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Thursday, October 29, 2020

Hemp Inc (OTCMKTS:HEMP) is a Hybrid Grower to Watch

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Hemp Inc (OTCMKTS:HEMP) is working to position itself in a hybrid niche sub-sector of cannabis. The company’s primary product is IH (Industrial Hemp) and shares have been trading in a tight 0.03-0.05 range for a year. It’s not unusual for the IH sector to trade differently than the cannabis sector itself. Industrial Hemp (IH) should trend along with the larger cannabis boom and as the revenues will eventually get hot becoming low margin cash flow. This explains why IH is flat versus the huge price appreciation that occurred across the cannabis sector.

It is important to note, the American attitude on marijuana usage has been undergoing a seismic shift. Over the past couple of years, more states are legalizing because of the economic benefits. Like its conservative cousin (industrial hemp), marijuana is big business. Small growers, advocates and big businesses are positioning themselves for the logical growth trajectory.

Hemp Inc (OTCMKTS:HEMP) is a smaller market cap at the moment, but I like the fact they are a hybrid grower with a commodity angle. This way investors and analysts can view them separately. Developing a niche is critical at the early stages of a developing market.

HEMP executives recently shed some light on the progress of its industrial hemp processing facility in Spring Hope, North Carolina. According to David Schmitt, COO of Hemp, Inc.’s wholly-owned subsidiary, Industrial Hemp Manufacturing, LLC, the mechanical installation of the bale shredder was completed last week. “This system starts with a very large metal detection system to insure that there are no metal objects in any of the bales of kenaf or hemp. If the metal detector senses anything metallic, it will shut the system down. This is a safety feature to insure no metal goes into the milling system.”

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Schmitt continued, “Next, the bales go up an incline conveyor into the shredder. Here the material is reduced in size to a 1-inch particle. It is then carried on a conveyor into the first stage of the milling operation. We have now started to run conduit and wiring to all of the electric motors on the shredding system. I am anticipating about two weeks to complete the electrical work. The milling operation will then be able to run in a fully automatic mode and we will begin processing the 18 million pounds of kenaf we have in inventory. We have been running the milling operation in a manual mode to confirm operation of all of the motors, sensors, filters, rotary valves, etc. All of the machinery is working properly.”

Hemp, Inc. (OTCMKTS:HEMP) is working to get their hemp seed into North Carolina, so that the first hemp crop can be planted in the next few weeks. “Our Nuaxon super critical CO2 extraction machine is scheduled to be delivered next week. We must then build a GMP compliant building to house the extraction unit as well as all of the post processing equipment. Once this is done, we will begin installation and commissioning of the extraction machine to begin producing CBDs,” said Schmitt.

HEMP continues to be active on the PR front and keep investors up to speed on their operations, and the industry as a whole.

The North American marijuana market posted $6.7 billion in revenue in 2016, which is up 30% from the year before. U.S. legal sales could reach $50 billion by 2026. Colorado has collected more than $150 million in taxes from legal marijuana sales, including nearly $50 million from a specific excise tax that directs funds to school construction projects. The first $40 million collected annually are earmarked for the school projects.

Just as an overview of the industry: fifty-seven percent of Americans supported legalizing marijuana in 2016 compared to just 52% of the country in 2014. Support for legal cannabis has been steadily increasing among Americans since 2006 when it reached 35%. By 2020, it is estimated that country-wide legal marijuana sales will generate more annual revenue than the National Football League.Cannabis is the largest cash crop in the United States, exceeding corn and wheat combined. The first e-commerce transaction to take place on the Internet was the sale of cannabis.

Hemp, Inc. (OTCMKTS:HEMP) is looking to carve out a niche for themselves, right now they are just a small ($6.85M marketcap) part of the industry, but worth watching as we see this (niche) industry getting ready for a revenue growth spurt. For continuing coverage on shares of $HEMP stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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