Speedy Growʼs business model includes an innovative supply chain plan. In the CBD industry, the primary raw material requisite to producing CBD oil is hemp. Not just any hemp will do. In order to produce CBD that is marketable nationwide, it must be low THC (-.003%) hemp. Furthermore, the hemp must be grown within a reasonable proximity to the CBD extraction facility. And, like any agricultural product, there are varying quality levels of the hemp. In most extraction scenarios, a farmer who has grown hemp takes his harvested crops to a CBD extractor. He then pays, on average $30 per pound of the harvested, pre-processed hemp, which is called “flower”. An average field that might produce 10,000 pounds of flower, then, would cost a farmer about $300,000 to have the CBD extracted.
There are two significant problems for the farmers in this scenario. First, in most cases, there is little to no transparency in how the extracted CBD is calculated as a final product. This gives opportunity for unscrupulous CBD extractors to report whatever CBD yields they want, and to ensure he is being treated fairly, the farmer has little more than his own experience in hemp farming (which in this emerging industry is usually minimal) and his trust in the extractor. And presently, most extractors participating in the CBD industry come from the marijuana industry—which, until recently, was a straight-up black-market industry full of black-market business owners, many of whom are willing to “lie, cheat, and steal” (because the legislation for products in that market required it) in order to conduct business.
The second problem farmers face is in the steep processing fees they have to pay to turn their flower into CBD oil and the cost and expertise necessary to market and sell CBD products. Farmers know crops. And for most other crops, there are co-op processing and distribution sites where farmers take their harvested products and collect a commodity rate for the product. With CBD the current process requires the farmer pay a rather high price for processing, then leaves the farmer with a raw ingredient that must be either sold to a producer or branded and sold somewhere else by the farmer, before he can make good on his agricultural investment in CBD hemp.
CHART:
<<<PLANT > GROW > HARVEST > EXTRACTION > MARKET/SELL
