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December 14, 2019 CONTACT

Debra Borchardt, Author at Hemp Market Report

Debra BorchardtDebra BorchardtDecember 4, 2019
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3min00

On Tuesday, The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency issued a statement clarifying banking rules around hemp customers.

Key Takeaway

The key takeaway from the statement is that banks no longer need to file the onerous Suspicious Activity Report, known as SARS for hemp farmers.

The statement said, “Because hemp is no longer a Schedule I controlled substance under the Controlled Substances
Act, banks are not required to file a Suspicious Activity Report (SAR) on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”

Michael Weiner is a partner at the international law firm Dorsey & Whitney and the chair of its Cannabis Practice Group said, “This statement is limited to hemp growers and not to other businesses related to hemp or CBD from hemp.  For banks that are already providing banking services to hemp growers, the word “solely” may cause banks to hesitate to cease filing suspicious activity reports for these customers.  For banks that are reluctant to provide banking services to hemp growers, this statement is unlikely to provide sufficient comfort to enter the market.”

“Further, FinCEN stated that it would issue additional guidance following further review of the USDA interim final rule, perhaps following issuance of final rules from the USDA following the current public comment letter.  Banks may delay making any changes to their banking services until issuance of such additional guidance,” Weiner added.

The statement went on to add “When deciding to serve hemp-related businesses, banks must comply with
applicable regulatory requirements for customer identification, suspicious activity reporting, currency transaction reporting, and risk-based customer due diligence, including the collection of beneficial ownership information for legal entity customers.”

Many in the industry are not interpreting the language as starkly as Weiner. Most believe the statement gets all hemp customers off the hook with banks. However, banks tend to be very conservative and may opt to only apply the SARS guidelines to the growers and not the extended hemp family of CBD producers.


Debra BorchardtDebra BorchardtOctober 8, 2019
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5min00

A new report from the Brightfield Group titled “Hemp Cultivation Landscape” was released this month that suggested, “On average, hemp could command revenues of over $40,000 per acre planted, depending on quality and yield.”

Here’s how the math works according to the report:

  • The average number of plants per acre was between 1,500-2,000
  • The conversion of flower to CBD averages 40 lb/kg
  • The yield per acre is on average 20 kg/acre
  • This brings a range of revenue per acre to between $30,000-$50,000 per acre.

Top Cultivators

The report also gave a sample list of the largest U.S. cultivators that have planted over 100 acres.

Lilu’s Garden is the largest hemp manufacturer. The company said that its 2019 harvest is on track to bring in 50 million pounds of hemp or 1 million kilograms if isolated CBD. The hemp is processed in a 175,000 square foot plant in Owenton, Kentucky. Lilu has planted 75,000 acres, which is a record quantity achieved by partnering with numerous farmers.

Eureka 93 has 19,000 acres planted and is a combination of several companies. LiveWell Canada, Acenzia and Vitality CBD Natural Health make up this company that farms in Montana. It has extraction facilities in Montana and New Mexico.

Integrated CBD farms 10,000 acres in Arizona  using organic farming processes. The report said that Integrated has the ability to process 200,000 pounds of biomass per day. and 1.3 million liters of distillate per year.

Australian company Elixinol has 4,942 acres in Colorado and Crop Infrastructure Corp. farms 2,115 acres in Nevada.

Farming Challenges

The report did not shy away from the challenges of growing hemp. “There is a lot of
manual labor involved in hemp cultivation, especially during harvest. Due to the newness of the industrial hemp industry in the U.S., there are limited choices in machinery for harvesting hemp so some farms are retrofitting their machinery to harvest hemp floral material (where the CBD content is highest).”

     provided by Brightfield Group

The plant requires space between the plants, much like tobacco and unlike corn, which can be grown in rows.  The report also noted that some companies promise farmers to buy their hemp and then renege on the deal. There is also the issue with the plant’s sex and cross-pollination. Farmers apparently have to make sure the male hemp plants aren’t too close to the female plants.

“Despite these challenges, hemp offers a chance for family farms facing low commodity prices for corn and dairy to increase their incomes. On a per acre level, hemp for CBD is many times more profitable than hemp.”

