London investment firm Chrystal Capital has announced the £7m private placement of Change Agronomy, offering the opportunity for investors to contribute to hemp as an environmental solution to climate change.
As leaders from across the globe gathered for COP26 to discuss securing net zero emissions by 2050, businesses are looking for ways to reduce their impact on the environment. Planting trees is one solution – but hemp is also one material that is offering hope, as its production is carbon negative. Hemp also offers an eco-alternative material to plastics as numerous sectors begin to look to harness environmentally friendly alternatives.
Sustainably focused company Change Agronomy is already operating in the legal hemp market across North American and 30 other countries – a market estimated to reach US$26Bn by 2025.
The company is supplying carbon-negative products to multiple global end markets including automotive, textiles, bioplastics, packaging, biofuels and healthcare.
The private placement gives investors 24% of the company and has been structured through a UK holding company to position the company to be a potential London Stock Exchange Main Board listed company on a 12-month view.
So far, the offering has had significant investor interest from High Net Worth individuals, family offices, wealth managers, and impact, sustainability and ESG funds, and is expected to close in early December.
“What’s exciting about this is the opportunity to be involved with a very macro level in what is probably one of the most sustainable businesses that we’ve ever come across,” says Kingsley Wilson, founding partner at Chrystal Capital Partners.
“An acre of hemp sequesters around 10 tonnes of carbon every 100 days, which compares to a rainforest taking two and a half tonnes every 20 years. So, the ability to take huge amounts of carbon out of the atmosphere via industrial hemp cultivation fits perfectly with a major global driving thematic investment trend at the moment, with governments, companies and investors all trying to figure out how to get to carbon net-zero by 2050.
“I would call this nature’s technology, or solution, to the problem that has been created by humans, first of all by polluting the world, but also then inexplicably banning hemp over the past 80 years. At scale, this could become a very major solution to global warming, but also a great solution for multiple different global industries from textiles, bioplastics and electric cars in terms of how this hemp plant and its multiple end products, once processed properly, could be used to create sustainable products. For example, hemp bioplastics can degrade in 72 days, not 1000 years.”
Change Agronomy owns the rights to seven premium hemp genetics globally and has a seed propagation facility in Italy that facilitates global supply at a large scale – having already grown 9,600 acres to date, along with 44m pounds of hemp biomass on-site at a fully operational state-of-the-art hemp facility in Canada.
“Change Agronomy has been in the industrial hemp market for several years, they truly understand how to do this at scale and substantially de-risk this proposition. They have farmed nearly 10,000 acres already – they have learned how to farm with the best genetics, to efficiently take it off the field, and process it through a state-of-the-art facility that creates multiple end products from the hemp plant fractions.
“Because they can supply all of these different end fractions from that hemp plant to all of these different industries, they have got lots of different customers queuing to get access to these products which are now available for the first time at scale. This is a company that is going to generate great revenues and profits in the very near term as well, which we believe is going to be a strong driver of shareholder value and upside for investors,” added Wilson.
“In 1941, Henry Ford built the first net carbon zero car built out of hemp and fuelled by hemp ethanol right around that time it all got banned. Now, 80 years later there is this big drive towards making cars more sustainable and to go electric. Generating electricity to power those cars is still burning fossil fuel, whereas hemp has solutions in terms of the fuel and in terms of how you make more sustainable and biodegradable cars.
“A lot of these industries are growing up alongside Change Agronomy, so, investors are getting the chance to invest at ground zero in the whole global hemp supply chain which is forecast to grow to US$25bn by 2025, making it one of the fastest-growing sectors in the world. More of these companies all wanting to use sustainable hemp end products are going to spring up across all of these different sectors and there will be more demand for what they produce at large scale.”
With carbon offsetting set to become a major contributor to the reduction of emissions across the economy, Wilson says the potential for Change Agronomy to create carbon credits will be a key component of its future growth.
“Governments are behind the move towards sustainability. So, in addition to investor capital, we can get relatively low-cost funding, or government funding, to help fuel the growth of this business.
“There are also lots of companies out there polluting the world which want to buy credits to absolve themselves for what they are doing. Therefore, we think the carbon credit market is going to become a very big piece of all of this, and Change Agronomy will be a major source of credit. Not just growing it in the field, but when you put hemp to end products like insulation and housing, or hempcrete – it continues to take carbon out of the atmosphere so they will be eligible for further credits.
“That makes this interesting because, at scale, those carbon credits could make the whole farming and operation side free, and therefore dramatically increases the profitability of the business.”
Cannabis cultivators “pessimistic” about industry, report finds
Cannabis and hemp cultivators across Europe are feeling pessimistic about the industry, according to a new report from Canxchange.
