Value Walk Q&A with Cannovia CEO


Consumers Across The Globe Are Widely Seeking CBD Infused Products

The following is a Q&A session with Brian J. Baum, the President and CEO of Cannovia, discussing the rise of CBD infused products.

What exactly is CBD?

Cannabidoil (CBD) is a naturally occurring compound found in the Cannabis Sativa plant. Its history as a therapeutic agent can be traced back more than three thousand years. As a product of Cannabis Sativa, it is frequently associated with THC (tetrahydrocannabinol)– the psychoactive derivative, that “gets you high”. Unlike THC, CBD contains little or no THC. By federal law, CBD must contain less than 0.3% THC. In fact, CBD can actually lessen the psychoactive effects of THC.


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Can you discuss briefly an overview of where CBD is legal in the U.S., or where it is not?

With the approval of the Agricultural Improvement Act of 2018, hemp farming, the interstate transport of hemp and the sale of hemp derived products such as CBD was legalized in all 50 states.

Each state may file a plan for licensing and regulating the farming of hemp within their state.

Some states have moved to restrict the sale of CBD, particularly ingestibles within their states until the FDA issues regulations. Some states have even greater restrictions on the sale of any CBD products.

However, with literally hundreds of bills related to hemp and CBD weaving their way through state houses across the country, expect these restrictions to disappear quickly.

How is CBD different than THC, Marijuana and Hemp?

Cannabis is a genus of flowering plants.

Cannabis Sativa is a species of Cannabis.

Hemp is a strain of Cannabis Sativa.

Hemp derived CBD, is CBD extracted from Hemp plants.

To be compliant with the 2018 Farm Bill and be considered a Hemp strain of Cannabis Sativa, THC levels must be less than .3%.

Cannabis Sativa can be rich in CBD with little THC (the psychoactive component of Cannabis) like in some Hemp plants or rich in THC with little CBD like in most Marijuana plants. Clarity is needed because both CBD and THC are derived from the same plant species: Cannabis Sativa.

Despite their similar origins CBD and THC are much different; THC is intoxicating where CBD is not. Special care must be taken from farming Hemp to formulating/manufacturing CBD products to make sure THC levels are below .3%.

What exactly does CBD do?

There is a biochemical communication system in the human body called the “endocannabinoid system”. This system impacts everything from our physiology to mental state. CBD as a cannabinoid interacts with the endocannabinoid system of the human body by binding to type 1 and type 2 cannabinoid receptors. (Type 1 associated with the brain and central nervous system and type 2 are associated with many human diseases such as cardiovascular, autoimmune, neurodegenerative, psychiatric and gastrointestinal.)

CBD stimulates the endocannabinoid system and it is believed to positively impact both type 1 and type 2 cannabinoid receptors.

Does it get you high?

NO. Legal hemp-derived CBD must contain less than 0.3% THC, (the psychoactive component of cannabis.) At that concentration it is not possible to “get high”. There are forms of CBD that contain zero THC. For example, CBD isolate (powder) is pure and has no THC. Through additional processing, THC can be removed from CBD oil. CBD with up to 0.3% THC is defined as “full spectrum”. There is an “entourage affect” between CBD and THC that can provide the greatest benefit. For this reason, full spectrum CBD is often considered to be the preferred formulation.

What ailments does CBD cure and which does it not?

In the current world of CBD “cure” is a four-letter word, (figuratively and literally.) Until the FDA develops a regulatory pathway for CBD, and further clinical research is conducted, there can be no specific health claims relative to CBD. For now, the benefits are best described by CBD users. Most frequently users attribute CBD with benefits such as pain relief, reduction in anxiety and stress, increased energy and focus and skin care.

Would legal marijuana help or hurt CBD?

It will help to remove the stigma of “cannabis”. For all the coverage of CBD, the majority of everyday people have little knowledge of it and many do not distinguish between non-psychoactive CBD and psychoactive THC – it is all just “pot”.

Beyond that, the CBD market is projected to eclipse the THC market. So I do not see a major impact one way or the other.

What does CANNOVIA do differently?

Our motto is “from seed to wellness”. The reason for this, Cannovia believes it is critically important to control the entire supply chain of any CBD infused products destined for the consumer market. So we farm hemp in Colorado, we coordinate with other farmers, ensuring they meet our testing and quality standards, we oversee extraction and blend our own products. When consumers select Cannovia they can be assured of a quality product that clearly indicates the concentration of CBD so that they can enjoy the full benefits of CBD.

As an example. It all starts with “the dirt”. Hemp is an extremely hearty plant. But it also is a “bio-accumulator”. In other words it absorbs everything in the soil around it – pesticides, herbicides, heavy metals, etc. As a matter of fact, it is so effective that in some areas it is planted to purify soil in preparation for new crops.