Home Grown

Brightfield looked at where the top U.S. CBD companies were getting their hemp and of the 21 top companies, 69% sourced their product within the U.S. The report noted that consumers feel strongly about hemp from the U.S. The four companies that get their hemp outside of the U.S. were Epidiolex (GW Pharmaceuticals), PlusCBD Oil (CV Sciences), Medical Marijuana and Nature’s Plus made by Hempceutix.

As the U.S. grows more hemp, Canadian acreage has declined from 140,000 acres in 2017 to 78,000 in 2018. In Asia, China leads the way with 250,000 acres of hemp. In Europe, France and Romania each farm about 40,000 acres.

Looking Ahead

Brightfield Group predicts “growth in acreage from 2019-2020 will be significant because of the 2018 Farm Bill and the additional states that enacted hemp regulations and legislation before, during, and after the hemp growing season in 2019 (e.g., Ohio, Georgia, Florida). Prices will decline as more hemp enters the market and value will move to process and branded products.”

The company also believes the U.S. will stop importing hemp giving more opportunities for U.S. farmers. There may even be a demand for the U.S. grown hemp, creating a market for the farmers in the states.


Debra BorchardtDebra BorchardtMay 14, 2019
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4min00

Hemptown Organics Corp. raised  C$24 million in a round of financing from Canaccord Genuity Corp.who served as the lead agent on the brokered portion of the financing on behalf of a syndicate of investors that included Sprott Capital, Beacon Securities, and Pacific International.

The investment will allow Hemptown to embark on a multi-state expansion, purchase $5.5M in Oregon CBD seeds, begin the build-out of its processing and extraction facilities, research team, as well as planting and harvesting of its 2019 crop of feminized hemp seeds.

“Successful companies in this sector will be those with the ability to build a scalable, vertically integrated multi-state company,” stated Rod Wolterman, Founder and Chairman, Hemptown USA. “We have assembled a well-respected team that has already produced some of the highest quality feminized hemp in the country here in Southern Oregon’s Emerald Triangle. The capital infusion will allow us to expand operations to Colorado, Kentucky, Northern California, ramp up processing capabilities and develop disruptive product formulations in the CPG sector. Needless to say, we’re very excited to be executing on our vision and delivering sustainably grown feminized hemp flower and biomass on a commercial scale.”

With this capital infusion, Hemptown USA is now poised to become a formidable multi-state operation within this rapidly growing industry. Hemptown reported that it had a first-year yield of 110,000 lbs of feminized hemp biomass. The company said it is one of the largest CBG producers in the U.S. with our purchase of 1 million rare CBG seeds for the 2019 growing season. It also said that it is producing some of the world’s most coveted strain profiles containing 15% – 20% full spectrum CBD, CBG and other cannabinoids and terpenes.

Currently, the company is growing 1500 acres in Oregon, Kentucky, and Colorado with the capability to more than double the acreage in 2020 and each year after.

Looking Ahead

Hemptown plans to continue farming more novel cannabinoid strains in large quantities. Such as CBC, CBDV, and CBGV. The company also plans on acquiring a cGMP nutraceutical facility to develop unique cannabinoid products for the health and wellness industry.

“Successful companies in this sector will be those with the ability to build a scalable, vertically integrated multi-state company,” stated Rod Wolterman, Founder and Chairman, Hemptown USA. “We have assembled a well-respected team that has already produced some of the highest quality feminized hemp in the country here in Southern Oregon’s Emerald Triangle. The capital infusion will allow us to expand operations to Colorado, Kentucky, Northern California, ramp up processing capabilities and develop disruptive product formulations in the CPG sector. Needless to say, we’re very excited to be executing on our vision and delivering sustainably grown  feminized hemp flower and biomass on a commercial scale.”


Debra BorchardtDebra BorchardtDecember 5, 2018
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7min00

Recently lawmakers said that they have reached a tentative deal on a massive farm bill, breaking a months-long impasse over legislation that doles out more than $400 billion in federal funds for farm subsidies, food stamps and conservation efforts. Senate Majority Leader Mitch McConnell (R-Ky.) confirmed hemp legalization would be included in the final version of the 2018 Farm Bill.