The trading platform Canxchange has released a new report including current pricing data and in-depth market analysis of the medical cannabis space.
The Q2 Benchmark Report is part of Canxchange’s strategy to encourage a more transparent and efficient market for hemp, CBD and medical cannabis. The report aims to support farmers, producers, extractors, manufacturers and other industry stakeholders by providing market insight and standardisation for a more productive market, the organisation says.
Pessimism amongst European cannabis cultivators
As part of the report, Canxchange researchers spent weeks surveying more than 100 hemp farms in Europe to gain an understanding of the current outlook for cultivation activity across the continent.
The company measured five key factors that include surfaces planted compared to the previous season, increase/decrease of production investments, stock levels, sales confidence and cultivation yields.
The survey results were analysed and translated into an index number – the Canxchange Farmers Sentiment Index (CFSI) – to gauge the health of the market and participants’ perception of the industry. 100 represents neutral confidence while extremes of 75 and 125 represent a highly pessimistic and highly optimistic perspective respectively.
This quarter, the CFSI remains below 100 at 96.5, continuing on a downward trajectory from March 2022. Although the decline in confidence is slowing, the overall sentiment remains “bearish” especially amongst bigger producers, the research team says.
For the first time since Canxchange launched the farmer sentiment index, big producers have fallen into the “pessimistic territory”. 500-1000 hectares production units scored 93 while those with more than 1000 hectares had an average CFSI of 94.3.
“Looking into the details, large operators have dramatically changed their views on the outlook of the market for 2022,” the report states. “Several factors could explain this market sentiment.”
Canxchange identified three primary factors that are causing cultivator’s pessimism, including uncertain economic conditions, the impact of high inflation on production costs and a lack of visibility for the coming months.
Seed supply in Europe “exhausted”
The Canxchange report found that seed supply in Europe has been “exhausted” with prices expected to surge over the coming months as demand continues to rise.
“We have seen a last attempt from food producers to source as much as possible but supply is drained,” the report states. “Our members are attempting to contract large amounts of seeds from the new harvest so expect the demand to surge further next year.
“Next year’s prices are naturally going to be higher due to increased fuel and fertiliser prices.”
Meanwhile, isolate extract prices have remained stable over the past few months at just over €300, the report found. Canxchange expects that this is the lowest prices will go before hitting highs of just under €400 within the next six months.
Renewed demand for industrial hemp
In the industrial hemp sector, Canxchange has seen fresh demand globally for hemp hurd (also known as shives), industrial hemp stalks used for building materials.
South Africa has been actively sourcing shives from the EU for hempcrete and hemp blocks, the report found while fibre demand has remained stable among insulation producers. However, some EU suppliers have had buyers cancel orders and contracts due to the impact of inflationary pressures.
Canxchange is a B2B market infrastructure that facilitates industrial hemp, CBD and medical cannabis transactions. Canxchange is a B2B marketplace and electronic platform that connects businesses, helping them to transact in a secure, fast and transparent environment.
Founded in 2019, the London-based company operates globally with over 400 members.
Trichome Pharma forms partnership with Little Green Pharma
Trichome Pharma has announced it is forming a partnership with Labiana and Little Green Pharma that will see the Australian-based company enter the Spanish cannabis market.
Spanish pharma start-up specialised in medicinal cannabis and consumer healthcare, Trichome Pharma, has welcomed Labiana Pharmaceuticals and Little Green Pharma as investors and strategic partners.
The company is forging partnerships in order to fulfil its ambition of becoming the first distributor of medicinal cannabis in Spain. The development follows Trichome’s recent announcement that it has received a medicinal cannabis cultivation license from the Spanish Agency of Medicines and Medical Devices (AEMPS) for R&D.
CEO of Trichome Pharma and managing director of Trichome Capital, Nicholas Balk, commented: “Labiana and LGP are both highly respected leaders in their relevant niches. Naturally, we’re very excited to welcome them both as shareholders and strategic partners. We thank them for their support and trust in our vision.
“Our partnership with Labiana makes perfect sense, given their expertise in third-party EU-GMP manufacturing of specialised medicines, including psychotropics, as well as their strengths in pharmaceutical distribution. Likewise, LGP has some of the highest quality medical cannabis products available and a successful commercial track record in complex regulatory environments.
“LGP’s range of flowers and oil based preparations will perfectly complement what we aim to produce locally here in Spain and allow us to achieve our goal of being first to market.”
Labiana’s investment in Trichome Pharma is a vote of confidence from the traditional pharmaceutical industry in the potential of cannabis as a regulated therapeutic in Spain.
