IPO Corner: The Hemp Revolution

What if we told you there’s a crop that’s place is so solidified in the future that it would be absurd not to pay attention to it? What if we told you that it’s such a sure thing, that it’s being built into the plans of the international community as we push toward a more sustainable future? Well, it’s true… and that crop is hemp, and it’s being called “well aligned” with most of the United Nation’s Sustainable Development goals.

According to Lorenzo Silva, Communications Officer for the Latin American Industrial Hemp Association, hemp is “very attractive” for global agro-industrial projects, which means we can expect to see funding and tax incentives for hemp moving forward. Yes, as far as the future of hemp… it’s looking pretty bright. The Federation of International Hemp is projecting exponential growth, which they say will entail a 2,000% increase in the crop’s global footprint by 2032.

And, for any concerned about public perceptions and regulations, those are all swiftly changing. In Europe and other countries, there have been THC legal level reforms, and in the United States, we’ve seen the federal legalization of hemp as a traditional crop… countries all over the globe are quickly following suit. With all these changes, it’s projected that the global hemp industry will reach a worth of $17 billion by 2028.

The great thing about hemp, besides the fact that it grows incredibly fast (30 centimeters in a few weeks), is that it has so many possible use cases. Typically, people tend to think of just the medicinal properties of hemp, but that’s just the beginning, it can be the basis for so many products… for instance, for skin products, paper, clothes, containers, car parts, insulation, animal food, drinks, furniture… we’ll not belabor the point. We just want to make sure we’re painting an accurate picture of how versatile (see: opportunity) hemp really is.

So, what can we expect in the space in the future? A couple of things… starting with how we think about and regulate hemp. It’s no longer the bad guy on cop dramas, hemp is a legitimate crop with far-reaching applications. Also, we can expect to see way more hemp farming in general. Move with the times or get left behind, right? That’s what the farmers think, so they’re farming hemp.

This will have all kinds of ramifications, like a decrease in the use of cotton, and an increase in the use of hemp fibers for clothing and bedding. And let’s not forget one of its most promising applications: fuel. We are expecting to see (at least to some degree) hemp in the energy space in the form of biodiesel. Finally, hemp is a friend to the environment… and that matters. Hemp screams “I care about the earth” without saying a word, that’s important because it tackles both sustainability and optics.

Deals To Watch

Today, we’ve decided to highlight some early players in the space, a couple of little gems forging a path in hemp: Hempacco and Open Book Extracts. Headquartered in San Diego, Hempacco makes and sells hemp-based smokable products to consumers in the United States. They also manufacture and sell an in-house brand called The Real Stuff Smokables, as well as under a white label for other companies. Hempacco’s claim to fame is their patented technology, which sprays the hemp used in its cigarettes (which are always tobacco and nicotine-free) with terpenes for flavoring, cannabidiol, and cannabigerol.

Hempacco is still quite small, and majority owned by Green Globe International (involved in cannabidiol (CBD) edible gummies and other products), but is growing quickly. In addition to its in-house brand, which are sold in 200 locations in the San Diego region, the company also has recently launched flavored hemp rolling papers for HBI International and has pending partnerships in the works with superstar rapper Rick Ross and well-known comedians Cheech & Chong.

Last month, the company was able to pull off a rare initial public offering, quite the feat for a 15-employee firm. The listing raised $6 million through the sale of one million shares. The stock opened trading at $6, jumping to $7.28 before finally settling at $3.48 to close. While the initial plan for the IPO was to raise $15 million, the firm proceeded with a smaller offering with the possibility of a secondary offering further down the road.

Unfortunately, HPCO has dropped below $2. Pick your spots wisely.

A true newbie on the block, Open Book Extracts is an NSF-certified manufacturer of premium plant-based cannabinoid products. The Roxboro, North Carolina firm makes the dream happen through control of the entire supply chain, a state-of-the-art extraction campus, proprietary refinement and conversion methods, and a team of PhD chemists. The expertise on this team is impressive, with PhD level talent which includes a Food Scientist from Cornell, two PhD Formulation and Research Scientists, three Master Chemists, and a Quality Control Manager from GlaxoSmithKline.

As if that weren’t enough, the team also consists of cannabis and technology industry leaders and bright, new talent. The company recently raised funds through a round of Series C Funding back in the springtime of this year… their light is just now beginning to shine. Proceeds will help the company fund the expansion of finished goods manufacturing capabilities, accelerate international distribution, and support additional research studies. Additionally, the company is in talks with strategic partners in the beverage, tobacco, nutraceutical, and cannabis industries.

So, there you have it folks, while we progress toward our future, we’re reaching back and rediscovering the magic of hemp… which just happens to line up with global sustainability goals. While it won’t quite be hemp-mania, we are certainly eyeing the crop and recognizing its greater potential for our world. Will either of these little companies end up on our Buy List? We’ll keep watching hemp, and all things IPO, and bringing you the latest. See you next week!