With California’s landmark Assembly and Senate passage of sweeping marijuana regulations this month, as the Medical Marijuana Regulation and Safety Act heads for an eager pen of Gov. Brown, the state’s $1.15 billion marijuana market (BIS Research, September 1) – which is the largest in what was a $2.7 billion legal marijuana market last year – has now reached a significant milestone. But this milestone, set in the country’s most populous state, applies to the much broader U.S. cannabis industry.
That industry is now forecast to hit $20.67 billion in 2020 (Research and Markets, September 18), on an estimated CAGR of 29.80 percent. One of the big components that will do quite well in all of this is going to be hemp, and it’s a subject that is largely under-reported on. Given that hemp was illegal to grow without a permit for decades, and that the 2014 Farm Bill finally made it possible for Americans to grow limited quantities of hemp, the $620 million (Hemp Industries Association, 2014) U.S. market for hemp is currently being serviced by some $500 million in imports.
With modern processing techniques, the powerful organic fibers in the hemp plant can be extracted for various important industrial uses, including a key LCM (lost circulation material) product for the global drilling fluids market, which was recently forecast in a report published by MarketReportsHub.com in January, as being on track to hit $16.31 billion by 2019. High-quality LCM is used in drilling mud to ubiquitously plug fractures or handle porosity in geological formations, which lead to lost pressure and output, and potentially blowouts. The high-grade organic fiber in hemp is perfect for this application, but the limited domestic market has hindered its more widespread use, even though it is superb at handling a variety of pressure and temperature related phenomena without impairing the rheology (fluid dynamics of substances like muds) of the drilling fluid, or increasing fluid-loss.
Hemp can be made into a wide variety of consumer goods as well, from fine clothing and shampoos, to high-grade medicinal cannabidiol and nutraceuticals for the rapidly expanding global nutraceutical market, which is set to grow at around 8 percent CAGR, from $186.2 billion this year to around $270 billion in 2020 (Associated Chambers of Commerce and Industry of India and RNCOS, August). However, it is the lucrative niche market in LCM that North Carolina based Hemp, Inc. has its eyes on the most, with the launch of the company’s custom 70,000 square-foot multipurpose industrial hemp processing plant, expected to be the biggest in all of North America, and capable of doing everything from decortication (fiber stripping) to milling.
The company’s existing portfolio of hemp-infused consumer products, like shampoos and conditioners, lip balms, moisturizers, skin treatment oils, and candles, showcase an already well-developed branding sense. Sure, Q2 sales this of nutraceuticals/bed and bath were up this year, but revenues from the company’s forthcoming DrillWall™ product, used to maintain seals across both energy and water drilling markets, are expected to be as much as just under of $1 million a month.
Given such revenue projections from the company using a limited workforce of one crew shift per day and an output of only one ton per hour, a three-crew shift cycle means HEMP could be raking in $2.94 million a month from its new facility, via juicy three to five year contracts typical among LCM buyers. The company is also working on an absorbent hemp product used to soak up spills called SpillSorbent™, made with hemp and another fibrous plant known as kenaf. The company already has almost five million pounds of material stored at its massive decortication facility and as of mid-August, the 150 acre kenaf crop of Tainung 2 cultivar, a kenaf variety prized for its maximum mass yield, was about seven feet high and on schedule for harvesting before the end of the year.
Learn more by visiting www.hempinc.com
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