Trichome Pharma’s director of consumer healthcare, Daniel Krupp, commented: “The medicinal cannabis sector needs to be taken seriously on issues of quality and safety, especially by prescribers and their patients. On the other hand, no one knows cannabis better than those that work with the plant directly.
“Both big pharma and the cannabis sector stand to benefit from closer collaboration and a transfer of knowledge.
“The unique part of our offer is that we’re bringing experts from different fields together to build a platform of open innovation. This serves to deliver only the best possible outcomes for patients and consumers.”
Labiana’s president and CEO, Manuel Ramos, added: “This commitment to the medical cannabis business is part of the company’s strategic innovation plan, which seeks to stay one step ahead in order to respond to all market needs.
“And in this case, at Labiana, we are authorized and experienced in the production of psychotropic and narcotic products, and it is clear that the medicinal use of cannabis is already, as we can see, a reality that is increasingly regulated by governments around the world, with a lot of potential for growth.”
Trichome Pharma’s collaboration with Little Green Pharma began after Balk and Fleta Solomon, CEO of LGP, met at a conference in German.
Solomon said: “Spain is the next major market in Europe to legalise medicinal cannabis. We’re very excited to anticipate a change in regulation and develop this partnership with Trichome Pharma, in a market that should be comparable in size to France or Italy at maturity.”
Labiana and LGP’s entry into the Spanish medicinal cannabis market comes at a major inflection point as it is expected that in the coming days, the Health Commission will vote on a proposal recently put forward by a special government subcommittee on medicinal cannabis regulation.
On June 21 the subcommittee agreed on and presented a long-awaited report which contemplates the prescription of medicinal cannabis for a limited number of illnesses.
Trichome Pharma has stated that the proceeds from their recent capital raise will be allocated to investments that are aligned with this thinking long-term and plans to raise additional capital towards the end of the year.
Celadon nears completion of preparatory work for MHRA inspection
The UK-based company has provided an update on its operations.
Celadon Pharmaceuticals has said it is now nearing completion of all preparatory work ahead of GMP inspection by the UK’s Medicines and Healthcare products Regulatory Agency (MHRA), which it expects to take place in the second half of this year.
Following Celadon’s admission to the AIM in March this year, the company has provided an update on its operations.
Celadon says it believes it will become one of the first organisations in the UK to be licensed to sell GMP standard API, high THC medical cannabis from its Midlands facility if it completes a successful MHRA inspection.
A successful inspection will set the facility potentially receive MHRA registration and the grant of a further licence from the Home Office permitting supply for manufacture into finished medicinal products.
The company has also confirmed that it has successfully completed its sixth harvest from its Phase 1 grow facility.
CEO of Celadon, James Short, commented: “We are pleased to report on our significant progress since Admission, which has seen Celadon advance all the necessary preparatory work to be in position for an MHRA inspection and continue the preliminary works for the build-out of its Phase 2 grow facilities.”
The Phase 2 facility is set to become operational by Q1 2023. The company has been working closely with the Home Office and has been successful in its application to expand its Home Office licence, which now allows for increased permitted storage of cannabis products at its Midlands based facility, and has received the necessary approvals to export its cannabis products for the purposes of analytical testing.
Adding to these developments, the company says that its private clinic subsidiary, LVL, the has received approval from Research Ethics Committee (REC) allowing for a 100-patient feasibility study of medical cannabis in patients with non-cancer chronic pain.
The feasibility study is designed to demonstrate the ability to engage and retain patients and will allow LVL to carry out an in-depth evaluation of the patient pathway. Enrolment of patients has already begun.
Initial patient onboarding data will be used in the feasibility study, and in the MHRA conditionally approved patient trial, for presentation to the National Institute for Clinical Excellence (NICE). The company has stated that initial feedback from patients who have received treatment has been positive, with improvements in quality of life being noted.
LVL also received Care Quality Commission approval for its physical clinic on Harley Street in London in order to operate that clinic, and the physical clinic is now able to see patients face to face.
Short continued: “Alongside our grow activity, I am delighted to report that LVL has been experiencing significant levels of new enquiries from those looking to participate in the chronic pain study.
“The LVL team is working hard to keep pace with patient onboarding as we continue to advance towards our objective of conducting what we believe would be the UK’s only MHRA approved clinical trial exploring the use of medical cannabis for the treatment of chronic pain.
“We believe that our highly regulated, pharmaceutical approach is the most effective route to ensuring that patient needs are met.
“With our focus on evidence-based data, facilitated by our medical cannabis study and MHRA conditionally approved medical cannabis trial, we hope to demonstrate the safety and efficacy of cannabis-based medicines, underpinning the case for regulatory approval and, in turn, reimbursement by the NHS.”
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