Global Hemp Group Inc. (GBHPF) (formerly Arris Holdings Inc.) was incorporated on October 30, 2009 in British Columbia, Canada and had its name change effective on March 24, 2014. The company’s principal activity had been exploration and development of mineral properties in prior periods and changed to agriculture and manufacturing in the industrial hemp sector on March 24, 2014 when the Company changed its name to Global Hemp Group Inc.

The Company is focused on acquiring and/or joint venturing with companies across all sectors of the hemp and cannabis industries in an effort to build a "soil-to-shelf" portfolio of complementary companies that will enable GHG to capture cash flow, revenues and value from its acquisitions and establish a far greater collective valuation than GHG or the individual companies would have on their own.

Management is actively looking at new projects in the hemp cultivation and cannabinoid extraction space that can be acquired or joint-ventured with, to produce near term revenue. The Company continues to focus on developing its vision for an Hemp Agro-Industrial Zone (HAIZ), a value-added hemp processing zone which is strategically located adjacent to hemp farming areas, that will focus on the processing of the entire hemp plant. These zones are designed to be replicated in any region where the law allows for the cultivation of industrial hemp.

Socio-Economic Benefits of the HAIZ - Benefits of the HAIZ are measured in the payments to farmers for products delivered to the processing plants, the number of jobs created, and the salaries paid. The way GHG views the relationships with its key suppliers, the farmers and with the workers, is an additional benefit of significance as it shifts the mode of operation from a competitive to collaborative.

Environmental Benefits of the HAIZ - GHG is fully committed to a carbon free economy and the HAIZ concept is an embodiment of this commitment. First at the farm level it promotes a farming system that minimizes carbon-based inputs through soil enhancing rotations to minimize fertilizer inputs. The more important environmental benefits of the HAIZ will be found in the range of its products, principally those made from the straw: hempcrete products, clean fibres for the textile industry, interior panels for the auto industry, to name a few.

State of the Hemp Industry in Canada and the United States

As the hemp industry continues to rapidly mature, much more detailed data is becoming available. Previously, the calculated the size and growth of the hemp has been based on approximations of sales in the categories of textiles, auto parts, building materials and other products, in addition to known data on the sales of hemp foods and body care. Now that there is much more specific data available that includes cannabinoids, the Hemp Business Journal projects a USD $2B hemp market by 2020 overall, while the hemp CBD market is projected to be USD $450M by 2020, up from $130M in 2016.

Canada however has not participated in the emerging growth of the hemp derived CBD market, but that is all about to change with changes in legislation slated for mid-2018. In the U.S., thirty-four states have now passed legislation that allow hemp farming as part of U.S. H.R. 3530, the Industrial Hemp Farming Act of 2017. Vote Hemp estimates that approximately 25,541 acres of hemp crops were planted in the U.S. in 2017, up from 9,770 acres in 2016. By comparison, it has been reported by Health Canada that there was a total of 82,2447.57 acres of hemp grown in Canada in 2016, making it a more established market to operate in. 2017 numbers are not available from Health Canada yet.

In the past two decades, several feasibility and marketing studies have been conducted by researchers at the USDA and various land grant universities and state agencies. Studies by researchers in Canada and various state agencies provide a mostly positive market outlook for growing hemp, citing rising consumer demand and the potential range of product uses for hemp. Some state reports claim that if the current restriction on growing hemp in the United States were totally removed, agricultural producers in their states could benefit. Other studies highlight certain production advantages associated with hemp or acknowledge hemp’s benefits as a rotational crop or further claim that hemp may be less environmental degrading than most other agricultural crops. Some studies also claim certain production advantages to hemp growers, such as relatively low input and management requirements for the crop. (CRS, Hemp as an Agricultural Commodity, Johnson, Renee, March 10, 2017).