Legislators are hoping to strike a compromise on the 2018 Farm Bill before the end of 2018. The big issue holding everyone up is the issue of SNAP, which is commonly known as food stamps. The Republicans want to reduce these benefits and require a work component. The Democrats don’t want any changes. McConnell insists that the the hemp language will remain in the final version.

“Hemp has played a foundational role in Kentucky’s agricultural heritage, and I believe that it can be an important part of our future,” Senator McConnell said. “I am grateful to join our Agriculture Commissioner Ryan Quarles in this effort. He and his predecessor, Jamie Comer, have been real champions for the research and development of industrial hemp in the Commonwealth. The work of Commissioner Quarles here in Kentucky has become a nationwide example for the right way to cultivate hemp. I am proud to stand here with him today because I believe that we are ready to take the next step and build upon the successes we’ve seen with Kentucky’s hemp pilot program.”

The original Farm Bill said that it was okay to grow cannabis plants that had little ability to get people high. The DEA (Drug Enforcement Administration) did not agree with this definition and has consistently pointed out that both plants come from the same genus and are therefore they are same plant and so subject to the Controlled Substances Act. A court case ruled against the DEA’s stance, but it continues to insist it is in the right.

Declining cigarette sales have caused tobacco crops to become less profitable as sales drop. Kentucky farmers had been searching for a replacement commodity and found it in hemp. In 2014, McConnell spearheaded a provision to legalize hemp pilot programs in the Farm Bill. The program has proved to be popular among farmers who have pressured McConnell to make it easier to farm hemp.

If the U.S. Department of Agriculture approves the plan, the Hemp Farming Act of 2018 will help Kentucky take the lead on hemp production by removing the current barriers to full-fledged farming. In addition to opening the fields for hemp, it will give researchers the chance to apply for federal grants from the Department of Agriculture.

“Here in Kentucky, we have built the best Industrial Hemp Research Pilot Program in the country and have established a model for how other states can do the same with buy-in from growers, processors, and law enforcement,” Commissioner Quarles said. “I want to thank Leader McConnell for introducing this legislation which allows us to harness the economic viability of this crop and presents the best opportunity to put hemp on a path to commercialization.”

The Hemp Market

The Hemp Industries Association (HIA) reported that in 2015, retail sales for hemp products reached $600 million, which is much lower than the $5.4 billion for marijuana sales in 2015 as reported by Arcview. HIA says that hemp sales on average grow by 15% each year and that most of that growth can be attributed to more people buying hemp-based body products and supplements.

Congress has blocked the DEA from interfering with state agencies and hemp growers with regards to hemp. The USDA has been blocked from prohibiting the transportation, sales or use of industrial hemp. Despite these measures, hemp was still subject to drug laws and hemp growers have to get permission from the DEA. In addition to that, harvesting and processing is labor intensive, which can drive up costs. Since the U.S. has been out of the hemp game for some time, harvesting innovations haven’t occurred.

A study by the University of Wisconsin-Madison concluded that hemp production “is not likely to generate sizeable profits” and also noted that international competition would affect the U.S. Most of the hemp for these sales was imported from China and Canada. Hemp imports for 2015 were nearly $78.2 million according to U.S. trade statistics.


Debra BorchardtDebra BorchardtOctober 30, 2018
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4min00

The New York Stock Exchange (NYSE: ICE) is delisting self-described cannabis company India Globalization Corp. (NYSE: IGC). In a short statement, the NYSE said that trading of the common stock would be suspended immediately.

The statement said that IGC has “Engaged in operations which, in the opinion of the Exchange, are contrary to the public interest. Section 1009(a) (ii) of the Company Guide states that it is necessary and appropriate for the protection of investors to immediately suspend trading in the Company’s common stock.”

The NYSE also said that “The issuer has substantially discontinued the business that it conducted at the time it was listed or admitted to trading and has become engaged in ventures or promotions which have not developed to a commercial stage or the success of which is problematical.

The Green Market Report recently highlighted the ways India Globalization Corp. claimed to be a cannabis company, but in reality, was earning money from legacy trading operations. Other outlets like MarketWatch have also dived into the company’s filings to uncover bad behavior. Mostly that IGC pretends to pivot its company to whatever new trend is moving the market, while not actually doing so.

