A presentation on industrial hemp tracking the "what" and "why" of global hemp economics. Includes data and analysis on hemp acreage cultivation, CBD (cannabidiol) and trends and opportunities in the hemp industry.

1. Hemp Industry Economics
Hemp Industries Association Conference
Lexington, KY | 9/10/17
Sean Octavius Murphy
Hemp Business Journal, Founder & Publisher

2. U.S. Retail Hemp Industry (5 Year CAGR)
22% Growth
U.S. Hemp Industry (2020)
$1.8B
Hemp-Derived CBD Industry (2016)
$130M

3. • Nutrition Business Journal
• Arcview Market Research
Deputy Editor (3rd Edition)
Carla Ooyen, MBA
Research Director
Available Advisor Position

4. 1. “What” is happening and “Why” it is happening
2. Cultivation Data
3. Retail Sales Data
4. CBD Market
5. Trends and Market Opportunities
Learning Topics

5. Textbooks describe economics as the study
of the allocation of scarce resources. That
definition may be the 'what,' but it certainly
is not the 'why. '
Ben Bernanke
Chairman of the Federal Reserve
2006-2014

6. February 7, 2014

7. Sec. 7606, Farm Bill Amendment

8. May 24, 2014

9. “The Earth, our home, is beginning to
look like an immense pile of filth.”
Pope Francis, Laudato si’

10. September 17, 2015

11. “I speak for the trees for the trees have no tongues.”
The Lorax
United Nations Sustainable Development Goals

12. April 22, 2016

13. Paris Agreement
“Now is the time for bold, unprecedented action. Our planet cannot be
saved unless we leave fossil fuels in the ground.” Leonardo di Caprio

14. UN Business Forum
Business Case for Corporate Climate Adaption Panel
Stuart Gulliver, CEO/Chairman, HSBC Bank

15. ROBERT. H. HERZ
Former Chairman, FASB
MICHAEL R. BLOOMBERG
SASB, Chair of the Board
Did you know?
89% of global institutional investors will request sustainability
information directly from companies, but only 10% of
companies are integrating sustainability metrics into 10-K
filings.

17. November 8, 2016

20. August 10 & 12, 2016
December 14, 2016
January 13, 2017

21. “The Big Three”

22. • December 14, 2016: DEA issues a three-page clarifying
document (“Final Rule”) on cannabis oil products,
including CBD-rich extracts, entitled “Establishment of a
New Drug Code (7350) for Marihuana Extract” with the
purpose “to better track these materials and comply with
treaty provisions.”
• January 13, 2017: The “Final Rule” is made effective and
Hoban Law Group immediately files a petition on behalf
of three clients (Hemp Industries Association, Centuria
Natural Foods, RMH Holdings) against the DEA in the U.S.
Ninth Circuit Court of Appeals.

24. July 28, 2017

27. Dates to Watch in 2017 & 2018
1. Introduction of Senate Bill (and leadership support)
2. NDA for Epidiolex and successive FDA actions
3. HIA, RMH, Centuria (Hoban Law) vs. DEA: Oral Arguments
4. Farm Bill 2018
5. Clarification on Statement of Principles

28. From Dates to Data…

29. Where’s HBJ Data Come From?
1. Data Partners and Collaborators
• Trade Associations
• Companies Non-Profits
• Government Agencies, Departments of Ag
2. Point of Sale *
3. Import / Export
4. Surveys and interviews with executives, experts and cannabis
industry leaders

31. 2016 Global Acreage
76,333 Registered
50,888 (e) Harvested
81,500 Reported
70,000 (e) Harvested
50,000 (e)
Harvested
16,417 Registered
9,651 (e) Harvested

32. • World’s largest hemp fiber and seed producer
• 10,000 yuan (US$1,500) per hectare, compared to just a few thousand
yuan for more common crops like corn
• Mostly hemp textiles and related products
• “We expect the sector (CBD) will grow into a 100 billion yuan
($154mm) industry for China in five years’ time,” Tan Xin, Hemp
Investment Group

35. U.S. Domestic
Production (2016)
143,880 Kilograms
U.S. Imported (2016)
24,726 Kilograms
Chart Available in The CBD Report

36. Chart Available in The CBD Report

37. Canadian Acquisitions

41. 5,922 7,500
State Acreage Growth Rates (2016/2017)
+27%
2,525 3,000
+18%
+2,262%
51 1,205
500 3,649 30 3,020
+629% +9,966%
225 200
-11%

42. CBD (Cannabinoids) Seed
Fiber
55%
30%
15%
U.S. Cultivation By Type (estimates)

43. Grain Processing
MarketSec. 7606 Cultivation

47. Retail Sales

48. 1. Food
- Dairy
- Bread
- Grains
- Beverages
- Snack Foods
- Packaged and
Prepared Foods
- Condiments
2. Supplements
3. Personal Care
4. Consumer Textile
5. Other Consumer
- Pet Food
- Household Cleaners
- Paper
- Jewelry/Crafts
- Other
6. Industrial Applications
- Automotive
- Green building
- Industrial Textiles
- Bedding Materials
- BioFuels
- BioPlastics
- Oil Wells
- Other
7. “Hemp-Derived” CBD
Hemp Industry Sector Breakdown

