Tilray to buy CBD from LiveWell for North American distribution
Tilray Inc. took a major step toward securing supplies of hemp-derived CBD from LiveWell Canada, days after the U.S. Congress approved the Farm Bill that will federally legalize the plant that many expect will create a huge market in Canada’s biggest trading partner.
The U.S. Farm Bill, which will remove hemp and cannabinoids extracted from it such as CBD from the Controlled Substances Act, still pends approval by President Donald Trump, which is widely expected.
Nanaimo, B.C.-based Tilray said on Monday it signed a binding letter of intent to buy hemp-derived CBD isolate from LiveWell Canada Inc., which will be sourced from both Canada and the United States starting in February 2019. Canadian regulations will allow its wholly-owned subsidiaries Tilray Canada and High Park Farms Ltd. “to potentially utilize hemp-derived CBD to increase supply of CBD medical and wellness products in Canada,” Tilray said in a release.
“The Farm Bill in the U.S. presents an opportunity to enter the hemp-derived CBD industry and capitalize on an estimated US$22-billion market,” Tilray said.
Eight Capital said in a report last week that it expects the U.S. CBD market to become a US$2.8-billion opportunity due to its potential in ailment-related use, functional food and beverage, skin care and cosmetics, and pet care.
Ottawa, Ontario-based LiveWell said it will supply Tilray with a minimum 2,400 kg of wholesale CBD isolate in 2019 with the option to increase this in 2020.
“With the legal barriers lifting, we believe the market for hemp CBD could exceed all forecasts because of the huge shift to self-directed care and wellness among consumers,” said David Rendimonti, President and CEO of LiveWell Canada.
U.S. Senator introduces amendment to fast-track STATES Act
Colorado Senator Cory Gardner is pushing for the United States Senate to vote on a major marijuana reform bill this week. On Monday, the senator introduced an amendment to a criminal justice bill currently before the Senate, which could open up the American cannabis industry to banking and allow large Canadian companies to enter some U.S. marijuana markets.
Mr. Gardener’s amendment mirrors the language of The Strengthening the Tenth Amendment Through Entrusting States, or STATES act, which was introduced into both houses of Congress in the summer but has made little progress since. Essentially Mr. Gardner is seeking to fast-track the STATES Act through the Senate by tying it to a larger bill.
“While we are debating criminal justice reform, we need to address the threat of prosecution by the federal government for people in Colorado that are operating legal businesses under state law,” Mr. Gardner said in a statement on Monday.
The STATES Act stops short of Canadian-style federal legalization for adult recreational use. But it amends the Controlled Substances Act so that U.S. federal cannabis prohibition does not apply in states that have chosen to legalize cannabis. Advocates for the bill suggest this could open up federally regulated services, like banking, to the cannabis industry. It would also remove the threat of Drug Enforcement Administration interference in states with domestically legal industries.
The STATES Act could likewise open up some U.S. markets to large publicly listed Canadian cannabis companies currently kept away because of the federal illegality of cannabis. The TMX Group does not let Toronto Stock Exchange-listed firms participate in federally illegal businesses in the U.S.
Introducing an amendment does not guarantee it will go to vote, and it’s unclear if and when Mr. Gardener’s motion will be put to the Senate. Speaking to U.S. media on Monday, however, he said he was confident it could pass if it goes to a vote.
“If we have an honest to goodness, straight up vote, 50-vote threshold, in the United States Senate, which is a rarity sometimes, this would pass with a majority of voters in the U.S. senate, bipartisan support,” Mr. Gardner told Bloomberg on Monday.
The amendment comes only days after both houses of Congress approved hemp reform legislation as part of the 2018 Farm Bill. The bill removes hemp derivatives, such as cannabidiol (CBD) from Controlled Substances Act, potentially opening the door for a rapid expansion of the U.S. CBD market. President Donald Trump still needs to sign this bill into law.