Aphria Inc.

On a positive note, Aphria Inc. (TSX: APH)  said that its common shares have been approved for listing on the New York Stock Exchange and will begin trading at the open of markets on November 2, 2018. The new symbol will be APHA and the company said that it was changing its Toronto symbol from “APH” to “APHA.”

The shares that are currently trading on the OTCQB will move over to the NYSE. Shareholders will not need to do anything other than making sure their brokerages reflect the change in exchanges.

“Listing on the NYSE provides Aphria with access to the largest equity market in the world, with increased exposure to a vast array of US institutional and retail investors. This strategic move aligns directly with our growth ambitions as we enter an elite peer group of respected, high-profile corporate brands listed on the NYSE,” said Vic Neufeld , Aphria CEO.

Mr. Neufeld added: “We are excited to usher in a new era with the recent legalization of adult-use cannabis in Canada and as we aim to further expand our footing in exciting markets such as Latin America , the Caribbean and Europe . Aphria is well-positioned to capitalize on this fast-growing industry.”

 

 

 

 


Debra BorchardtDebra BorchardtOctober 29, 2018
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3min00

Massachusetts-based Curaleaf Inc. will begin trading on the Canadian Securities Exchange using the symbol CURA on Monday, October 29. The company is expecting to price its shares at C$11.45 and had an initial valuation of C$4 billion. It is the fastest growing U.S. cannabis company with the largest retail footprint under one brand.

The company was founded in 2010 under the name Palliatech and has mostly its operations on the east coast, even though these markets have fewer licenses and restrictive condition lists for patients. Curaleaf is conducting a reverse takeover of Lead Ventures in order to begin trading publicly on the CSE.

“We focused on limited license markets that are highly regulated creates a significant barrier to entry,” said Joe Lusardi, CEO of Curaleaf. “For example, companies have to put down lots of money in New York and staff the dispensaries with pharmacists. We see that as an advantage. not disadvantage.” Lusardi also noted that states with light restrictions have experienced a lot of black market activity. “We want to be in a highly regulated state with reputable operators,” he added.

The company is currently servicing 33,000 unique patients and employs 875 people. It is located in 12 states and owns and operates 28 dispensaries, 12 cultivation sites, and 9 processing sites. Its goal is to create welcoming stores that focus on wellness as opposed to the party side of cannabis.

While the east coast is its main focus at this time, Curaleaf will be opening a dispensary in Las Vegas at some point in the fourth quarter. Lusardi also said he expects that Curaleaf will continue its expansion in numerous ways. It will capitalize on states with existing licenses that have room for more storefronts and look to grow in western states. “Ohio could be a target and even Illinois,” he said.

While it seems like many companies call themselves multi-state operators, Lusardi emphasized that Curaleaf owns 97% of its earnings.

 

 


Debra BorchardtDebra BorchardtOctober 26, 2018
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4min00

HEXO Corporation (HYYDF), formerly known as The Hydropothecary Corp. reported that its revenue increased 14% to $1,410,656 quarter over last year’s $862,000 for the same time period. The net loss was a whopping $10.1 million versus last year’s net income of $935,000 for the same quarter. The net loss per share was five cents versus last year’s net loss of one cent for the same quarter.

“The past quarter has signified many milestones for HEXO Corp as we moved towards final preparations for the adult-use cannabis market. With two additional supply deals, this time in Ontario and in British Columbia, the establishment of a joint venture with Molson Coors Canada to develop cannabis-infused non-alcoholic beverages, a first step towards going global, and more, I’m extremely proud of the speed at which we continue to execute on our strategic priorities,” said Sebastien St-Louis, HEXO’s CEO and co-founder.

For the fiscal year ending July 31, 2018, revenue increased 20% to $4.9 million compared to $4.0 million for fiscal 2017. Sales volume increased 33% to 538,886 gram equivalents, compared to 404,158 in the same prior year period.

Raw Costs Declining

HEXO said that the weighted average cash cost of dried inventory sold per gram declined 60% year over year to $0.90 for the fourth quarter versus last year’s $2.23 for the same time period.  The company said that the cost per grams sold had been trending downward cumulatively as a result of improvements in the cultivation processes and economies of scale resulting from the full utilization of a higher production capacity.