Business Outlook

New Brunswick Hemp/CBD Project

Global Hemp Group (“GHG” or the “Company”) has established a 50/50 joint venture (JV) with Marijuana Company of America, Inc. (OTC: MCOA) to development a multi-phase hemp/CBD project on the Acadian peninsula, in New Brunswick (NB), Canada.

Under the terms of the JV, MCOA, a California based cannabis and hemp research and development company, whose business includes the marketing and distribution of hemp-based consumer wellness products, has joined GHG in developing commercial hemp production in New Brunswick. GHG and MCOA (the Partners) will share equally the cost of developing the project. GHG will provide technical and management expertise, while MCOA will provide its expertise in developing hemp cultivation, and will become the project’s primary off-taker being granted a Right of First Refusal for any cannabinoids produced and extracted from the project. They will also facilitate access to international markets for the project’s CBD production, and assist in product development and distribution.

Research is also an important component of the project. GHG has partnered with a very dynamic college, the Collège Communautaire du Nouveau Brunswick (CCNB) in Bathurst, NB. CCNB will assist the Partners in conducting research with the hemp trials, and support innovation in industry through its innovation center. The project will benefit from CCNB’s laboratory capacity in analyzing hemp samples, as well addressing some of the technical issues associated with crop production, processing, and training.

The HAIZ collaboratively produces and processes 100% of the hemp plant to produce a number of wholesale industrial materials, and ultimately high value cannabinoids like CBD, CBG, CBC and CBN. The Partners’ vision for the project is to produce greater social and environmental benefits for New Brunswick, while creating significant value for shareholders. The Phase One, first year research trial provided valuable information to refine the Company’s project, which is designed to support and promote the expansion of the hemp industry into New Brunswick, through the development of the processing infrastructure required to take the industry to the next level. The HAIZ will provide market opportunities for farmers; create jobs in an economically depressed area; provide the opportunity to develop biodegradable products of superior quality; and, help support GHG’s commitment to creating a carbon free economy.

Business Update

Phase One, First Year New Brunswick Hemp Trial Results

The Partners have successfully cultivated industrial hemp during the 2017 growing season. For this phase of the project, the Partners only grew hemp for research purposes, as this was the first time in 20 years that industrial hemp was grown in the region. The objective of phase one was to re-introduce hemp into the area, and ensure that it could be productive under New Brunswick growing conditions prior to significantly increasing cultivation acreage and building a hemp processing facility in the region, in future phases of the project.

The first-year trial consisted of fifteen test plots with three different varieties and as many planting densities of hemp, in two different locations east and west of Bathurst. The trials were sampled and collected materials were measured at Collège Communautaire du Nouveau Brunswick (CCNB), Grand Falls laboratory where standard drying and measuring procedures were applied to the hemp straw, flowers, and leaves collected. Straw yields averaged 1.0-2.5 T/ha, whereas the combined flowers and leaves of the plant averaged 1.25-2.10 T/ha. The Partners are confident that with an earlier planting date, adequate soil preparation, and a higher fertilizer application, yields will be improved in future seasons.

Cannabinoid analysis of the flowers and leaves was completed by RPC – Science & Engineering (RPC), an accredited laboratory located in Fredericton, NB. Contrary to expectations leaves, rather than the flowers, contained a greater concentration of CBD, largely explained by laboratory procedures. The highest concentration that was found was the CFX-1 leaf sample that resulted in 1.46% for the 30 kg/ha plant density compared to 1.17% for the flowers. Also, it should be noted that the CBD concentration in flowers is consistently higher at densities of 30 kg/ha across all varieties that were tested.

Frank Giese, an advisor to GHG, will consult on the 2018 cultivation to assist in increasing both plant yield and cannabinoid production. Through his experience, he has bridged the fundamentals of scientific research and hemp/cannabis breeding, as well as the use and development of modern cultivation and processing techniques in his breeding work. He has become proficient in breeding cannabinoid rich varieties of hemp, as well as being very experienced in auto flower breeding.

