A focus on growers and production is leading to problems but smart cannabis investors can still help put the sector on the right track through companies like GreenStar Biosciences Corp. (CSE: GSTR)
According to unofficial reports from specialized media, cannabis production in the United States is at risk of major economic losses due to overproduction of the plant and lack of technical capacity and investment to process it.
Specialized portals point out that this problem is due to the lack of processing equipment to extract cannabis oil. There are fears that more than 7,500 million dollars worth of cannabis may simply rot in the fields.
Part of the problem has been a focus on volume and growers and a glut of new growers flooding the market. While overproduction may cause short term problems for these growers some cannabis companies are still set to thrive.
GreenStar Biosciences Corp.’s (CSE: GSTR) identifies and invests in promising, sustainable cannabis companies that do more than just grow marijuana. For example one of GreenStar’s assets is Cowlitz, a grower and producer from Washington state that controls their own supply lines. This allows them to develop and process cannabis products without having to worry about under or over supply and that their business will be competitive regardless of the prevailing industry conditions.
Outdated preconceptions hamper investment
According to the portal Bolsamanía, the consumption of products with cannabidiol oil (CBD) is one of the fastest consumer product segments, only in the United States it has more than 52,000 hectares of sowing, equivalent to 100,000 soccer stadiums sown in 2019. This figure represents an increase of 300% in comparison to the previous year.
Despite the rising popularity of CBD and the success of companies like GreenStar conditions industry-wide are still difficult. CBD and Hemp may be legal but many legitimate cannabis and CBD companies still have difficulty obtaining loans or bank accounts.
Why does the sector need investment so badly?
The lack of financial support is crippling the CBD sector. Without proper equipment the majority of hemp destined for CBD is simply rotting in the fields.
“CBD derived from hemp is an immensely growing new industry for the United States, but this year, the sector’s first fully legal year, will be a nightmare for many. The big banks fled in terror and did not want to support investments in infrastructure because they heard the word cannabis, although hemp is totally legal at the federal level,” said Roger Cockroft, executive director of Delta Separations, a firm that manufactures extraction equipment.
Regarding the reasons for the lack of support, many consider that they arise due to the decriminalization of its recreational and/or medicinal use. Many myths still persist around the fact that the Federal Deposit Insurance Corporation (FDCI) can put sanctions on banks for supporting the cannabis business.
It will likely be companies like GreenStar, and other investment focused enterprises, that will provide the cannabis sector with the capital it needs in order to grow and thrive.