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In this episode we bring back Jeff Schuh, the chief commercial officer at the Global Smart Commodity Group. In the last episode Jeff told us all about the Salus platform and how it was built to trade hemp and CBD products as a certified commodity. In this episode Jeff will share his thoughts on the hemp and cannabis market and his views on what we can expect in 2022 and years next. As I hinted last time, there is going to a lot of churn in the industry. But how and why? That’s what I asked Jeff during this part of the interview.
Cannabis Consolidation?
Jeff believes cannabis consolidation is on the horizon. The cannabis ETFs have been down over the year. He is a big supporter of cannabis legalization, but there has been too much product grown. Currently cannabis is priced $1200/lb. but only $300-500 lb. in black-market in Oklahoma. Just like in the alcohol industry there will be 3-5 big players.
Some states are highly regulated, others not. In Oklahoma anyone can get into the business, $2500 for a license. When federal legalization occurs, anyone will be able to grow and Jeff believes that will be highly disruptive to the MSOs. Already Multi State Operators are seeing their value plummeting, down 50% year over year. The big issue with cannabis business is the margins are very small, THC so high people don’t need to buy large quantities. Until MSOs compete on a level playing field, people will continue to buy on the black market. MSOs thought state would back them, but states haven’t done anything to help the black market situation. Prices need to come way down. Jeff would love to see the mom and pop cultivators and producers get on the Salus platform.
Hemp Flooding the Market
Of the 330 million Americans, 75 million use cannabis on a regular basis. To meet the needs of that market it would require 15K acres. Compare that to the past: in 2021 75K acres in production, 2020 200K acres in production. Already there is a bounty of product holding prices down, some stored right, some not, Sadly many southern farmers grew on contract with extractors who went out of business and they had no one to sell too! We see less licenses in CA OR or OK. License applications are down for hemp. Some farmers are trying to pivot to hemp fiber but that requires capital improvement to process those products.
Future Farming Hemp
Some states better suited to grow hemp than others. It take a90 day turn, may only get one turn in the Midwest. These states don’t make sense to grow hemp. Burn a bucket of hemp challenges is now on YouTube, farmers are so upset. There is much to be worked out.
How To Connect with Jeff Shuh
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- Global Smart Commodity Group here https://smartcommoditygroup.com/
Questions, sales, or inquiries, email Jeff at smartcommoditygroup.com or for inquires on how to become a member of the exchange.
The Cannabis Advocate Podcast
The Cannabis Advocate podcast advocates for businesses in the cannabis industry and the explores the unique challenges they face. Despite hurdles in legislation, regulation, and culture, there are tremendous opportunities for growers, producers and sellers of cannabis products. Many of these issues are unique to the cannabis industry, This podcast speaks to these common concerns and shares stories of success.
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