and allows its use in a variety of products. Revised regulations that most are expecting in late 2019 will further open the global market for CBD-fortified food products. “CBD is taking the market by storm and becoming accepted and deregulated in Canada and across the globe as well,” said Bryan Carson, VP Operations and Co-Founder of Naturally Splendid (TSXV:NSP,OTCQB:NSPDF). “The research being conducted is proving up the benefits of CBD and this is translating into a strong surge of demand from consumers seeking plant-based nutrition and relief from ailments and deficiencies.”

Hemp-based CBD sales are expected to reach $646 million by 2022 in the United States, and this trend is expected to take shape in Europe and other international markets. The global hemp industry overall is projected to reach $10.6 billion by 2025, according to Grand View Research, representing CAGR of 14 percent.

The market applications for hemp-based CBD fortified-foods are numerous and wide-ranging, including supplements, nutritional powders, beverages, protein and nutritional bars, bakery and snacks, breakfast cereals, dairy and dairy alternative products, pet food and animal feed.

Canada and the United States control the majority of the global hemp market and new government regulations in both countries are allowing for more uses of the hemp plant, including CBD extraction and formulation, which is already expanding the market opportunities for hemp-based CBD-fortified foods on the global stage.

In the United States, the sale and consumption of hemp-containing foods and beverages is legal; in fact the US hemp foods retail market reportedly reached $43.6 million in February of 2018. Changes to those restrictions under the 2018 Farm Bill now allow for more US domestic hemp production, making supply sourcing less costly and complicated.

International markets for hemp-based functional foods are opening in countries such as Australia, which in 2017 enacted changes to the Food Standards Code permitting hemp seed to be sold as a food. The regulation change ignited a new industry in Australia focused on hemp-fortified food products — including chocolates, honey, flour, oils, protein powders, cereals, milk and even beer.

Innovative products to match consumer demand

Hemp-based CBD product companies as a subsector of the wider fortified foods market are showing that they are more adept at meeting new trends in this space compared to more established industries, indicated by recent product launches that include beverages and meal-replacement bars.

Naturally Splendid, for instance, has a wide range of products in most in the hemp and functional food and products space. This established hemp distribution network positions the company well as it begins introducing CBD-fortified products into its portfolio.

CROP Infrastructure (CSE:CROP,OTCMKTS:CRXPF) recently announced it is developing a new functional beverage line called CannaDrink which uses Naturally Splendid’s proprietary HempOmega™ powder created from microencapsulated hemp seed oil. CannaDrink will be a zero calorie, non-GMO, ketogenic-friendly line of soda pop, tea, and coffee variations. CROP is also working with Naturally Splendid to develop a “Hempire” branded hulled hemp seed and protein powder product line.

“We believe in the nutritional spectrum and health benefits of both hemp and CBD so adding a consumer goods vertical was a logical progression as consumer data shows strong trends in plant-based foods and nutritional products,” Michael Yorke, CEO and Director of CROP Infrastructure.

Naturally Splendid itself recently launched a new Ketogenic diet friendly, hemp-based performance snack, Key-to Life Keto Bars as part of its NATERA™ Sport high-performance supplement line for athletes. The company is also developing a CBD fortified keto-bar.

Naturally Splendid President and Co-Founder Craig Goodwin stated, “Through our own company branded products such as NATERA Sport and NATERA FX, as well as our many contract manufacturer clients, like CROP Infrastructure, products we manufacture in our facility are sold in virtually every major retailer across Canada. We believe this gives us a competitive advantage as the regulations in Canada evolve to accept CBD fortified products.”

Looking forward

The demand for CBD-fortified products is growing and there is plenty of space for further expansion and new applications for hemp across the health and wellness industry. Consumer demand for more plant-based protein choices and the growing global awareness of health benefits of cannabinoids will also serve as further drivers of growth for hemp-based CBD-fortified foods. Vertically-integrated companies in this sector are poised for significant growth across multiple consumer categories. The biggest differentiator in this emerging market will likely be product innovation.

This INNspired article is sponsored by Naturally Splendid (TSXV:NSP). This article was written according to INN editorial standards to educate investors. 

 Aion Therapeutic Inc. (CSE: AION) (” Aion Therapeutic ” or the ” Company “) announced today that its proprietary and patented combinatorial mushroom preparations AION F7 and AION F8 (collectively, the ” Aion Mushroom Preparations ” or ” Preparations “) showed high efficacy in killing HER2+ breast cancer cells, ER+PR+ breast cancer cells, and triple-negative breast cancer cells by direct cytotoxicity.

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The Company Will Tap into Southern Glazer’s Established Distribution Network to Bring Quatreau, its CBD-Infused Sparkling Water, to U.S. Retailers

 Canopy Growth Corporation (“Canopy Growth”) (TSX: WEED) (NASDAQ: CGC), a world-leading diversified cannabis, CBD and vaporization device company, today announced Southern Glazer’s Wine & Spirits (“Southern Glazer’s”), the world’s pre-eminent distributor of beverage alcohol, as the distribution partner for its U.S. portfolio of CBD-infused beverages. This partnership announcement follows the recent launch of Quatreau Canopy’s first line of CBD-infused beverages sold in the U.S market.

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 Canbud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“Canbud” or the “Corporation”) announces its subsidiary Empathy Plant Co. has completed the full development of its vegan multivitamin formula exclusively for women.

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Cannabis Market Update: Q3 2020 in Review

Click here to read the previous cannabis market update.

During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.

The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.

To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.

 

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Cannabis market update: New York and US potential boost operations

New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the US federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.

“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.

Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.

Before starting Bespoke Financial, Mancheril learned from traditional investment banks, working in the lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.

Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.

“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).

This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.

The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now undergoing a return to form as excitement about the US opening up increases.

The expert explained that there is likely to be a windfall of capital in the wake of major federal changes in US cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.

Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.

“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”

 

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As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro pressures affecting the way these assets operate.

“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.

Cannabis market update: Volatility continues to rule as industry foundations build

Despite the industry’s potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.

Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.

These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.

“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.

“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.

That means investors shouldn’t expect an end to volatility anytime soon.

“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”

Cannabis market update: Canadians talk up US business, but questions remain

A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.

One of the biggest announcements in this regard came when Organigram Holdings (NASDAQ:OGI,TSX:OGI) secured a C$221 million investment deal from British American Tobacco (NYSE:BTI,LSE:BATS).

Using the funds, the two will work in tandem to develop new branded products designed for the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be.

 

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While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.

The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.

“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.

“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.

Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.

“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.

Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance. In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.

“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).

Cannabis market update: Investor takeaway

The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.

While for the Canadian companies waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent future positivity for already thriving operations.

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 Trulieve Cannabis Corp. (“Trulieve” or the “Company”) (CSE: TRUL) (OTC: TCNNF), a leading and top-performing cannabis company in the United States will release its first quarter 2021 financial results on Thursday, May 13, 2021 before markets open. Following the earnings release, management will host a conference call at 8:30 AM Eastern Time to review the financial results.

All interested parties can join the conference call by dialing 1-888-231-8191 or 1-647-427-7450, conference ID: 4880609. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until May 20, 2021 . To access the archived conference call, please dial 1-855-859-2056 and enter the encore code 4880609.

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