Soil testing is therefore critical to ensure the purity of the soil where hemp is to be planted. Cannovia does core sample testing at a depth of 3 feet before any farming is even considered. We also test the water sources that will feed the farm – looking for a neutral ph and lack of any toxins. Next the selection of seeds or seedlings. We want to match the plants with the soil and water conditions. Then during the growing season we deliver the appropriate organic nutrients to the soil to develop a hearty crop. During the growing season we continue to monitor the soil. Continuous testing, from soil to seed, to harvest, to extraction to final on the shelf product is key and is a core standard of Cannovia.

How is the global growth picture for CBD and how does that differ from the US?

CBD is definitely a global phenomenon. To that end, supply is a worldwide challenge. Much of the CBD in today’s market is coming from China. Farming regulations are more “relaxed” in China and therefore, quality is far more suspect. Given the vast farming resources of the United States, look to the US to become a major worldwide supplier of CBD.

From a consumer point of view the trend toward natural/holistic therapeutics is also universal. That will fuel demand for CBD products.

Some markets that have a more supportive view of cannabis at large, including THC, will likely grow at a faster rate as new CBD products are introduced, these markets may become the early adopters.

What do you foresee in the future for the CBD industry in America? The evolution of the CBD industry? Predictions for the future of the CBD industry?

First, dramatic reduction in consumer costs. Right now, we’re in a supply and demand crunch. With hemp farming being generally illegal up until December 2018, there is just not enough supply to meet demand. So unfortunately, consumer costs of CBD products are quite high at this point.

Second, an explosion in CBD infused products. Right now, the market is being addressed by one size fits all products. Going forward, we’re likely to see more unique and targeted uses of CBD. This will help to simplify things for the consumer. It will be easier for them to find products that address their specific concerns.

Third, clinical research. Expect to see a dramatic increase in academic and industry supported CBD research. We need to uncover and quantify the true impact of CBD on health.

Fourth, continued investment dollars pouring in to the CBD space. The stakes are just too high for a balanced portfolio to not have some exposure to this game changing industry.

Fourth, consolidation. Right now, everyone seems to be launching a CBD company. The majority will disappear. Many survivors will be acquired in a variety of market segments. From the beverage industry, to cosmetics, to health and wellness companies. CBD will be a “must have” for these companies and they’ll look to the proven/successful brands to accelerate their jump into the market.

Fifth, “intelligent regulation”. This is critically important for the long-term industry. Standards are required, labeling guidelines and of course parity across federal and state levels. Right now the burden falls completely on the consumer to figure all of this out. We all lose in this environment. Intelligent regulation will benefit the industry and most importantly the consumer.

How the lack of federal legislation impacts the CBD industry

At this point, it is really more a lack of regulation then legislation. Certainly, legislation would be required to affect the THC/Cannabis market, but the Agricultural Act of 2018 cleared the way for CBD.

The challenge, while the Act removed hemp derived CBD with less than 0.3% THC from the DEAs controlled substance list, the FDA defined CBD as a drug when it approved CBD based Epidiolex for the treatment of epilepsy. Therefore, the FDA retains control of CBD as an ingestible. An FDA hearing, today, May 31, is a step toward defining a regulatory pathway for ingestible CBD.

The absence of regulation leaves CBD companies somewhat in the dark regarding labeling requirements and the use of any specific claims of CBD benefit. Consumers are widely embracing CBD and seeking CBD infused products. Absent regulation, the CBD market is the wild west for consumers. There are products in the market that imply CBD, but in fact are hemp seed oil and contain no CBD. There are CBD infused products that contain trace amounts of CBD and therefore would have none of the benefits of CBD. At Cannovia, we urge consumers to spend time researching any CBD infused products they are considering before purchasing.

How the booming CBD industry is affecting the U.S. economy, employment and the future of work?

Estimates for the future worth of the CBD industry range from a few billion to twenty+ billion within the next three years. Regardless of which projection you believe, CBD has arrived, is here to stay and will have a significant impact on the economy.

Agriculture. Farming will be significantly impacted by CBD. As a matter of fact, one of the key drivers to the legalization of hemp farming was to replace tobacco as a cash crop for farmers. So expect the entire agricultural segment to be impacted. (New farming techniques, innovations in soil testing, in-field plant testing, biomass extraction, etc.)

The pharmaceutical industry. While there is a major lack of clinical research into the efficacy of CBD due to the legal status of hemp farming and the lack of availability of CBD, expect that to quickly change in the coming months and years. The use of hemp and by extension CBD as a therapeutic agent dates back thousands of years. As CBD clinical research emerges, we can expect many new and validated health benefits of CBD. Given consumer trends favoring natural health solutions, the increasing financial burden of health care on individuals, CBD is likely to have major implications on the pharmaceutical industry; and not necessarily positive implications as it may offer non-drug alternatives to a broad array of health conditions.

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