53. Chart Available in The CBD ReportChart Available in The CBD Report

54. Chart Available in The CBD Report

55. Chart Available in The CBD ReportChart Available in The CBD Report

56. Chart Available in The CBD Report

58. "Cannabidiol (CBD) is one of the active cannabinoids identified in cannabis. CBD has
been shown to be beneficial in experimental models of several neurological disorders,
including those of seizure and epilepsy. In the United States, CBD-containing products
are in human clinical testing in three therapeutic areas, but no such products are
approved by FDA for marketing for medical purposes in the United States.”
"FDA is requesting interested persons
to submit comments concerning
abuse potential, actual abuse,
medical usefulness, trafficking, and
impact of scheduling changes.”
Deadline: Submit either electronic or written comments by September 13, 2017
The Setup… and What To Do
CBD is food stuff or a supplement, NOT “medicine”

59. “By the end of November” is the
expected submission of the NDA.
The New Drug Application is the
vehicle in the U.S. which drug
sponsors formally propose that the
FDA approve a new pharmaceutical
for sale and marketing.
End of Year, 2017:
The FDA has 60 days to
review the NDA and accept
or reject it. The Epidiolex
NDA is “robust and well-
written.” HBJ anticipates it
will be accepted.
The Prescription Drug User Action
(PDUFA) outlines the timeline and
protocol by which drug companies
submit fees and the FDA approves
drug applications. PDUFA is typically a
one year timeline unless the drug is
“fast tracked,” and then it’s 6 months.
Epidiolex will likely be fast tracked.
GW management stated a June, 2018
PDUFA date.
Upon the FDA’s approval
under PDUFA, the DEA has
up to 90 days to reschedule
a drug. HBJ anticipates
Epidiolex will be re-schedules
on the CSA as a Schedule IV
drug in October or
November 2018.
The Greenwhich
Biosciences sales
team will take
Epidiolex to market.
HBJ estimates an
initial wave of pent
up demand at the
end of 2018. Sales
may not begin until
early 2019.
End of 2018 or
beginning of 2019.
The hemp industry
should watch for
increased FDA action
or regulation to
enforce CBD as a
drug given Epidiolex
commercialization.
Epidiolex sales ramp-up.
Continued
regulatory clashes
between FDA, DEA
and cannabis
companies (hemp
and marijuana)
concerning
labeling, marketing
and scheduling.
Note: If the DEA reschedules (to Schedule
II) or de-schedules marijuana from the
Controlled Substances Act, it will have an
impact on this timeline. HBJ estimates no
such scheduling action will occur – until at
the earliest - Epidiolex becomes a
scheduled drug and pharmaceutical
financial interests are ‘in play’ across
regulatory agencies and financial markets.
Following the U.S.
submission, we expect
the E.U. drug filing to
following shortly
thereafter.
2018 2019
Chart Available in The CBD Report

63. CBD vs. Hemp Extract, Oil and Complex
CBD:
Hemp Extract:

65. Genetics/Se
ed
Farming/Cu
ltivation
Processing Dealers/
Wholesale
Retailer Market
Pain Point #1
Seed Supply – unreliable, untimely, and
difficult to acquire---the process to acquire is
often full of bureaucratic delays and lack of
transparency.
Pain Point #3:
Industrial Processing– where do cultivators
take production for processing? Where do they
store it? Who are the wholesale buyers? What
is the market price?
Pain Point #2
Weed and insect control - “We’ve seen a lot of
plant disease.” –Ron Turco
Pain Point #4:
FDA & DEA – lack of clarity & misinformation
Pain Point #5:
Consumers: awareness, demand
and education

67. Trends &
Market
Opportunities

68. Fact:
Agriculture uses 70% of the
world’s fresh water supplies.
Food and Agriculture Organization of the United Nations
1. Water Conservation

69. 2. Global Food Security
“Food Production Must Double by
2050 to Meet Demand from World’s
Growing Population, Innovative
Strategies Needed to Combat Hunger”

70. Acquisition

71. 3. Whole Plant Extracts

72. 4. Industrial Processing
X X

73. 5. Petrochemical / Plastic Replacements

74. Five Market Opportunities
happening NOW in the
U.S. Hemp Industry

75. 1. Seed Sales
2. Central and South America Markets
“Kilos upon Kilos” -Bob Hoban
• Purchasing viable seed for germination can be a complicated process. It
can be difficult to locate a seed source and extensive permitting and
documenting with DEA and USDA phytosanitary rules.
• Seed sourced internationally and sold domestically.

76. Chart Available in The CBD Report

77. 4. “The microbiome is where the money is at.”
• Genetic Sequencing, Eliminating Genetic Drift
• Personalized Medicine for Cannabinoid and Terpene Therapies
• Open Sourcing Genetics
Kevin McKernan, Chief Science Officer, Courtagen

78. 5. Farm Data Management and Optimization

81. The CBD Report &
2017 Mid-Year Updates | $399
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