September 2019
Vol 6 | Issue 246

Q&A with Alex Fredericks & Brett Weithorn of Hemp Traders International


Principal Series:

Hemp Traders International (HTI) business model is to create a New York City based trading desk enterprise focused on the commoditization of bulk, raw Hemp Biomass. HTI will secure hemp biomass at a discount to the market at time of harvest through the acquisition of forward contracts directly from reputable and sophisticated grower cooperatives. These forward contracts incorporate put option clauses to hedge against downward market fluctuations and protect the forecasted gross margin profit percentage negotiated at time of contract. Although detailed market information for hemp is just emerging; estimates from Vote Hemp, a leading U.S. Hemp Farming Industry Advocacy Organization, shows that the total retail value of hemp products in the U.S. in 2017 was $820 million. The global industrial hemp market is expected to reach $13.03 Billion by 2026, according to a new report by Reports and Data.

Family Office Insights is a voluntary, “opt-in” collaborative peer-to-peer community of single family offices, qualified investors and institutional investors. Join the community here

What is hemp biomass; how does it relate to the cannabis and CBD industry?

Hemp Biomass is the raw form of Hemp post harvest and prior to any form of processing. Hemp is a term used to classify varieties of Cannabis that contain 0.3% or less THC content (by dry weight). While the legal definition described above had not been legitimized until the Agricultural Act of 2018 had passed, “hemp” has generally been used to describe non-intoxicating Cannabis that is harvested for the industrial use of its derived products. As the leading cannabis researchers, BDS Analytics and Arcview Market Research project that the collective market for CBD sales in the U.S. will surpass $20 Billion by 2024. It is important to understand that all CPG (consumer packaged goods) that use CBD in a non-medical form need to use CBD derived from Hemp, not from Marijuana.

What size market will the hemp biomass industries command in the US and worldwide in the near future versus today?

Industrial hemp production significantly increased in the U.S. in 2018, with farmers cultivating three times as many acres of the crop as compared to the previous year. Farmers grew more than 78,000 acres of legal hemp last crop year, the advocacy group VoteHemp reports. In 2017, they grew about 26,000 acres and in 2016, the total was just under 10,000 acres. Forecasts expect a massive surge in 2019 thanks to hemp's outright legalization through the new Farm Bill. The legislation is a game-changer in terms of production estimates and it's not just California and Colorado. In the Northeast, land owners of tens of thousands of acres of preserved agricultural land are betting on bills that will allow them to join a business that's expected to grow exponentially over the next several years. The demand for Hemp and CBD products is exploding. Hemp is used to make a variety of commercial and industrial products, including rope, textiles, clothing, shoes, food, paper, bioplastics, insulation, cosmetics, nutraceuticals and biofuel. At the moment the demand is far outpacing the supply," said Heather Darby, a hemp expert at the University of Vermont Extension who advises agricultural officials and prospective hemp cultivators in Massachusetts. "Farmers and businesses are scaling up production quickly and moving from producing an acre to producing 50 acres. About 1,500 to 2,000 hemp plants can be grown per acre generating between $40,000 and $50,000, according to information provided by Brightfield Group, a Chicago-based cannabis research firm.

What is the opportunity currently at hand to make money in the short term with hemp biomass? How does the short term opportunity correlate to a longer term profit scenario?

In the short term, HTI is negotiating to secure forward contracts at a very favorably discounted rate. This discount percentage is fixed, and in the case of a market price decrease from the time of contract to the time of title transfer, the purchase price will adjust accordingly, ensuring a positive return on capital. In addition, HTI will merchandise these forward contracts into the daily Spot Purchase market to further increase margins and return on investment. In the long term, as the frequency of harvests matures to 3 full cycles a year and more farmers come online, HTI will be positioned within the Industry as the preeminent Trading Desk in the Raw Hemp Biomass space, fostering what are today’s forward contracts into what will be tomorrow’s robust Futures Market affording exponential growth and investment return.

Alex Fredericks & Brett Weithorn of Hemp Traders International

Alex Fredericks
Growth engineer with over a two decade history of high-level problem solving and market development. Mr. Fredericks is a passionate executive focused on building hyper-value solutions effective within many industries; understanding the demands and unique challenges facing profit, consumer and innovation. Results driven with a broad knowledge base and a proven record of success for implementing programming oriented towards meaningful revenue and market share growth. Mr. Fredericks is sought after for building affiliate relationships that deliver premier value around the globe driving engagement and market value.

Brett Weithorn
Seasoned commodity and specialty ingredient trader with over a decade of trans-national market procurement and sales experience. Mr. Weithorn hails from a storied commodities family who’s renowned for setting markets on trend products and growing them to be massive industry markets as they did with Soy and Wheat in the 80’s and 90’s, controlling a significant share of transactions processed on the mercantile exchange. Since entering the family business in the 2000’s Mr. Weithorn has been at the forefront of trend forecasting and developing markets, first with Ancient Grains such as Flax and Chia; launching one of the nations first Organic Dry Goods Milling Facility in Skaneateles NY, and now in Hemp Biomass and its derivatives such as Oil and Isolate. Mr. Weithorn’s acumen for developing transaction models which limit capital risk from the physical to the paper trading components of the commodity industry has made him a high demand consultant within Agricultural Hemp markets. Email Alex