Hemp Crash of 2019

“The oversupply and under regulation of a new industry” By Shanna Perry

This my forecast into the Cannabis Hemp industries, including the highly advertised CBD sector. I have spent 10 years tracking this global market and believe this will be a market in chaos before it will be sustainable enough to generate the 22 billion or 50 billion (whichever opinions you choose to believe) market size it has been prophesied to be.

• I will cover why many companies that have already received substantial funding could already be out.
• How with the lack of regulation, fraud has penetrated this sector to an uncontrollable level.
• And with the hiring of professionals that have zero field experience, they have been educated with falsified data, collected by companies selling untested products and have even gone as far as to forge documents for redistribution.

This is the first year that farms all over the United States have been given the “go ahead” with the passing of the 2018 Hemp farm bill to grow Cannabis Hemp that has under 0.3% THC. So have many other countries across the globe. While this is great, without regulation in place to force farms to follow standard operating procedures when it comes to testing this substance for human consumption, enforcement will be impossible. Thus, causing an oversupply of who knows what in our consumables because 95% of the farms currently growing are doing so for 1 purpose, CBD oil. High CBD plant material also known as Biomass is being grown for process into an extracted potent CBD oil. If everyone is making the exact same thing for the same reasons where in the 22-50 billion market?

You have heard all about it and it is advertised in everything. CBD is NOT in pretty much anything. Simple greed and false information have led to a massive amount of companies slapping a label on a chewy candy with a milligram promise and the words “full spectrum” or “broad spectrum” CBD. This is mostly sales terminology and has been sold to not only the unsuspecting consumer and retail outlets but to investors in board rooms across the world. Allow me to take a moment to explain what these terms mean and what is literally written on most product labels sold everywhere today.

The term Full Spectrum means processed using whole plant material to extract the natural Cannabinoids (CBD, THC, CBN, CBC). “Broad Spectrum” means the same thing except removing some plant molecules or Cannabinoids. Now this would be great except 90% of what is advertised are companies using “Isolates” or a single molecule of CBD in their “Full Spectrum CBD Isolate” product. How can you have a “full” meaning more than one and a “isolated” or single molecule of CBD as ingredients? Pick a side. Which brings me to isolates!

The isolating of plant molecules like CBD and THC. Before I get more into this, I would like to state that most of our pharmaceuticals began as plants and have been manufactured in labs synthetically for generations. This is usually to meet the immediate demand as it is more costly to grow and process from plants. Synthetic drugs have always been the most used option. The debate on whether or not one is more effective than the other is still a hot topic of theory and

hypothesis. Take the drug Marinol a synthetic THC given to AIDS patients in the late 1990s Over 20 Cannabis Hemp compounds have been synthesized since then including CBD.

Going back to isolates, they are a powder substance that in their true form are hard and does not mix easily. The process of isolating CBD from a plant is very costly and takes a lot of material. Over the last 2 years brokers have popped up all over the country and are now sending spam emails from overseas claiming large supplies with unregulated documentation of testing and the bank wire transfer account number to go with it. More than enough of these fraudsters have stolen funds in what I can only estimate is in the 10’s of millions of dollars by now. Which brings me to the under regulation and lack of legalization!

A patchwork of loose State regulations has created a perfect storm for chaos. The Cannabis and Hemp industries are still a fantastic investment opportunity. Many companies in this sector will create great success. However, navigating through the chaos over the coming years is key to this. Many industry experts, with no field experiences, have been educated through paid for blog advertisements and lack the basic supply chain fundamentals, like units of measure, causing a nanogram nightmare. This brings me into the over selling of technology.

Before my head spins off, let me add this last part of the blatant over sell. Now the term Nano or Nanogram is a unit of measure. Which is 1,000,000 times less potent than a milligram, Most Cannabis and CBD products sell in potencies of milligrams, it actually should be milliliters, but that can be another paper! So, the sales tactic goes like this, “Our CBD oil has Nano technology and a secret proprietary blend.” Mind you most of these companies have not tested their products, especially through standardization. Then they may say something like “It makes the absorption rate faster because the molecule is smaller.” How effective can that dosage be? Considering a nanogram is a million times less potent than a milligram where is the value? How long before the consumer realizes it?

Let me take you back to the basics and what is needed before we can have any final stabilized consumer goods. What are you growing all this Hemp for? In my estimate 95% of state department of agriculture licensed farms are growing to sell their material for the processing of oils. No textiles, no alternative fuels, no alternative plastics, no building materials.

Whatever final product you choose to make with these plants, all come at very different costs. It is too vast of a market to honestly project those numbers at this time. Until massive data is collected, we can have no true inventory or sustainable supply chain. Things like a crop report on a future commodity exchange simply does not exist yet. A few companies have websites of promises, and a secret plan, but only have a tab for investor inquiries.

The over building and blockbuster moment is upon us. Ten years ago in places like California and Colorado, indoor grow facilities were the only way to cultivate these plants for genetic creations and resale. On a global legal commercial scale, the costs of indoor cultivation vs greenhouse vs outdoor have so much of a variable the margins of profit are simply all over the map. Don’t get me wrong, indoor cultivation for the research of genetics into the healthcare system is imperative but until we have those proven studies and collect all that data no revenue can be generated through a regulated healthcare system. Many companies have overextended themselves before they can even get to production.

FDA, with a recent interview on CNBC that aired August 10, 2019. The former director of the FDA stated that CBD in food, beverages and supplements was still in fact very illegal. I felt this moved the timeline of publishing this paper up. I was going to spend time prophesying future regulations, but this interview covered the CBD aspect of Hemp for me. Please refer to link. FDA Interview CNBC

USDA, this is the governing body to watch in regard to regulating the commercial cultivation and production of this commodity because at its face value it is agricultural farming. What the businesses choose to grow for is not regulated the same in any way and those business plans and financial projections are highly debatable. Who regulates concrete? Rope? Gasoline?

In conclusion, my prophecy of this epic sector is bright overall if you have the tools to navigate these chaotic waters. When I made the decision to write this paper I began to whisper and every day since I have received some form of validation that this information needs to be released. I know that my predictions will come at a cost.

The cost of building a sustainable market for future investors of retirement funds, IRA’s and money all humans work tirelessly to earn in the hopes of giving themselves a livable retirement or a head start in life. These are investments not just into businesses, Cannabis and Hemp are potentially the future of medicines, clean energy, and fundamentally planet saving products. But if 95% of these businesses all make 1 thing and too much capital is wasted, we are doomed to fail.

“There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures”. -William Shakespeare