The company also reported that the weighted average cash cost of dried inventory sold slightly increased to $0.90 from $0.88 as compared to the 3 months quarter ended April 30, 2018. This trend is expected to continue in the short-term, as it moves towards full efficiencies of scale and utilization of the new facilities as well as begins increased levels of production to meet the demand of the adult recreational market.

Expenses Increase

Expenses increased to $4.3 million in the fourth quarter, compared to $1.2 million for fiscal 2017’s fourth quarter. HEXO attributed the increase to the general growing scale of our operations, including an increase in general, finance and administrative staffing and additional rental space. Consulting and professional fees increased by $1.7 million and $207,000 respectively, reflective of the increased financial reporting and control based regulatory requirements accompanying public status on the TSX-V and subsequently the TSX as well as increased compliance costs as a publicly listed company.

For the twelve months ended July 31, 2018, general and administrative expenses increased to $9,374 compared to $3,609 for the same period in Fiscal 2017. The increase is consistent with the explanation as stated above.

On a positive note, cash and short-term investments were $244.8 million and the balance sheet remained debt-free


Debra BorchardtDebra BorchardtSeptember 10, 2018
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3min00

Apparel company Hoodlamb may have started using hemp as a tribute to cannabis by the founders, but now the company sees hemp more as an ecological choice, not a scandalous choice. The company began in 1993 in Amsterdam by Doug Mignola who wanted a better post surf jacket and also loved the idea of working with industrial hemp. The name is also tongue in cheek for the hoodlums that might consume cannabis.

The hemp comes from Northern China and is grown chemical free on family farms, some of which are owned and operated by women. The raw fiber is then spun into a durable fiber that is used to make the fabric for Hoodlamb jackets. Even the water-resistant coating on the jackets comes from natural cellulose taken from hemp stalks. Hemp fabric alone would be pretty stiff and scratchy, so it is combined with organic cotton to soften the feel of the fabric.

Not only will these jackets keep you warm, but they are also vegan and environmentally friendly. The Hoodlamb line comes from cruelty-free sources and uses no animal products. The faux fur trim feels amazingly real. “Some vegans don’t like the idea of faux fur trim at all, but it is practical for bad weather,” said a Hoodlamb spokesperson.

The thermal insulation is called EcoDown and each jacket recycles up to 10 bottles. The company said, “It’s the one part of the jacket that uses something synthetic, but since we are recycling we feel that it’s a positive thing. Otherwise, these plastic bottles would just be trash.”

The products do have some slight nods to its roots in cannabis culture. There are secret pockets sewn into the jackets that are really hard to find. Just in case the wearer may have some contraband they may want to conceal.

So far, Hoodlamb has produced over 80,000 jackets and can be found in over 20 countries. The company had  $2.6 million in sales in 2016. The surf crowd is especially fond of these jackets since it was created from a surfers point of view.

One thing the company doesn’t conceal is its commitment to Sea Shephard, a non-profit marine life conservation organization. The company exposes and confronts illegal activities on the high seas. 10% of every Hoodlamb X Sea Shephard purchase is donated to the mission and in addition to the Hoodlamb contributes at least one percent of its annual revenue to environmental causes.

 


Debra BorchardtDebra BorchardtJanuary 29, 2018
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3min00

Advertising Week and PRØHBTD MEDIA have extended their exclusive strategic partnership to further develop content and consulting services for brands in the cannabis space and beyond. The two companies first teamed up last year at Advertising Week in New York where PROHBTD impressed the New York crowd with its video stories on emerging cannabis brands like the chocolatier Defonce.

The partnership is starting strong with a video docuseries called “Branding Bud,” along with an editorial platform and a podcast series that will examine cannabis brands. There will be a special focus on what goes on behind the scenes of building a brand in the cannabis world and how that effects design, marketing, and diversity.

