As the cannabis industry continues to expand, so too do the avenues through which investors can participate. It’s no longer just a matter of investing in cannabis flowers and cannabis farms. The direct to consumer and business to business sales of CBD isolate and distillate is exponentially growing, and these two, near-pure CBD extracts are quickly becoming highly sought-after products.
To simplify: CBD isolate and distillate can be used in the preparation of almost all CBD products. These extracts can be used in the manufacture of CBD food products, CBD oils, tinctures, topical treatments, and even CBD water. By virtue of their versatility, many CBD product manufacturers are utilizing isolate and distillate as the base, raw materials for their products. And naturally, where we see market potential, we see a dramatic increase in purchasing patterns.
Currently, companies are not shy to invest in CBD extraction. The way it stands, cannabis extraction is the future of the cannabis economy. Being the source of cannabis extraction, hemp and marijuana cultivation will always play a pivotal role in the cannabis market. But a sizeable proportion of the end product of these plants moving into the future will be CBD isolate and distillate. There are some companies worth watching through this journey from cannabis flower to cannabis extracts.
Layn Corp’s $60m investment in CBD
Layn Corp, which is famous for its integrated production of plant-based sweeteners, flavors, and botanicals, has just announced plans to invest in hemp-derived CBD. The $60 million investment is to be spent on building a CBD processing facility in the USA. Layn will become another producer of CBD products including full-spectrum CBD oils, CBD distillate and CBD isolate.
The company expects a minimum production of 5,000 tonnes of hemp biomass per year, which will then be converted into the aforementioned products. Extracts will be at the forefront of their manufacturing paradigm, leaving little to the “hemp flower” market. Rather, most, if not all, hemp will be used for the manufacture of near-pure, highly potent CBD distillate and crystallized CBD isolate.
Layn doesn’t have to buy any land for this endeavor. Rather, they have partnered with farmers across the USA who have already been growing hemp for years. Layn states that the farms are certified organic. However, they will be partnering with universities to find ways of growing more CBD and CBN rich plants and developing technologies for extracting these compounds.
Zenabis and Farmako, a Canadian and European investment
Zenabis (TSX:ZENA) has a particularly interesting story, being the first Canadian company to enter into a contractual agreement with European suppliers. These Europeans aren’t going to be supplying Canada with hemp-derived CBD. Rather, Zenabis announced in April 2019 that it has partnered with German pharmaceutical research company, Farmako GmBH. Farmako will be supplying Zenabis with biosynthetically produced CBD, which Zenabis will then be selling to Canadian CBD product manufacturers.
Without the need to physically grow hemp or cannabis, there is the potential for extremely competitive pricing for CBD products. That is the main driver behind Zenabis’ decision to supply biosynthetically produced CBD. Even though the company is already at the forefront of hemp and marijuana-derived CBD products, Zenabis obviously thinks there is a place for synthetic cannabinoids in the Canadian market.
It’s not just a one-way agreement, either. Germany benefits just as much as Canada, as this agreement will enable Zenabis to provide Germany with its high-quality medical cannabis products. Germany has one of the biggest medical cannabis markets in the world.
Aluf Holdings, Inc. for CBD distillate
Also in April 2019 (it seems that it was a very fruitful month for the CBD extract industry), ALUF Holdings Inc (OTC:AHIX). announced its initial investment into CBD distillate processing. The company launched a hemp subsidiary called Aluf CBD Partners LLC and has made the initial investment, with the plan of manufacturing CBD distillate specifically.
Aluf’s CEO specifically mentions this endeavor as a financial one, with the ultimate goal of “build[ing] shareholder value through profitability”. This is a big deviation from the company’s primary focus on technology, but can’t deny the projected expansion of the CBD industry in response to growing customer needs.
Aluf Holdings is a “Next-Gen” technology company, and somehow, CBD manufacturing in the hands of a technology company is somewhat exciting. After all, CBD distillate is the product of nifty technology and advancements. If anybody knows how to develop technology to manufacture high-quality CBD distillate, it’s probably Aluf. At the same time, cannabis is a new adventure for these guys, but they haven’t shown any shyness about investing in this marketplace.
Big players in a big game
Quite obviously, cannabis is no longer a money maker for someone who has room in their backyard for a couple of plants. The legalization of cannabis has opened an entire market that investors probably only dreamed of before, and cannabis is projected to be one of the biggest industries yet. It’s no wonder that big players are making big investments in the future of cannabis: isolates and distillates.
Fundamentally, those manufacturing isolates and distillates will open up an entire world of cannabis product manufacture, whereby manufacturers won’t have to worry about growing and processing hemp. With CBD isolate and distillate readily available to product manufacturers, the potential for manufacturing CBD products becomes almost infinite. Small companies won’t have to worry about farming simply to produce a CBD edible. It is an invaluable product in an industry as rapidly growing as CBD, where companies will appreciate easy and rapid access to CBD raw products such as isolate and distillate.