Looming Canadian regulatory change keeps hemp investment interest high

By Hank Schultz contact

- Last updated on GMT

Looming Canadian regulatory change keeps hemp investment interest high

Related tags: Cannabis

Interest in hemp-derived products is driving increasing investment and M&A activity in the sector, according to financial news sources.

Sales of hemp products, which include dietary supplements and functional foods, are increasing in the United States. According to an analysis published earlier this year in NutraIngredients-USA, sales of the products hit $688 million in 2016, with $130 million of that coming from the sales of CBD products​.  Sean Murphy, founder of Hemp Business Journal, said his publication estimated that the CBD market in the US grew 53% in 2016.

According to NetworkNewsWire, M&A activity in the cannabis space is heating up with that market expansion. The Canadian market is one of the drivers as well, with that country preparing for approval of  recreational use of the botanical in 2018​.

Advances in hemp extraction

The growth of the market is driving acquisition interest in companies providing adjunct technologies. Among the companies of interest in space, according to NNW, is Lexaria Bioscience Corp., which has developed technologies to improve the bioavailability and taste of compounds derived from hemp. Another such company is Radiant Technologies, Inc., which has developed microwave assisted extraction methods that can, the company says, provide higher quality and lower cost extracts that have a friendlier environmental footprint.

Lexaria’s technology is called DehydraTECH.  According to the company it can enhance the performance of beneficial compounds in ingestible products in what regards smell, taste, action duration and bio-availability and absorption. This allows for lower overall dosing and higher efficacy.  In October, the company grew its patent portfolio, which now includes 19 patents, with a new patent, DehydraTECH as a delivery platform for all​ cannabinoids, including (tetrahydrocannabinol), fat soluble vitamins and other substances.

"This wide-ranging patent allowance from the USPTO exceeds our expectations. This vastly expanded intellectual property protection will enable us to aggressively pursue new business opportunities in 2018," ​Lexaria CEO Chris Bunka said in a statement.

Quickening pace of deals in sector

According to Viridian Capital Advisors, a company that tracks transactions in the cannabis space in North America and Australia, an average of 3.2 deals closed per week in the period from late 2016 through June 2017​, the last point at which data had been collected.  The weekly dollar value of deals, which included capital raises, debt financing, as well as acquisitions, was typically eight to ten that of the same weeks a year previously.  Many of these took place among companies that fall outside of supplement applications, but as the regulatory lines in the sector remain blurred, some of that activity pushes up interest and valuations in companies aiming solely at functional foods and supplement-like delivery modes.

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