PRØHBTD MEDIA CEO and founder, Drake Sutton-Shearer, said, “We’re honored that Advertising Week has chosen to continue working with us. With the cannabis industry positioned to exponentially grow beyond $40 billion within the next five years, cannabis brands need help telling their stories to mainstream audiences and potential acquirers. Mainstream brands also need guidance to communicate with cannabis consumers in genuine and brand-safe ways. This partnership enables PRØHBTD to continue our mission of connecting brands with consumers via the Advertising Week platform.”
Advertising Week APAC, which takes place from 30 July and 2 August 2018, will see the debut of the “Cannabis in Australia” sessions to help educate and introduce leading cannabis brands to the Australian market, before returning to the United States for Advertising Week in New York in October 2018.
“The Advertising Week platform has always been about helping brands and marketers navigate what’s coming next in the technology and marketing space,” said Lance Pillersdorf, Advertising Week co-founder, and COO. “We’re excited to expand our partnership with PRØHBTD MEDIA to ensure the Week continues to bring a fresh perspective and provocative global conversations to delegates all around the world.”
Advertising for cannabis companies is a huge challenge since many of the traditional outlets are off limits. Cannabis companies are finding that building a brand name is harder than normal since even social media outlets reject the most innocuous ads. Last year’s cannabis sessions at Ad Week in New York were heavily attended as there was a large desire to learn more about cannabis branding.

Debra BorchardtDebra BorchardtJanuary 18, 2018
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11min00

There is a huge disconnect between how cannabis consumers use social media sites like Facebook (FB) and how social media sites treat cannabis users. Polls have shown over 60% of Americans approve of legalization, making it one of the few things that many Americans agree upon. This is a formidable group of people that are also users of social media channels.

In survey data from Consumer Research Around Cannabis, 2.4 million over the age of 21 said they had bought or used marijuana in the past month. Of that group, 83% had logged on to Facebook. However, Facebook is very resistant to cannabis companies having pages on the site. The company regularly states that cannabis pages are promoting illegal drug use even if they are businesses that don’t even touch the plant. Many companies have complained about their pages being shut down with no warning and little recourse other than asking for an appeal from a vague link.

“I talked to the Facebook people about two years ago and tried to explain that a lot of businesses in the industry are using social media to inform and educate medical marijuana patients,” said Olivia Mannix Co-founder of cannabis marketing company Cannabrand. “If pages are shut down, then patients can’t get information about products in the stores, or find networks like cannabis patients group.” Cannabrand, like other cannabis companies, has learned that by avoiding the use of hot words like marijuana, cannabis, and weed to name a few and making sure that images don’t contain pot leaves posts can get by Facebook’s watchdogs.

Facebook didn’t respond to a request for a comment, but it seems steadfast in its approach to the cannabis community, no matter the size of the group. Cannabis company pages are generally allowed but boosted posts or ads are not.

Instagram And Cannabis

Instagram, which is owned by Facebook had been more permissive towards cannabis companies with regards to allowing cannabis posts, yet tougher when it came to allowing the profiles. According to Consumer Research Around Cannabis, only 56% of cannabis consumers even log into Instagram. Cannabis companies might be able to make these posts to reach their clientele, but then they learn the accounts disappear when Instagram decides it wants to shut them down.

Mike Coleman, Dir of Marketing for Medical Marijuana Inc. (MJNA) said, “Instagram has been more aggressive in policing cannabis. Facebook doesn’t seem to shut down pages even if they don’t allow ads.” He added, “I’ve heard of companies building a following on Instagram only to wake up and have it shut down. Its a tough place for a marketer to go.” Businesses are estimated to have spent $36 billion in social media advertising according to eMarketer, so it’s a significant place for companies to reach their customers.

Twitter (TWTR) is another marijuana friendly social media channel. Companies are given the green light for profiles and free rein on what messages they want to send out. Still, only 52% of cannabis consumers logged on to Twitter in the past month, while only 48% use Snapchat. So, the sites that seem to tolerate cannabis consumers, aren’t the sites where they are spending time. Even fewer cannabis consumers log on to LinkedIn with only 41% choosing to visit this platform.


