CBD industry consolidation continues with manufacturing facility sale

By Hank Schultz contact

- Last updated on GMT

©Getty Images - Tinnakorn Jourang
©Getty Images - Tinnakorn Jourang

Related tags: Dietary supplement companies, CBD and Hemp, Mergers and acquisitions

In a sign of further consolidation within the CBD/hemp products industry, THC Farmaceuticals Inc has announced it has acquired a contract manufacturer in Southern California.

Called G.K. Manufacturing, the newly acquired 13,000 square foot facility which is operating in leased space reportedly has the capacity to manufacture CBD edibles, tinctures, drinks and topical products.  Terms of the acquisition were not disclosed.

Deals among penny stock firms 

G.K. Manufacturing was part of Cannabis Sativa, Inc.  That company’s stock is traded on the OTC board and at one time traded for as much as $12 a share.  The company’s shares entered the penny stock category almost two years ago and trade for about 50 cents today.

THC Farmaceuticals is the parent company of CBDual Biotechnology Corp (CBDG), and it is under this stock symbol that the company’s shares are traded. The shares have resided in the penny stock realm for more than two years and trade at 35 cents today.

The company is apparently in a current state of flux with regard to its financial reporting.  It has been releasing unaudited financial statements, the most recent of which pertains to the quarter ended September 30, 2020.  In that statement the company said it is “[D]ependent upon raising additional capital and without realization of such it would be unlikely for the Company to continue as a going concern.”

How big is the market?

The press release that accompanied the announcement of the acquisition including a rosy market report from the firm Grand View Research.  Grand View’s take is that the global CBD oil and CBD consumer health market size was valued at $20.3 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 25.6% from 2020 to 2027. 

As the hemp/CBD industry is still so new, sizing the market seems to continue to be more art than science.  Off the record conversations at the recent NoCo Hemp Expo held in Colorado, as well as what was said by speakers on stage, do not support Grand View’s expansive picture of the market​.  The planted acreage of hemp in the US is expected to be down significantly this year from last year, and has been contracting for several years.  And an undetermined amount of industrial hemp grown last year for the extraction of cannabinoids reportedly went unsold.  Market observers said off the record that the market for CBD finished goods actually declined in 2020 during a time when certain dietary supplement categories posted record sales.

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