Phase Two, 2018 Outlook for New Brunswick Project

The Partners are now focusing on the next season of crops. Farmers have been recruited and a minimum of 125 acres of hemp cultivation is planned for 2018, with the goal of increasing the acreage under cultivation to 1,000 acres by year three of the project. This first commercial crop will focus on CBD extraction. GHG is required to have a processing license to do this type of extraction and will be submitting an application shortly. The Partners are currently considering sites in northeast New Brunswick to locate their processing facilities. In addition, discussions are underway regarding the purchase of extraction equipment for cannabinoids, and straw processing equipment for building materials. The companies expect the facilities to be in place and operational for the 2018 harvest in October.

Farming – As the future focus of the project will be on flower and straw production, other varieties with higher straw and similar flower yields will be selected for next year. GHG is currently evaluating a number of varieties for the coming year.

The 2018 production will focus on five experienced farmers cultivating a total of 125 acres. GHG has also recruited an agronomist to provide agronomic support to the farmers. Interaction with the farmers will be essential in finding solutions to practical problems that will inevitably arise. To maximize the visibility of the hemp farming experience in the region, farmers were selected across the northeast region of NB.

Industrial Site Selection – Bathurst appears to be the logical central point to process the straw and flowers coming from as far as Campbellton (75 km to the west) and from Miramichi (75 km to the southeast). The area comprises close to 40,000 acres, mostly in field crops, making hemp an excellent alternative.

There are many industrial sites currently available in the Bathurst region since the closing of the paper mill and mines in the area. The city of Bathurst identified a number such sites in and around its industrial zone that Management recently visited. The mayor of Bathurst and his team were very supportive in the effort to bring processing/job creation to the region. Other sites outside the Bathurst city limits were also explored as possible processing locations.

Selection of Industrial Processes – The Partners plan to focus on the processing of the flowers for cannabinoid extraction as legislation permits, and the straw for fibre and hurd products. Discussions regarding the engagement of key technological partners is continuing. Once finalized, they will be included in the next version of the project overview that will be submitted to Opportunities New Brunswick in the coming months.

Renewal of GGH’s Hemp License in Canada

GHG’s industrial hemp license was renewed for 2018. Under current legislation, hemp flowers and leaves grown under field conditions cannot be processed. It is expected that this will be allowed under new 2018 regulations, but will still require additional licenses: one to extract the CBD and another to sell CBD for medical or non-medical purposes. In anticipation of this change, GHG will be applying for a license under the Narcotics Control Regulations (NCR) to extract CBD, and an additional license under the Access to Cannabis for Medical Purposes (ACMPR) to sell it to wholesale and retail customers in Canada.

In addition, GHG is preparing for the proposed changes to Canadian legislation expected in 2018 that will permit cannabidiol (CBD) extraction from industrial hemp. Health Canada is currently consulting industry representatives regarding the regulations that will accompany the new cannabis legislation expected by July 1, 2018.

Space Cowboys Colorado Hemp Project - Further to the Company’s news release of October 10, 2017, announcing GHG and MCOA entering into a Letter of Intent with Space Cowboys, Inc. to form a joint venture on their Colorado hemp project, the Partners were unable to complete satisfactory due diligence on the project and have let the LOI expire and will not be proceeding with the project. The Company continues to evaluate additional hemp cultivation and cannabinoid extraction projects in both Canada and the United States.

LOI to form a joint venture with Western Sierra Mining Corp. (WSM) of Edmond, Oklahoma for the acquisition of agricultural lands for the purpose of hemp cultivation and the development of a HAIZ was signed on July 29, 2015. The completion of the transaction is subject to a number of conditions, including signing of a Definitive Agreement within 60 days of available funding for the project. The partners have identified a suitable location and while they have not been able to fund this particular project, it remains an attractive project to develop when funding is secured.

References

Tags: US:GBHPF
Created by Asif Farooqui on 2019/10/29 04:26
     
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