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

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.

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.

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.