CBD (cannabidiol) products get caught up in this marijuana blacklist. Mannix mentioned several hemp-based CBD companies, whose products are legal, but have experienced getting blackballed on the internet. Amazon (AMZN) has over 9,000 listings to purchase CBD products. Facebook allows Amazon to keep its page, even though by its own standards Amazon is promoting illegal drug use by selling CBD products, whereas a consulting firm for the cannabis industry that sells no products is considered to be promoting drug use. 73% of cannabis consumers logged on to Amazon in the past month according to the Consumer Research’s data. Making this one of the few places where cannabis users aren’t tossed aside.

Cannabis Consumers Prefer Google

Moving on to search engines, cannabis consumers are overwhelmingly on Google (GOOG) as 85% have logged on in the past month versus 44% for Bing. Yahoo is apparently not a choice at all. Jeffrey Stein of Consumer Research Around Cannabis said, “Yahoo was not included in the survey because it hasn’t been deemed relevant by our database subscribers. The primary search engines they are currently interested in are Google and Bing. If there is a sudden surge in demand for Yahoo, we would, of course, consider adding it back into our questionnaire.” “Google also has a hot list of ad words they do not allow,” said Kyle Porter, President of CMW Media. “Even in metadata or in the description you can’t use the words marijuana or cannabis. This makes it hard to reach the consumer with a new brand. For publishers, it’s hard to monetize content or reach consumers through traditional digital marketing plays.”

Porter noted that for some businesses, these “hot” words are found in the company name makes it even more difficult to use Google as a way to steer customers to the business. Porter did point out there are several websites that have been created to help the cannabis community get around these roadblocks. The drawback to these sites is that marketers aren’t able to reach fresh customers. They are already “singing to the choir.”

Internet Radio Allows Drugs In Songs But Not In Ads

Music seems to be a bigger pleasure with 54% logging into Pandora (P), while 50% choose Spotify. I Heart Radio is at 45%. Only 19% chose Google Play Music and 8% listened to Slacker Radio. While music sites regularly play songs that sing about drugs, they aren’t so happy about running ads for cannabis companies. “We’ve avoided Spotify and Pandora as well because we can’t target them,” said Porter. The irony is that The University of Pittsburgh School of Medicine researchers found in a study, “116 of the 279 unique songs (41.6%) had a substance use reference of any kind. Ninety-three songs (33.3%) contained explicit substance use references.” In other words, its okay for the artists but not the advertisers.

Netflix And A Preroll?

Cannabis consumers do love their entertainment with 74% enjoying streaming video and TV shows. Netflix is the provider of choice with 58% using that service. Amazon Prime was used by 29% and Hulu was used by 27%. Only 18% used iTunes. Maybe Netflix is the channel of choice because of its embrace of the community. Netflix has created original programming around Columbian drug lords in Narco, a light comedy based in a dispensary called Disjointed and a drama simply titled Cannabis. Netflix also created its own collection of cannabis strains with names that pay homage to shows like Orange Is The New Black. The collection was sold at the Alternative Herbal Health Services in West Hollywood last summer. Netflix obviously doesn’t have the same issues that Facebook does.

Just Send Me A Text

Really, the best way for businesses to reach consumers is through their phones. The vast majority of Americans – 95% – now own a cellphone of some kind. The share of Americans that own smartphones are now 77%, up from just 35% in Pew Research Center’s first survey of smartphone ownership conducted in 2011. So since most people own smartphones, that means most cannabis consumers own smartphones. Loyalty programs from companies like Baker push out promotional notices to customers through text messaging. Dispensaries just skip the middlemen and go directly to the consumer. Coleman said, “We have engaged in push marketing and it’s been effective. It’s a great way to build a contact list.”

All of the marketers believe that at some point all of these social media channels will change their policies and begin to be more friendly to cannabis companies. Once cannabis is legalized, they will probably change their policies to accept some form of advertising. For now, none want to run afoul of federal law and are opting to take a conservative approach. The question will be whether cannabis companies will feel they need these outlets when that time comes. Most have been forced to work around them for years and may have little desire to dance with them once they are ready.



About Us

The Hemp Market Report will target news from the fast growing worlds of cannabidiol (CBD) and hemp. As a sister site to the Green Market Report, HMR will cover financial stories, but also take a look at lifestyle news as well. The Hemp Market Report will also publish sponsored content as we seek to expand our content offerings.


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