KushCo Holdings (KSHB) recently announced an expansion of its CBD footprint with the launch of its new hemp trading business. This move focuses on promoting hemp trading with farmers and a verified buyer network. Further, the company partnered with leading hemp suppliers to supply verified buyers.
KushCo’s new hemp trading business
KushCo’s new addition accommodates the company in servicing operators, growers, extractors, brands, and distributors. KushCo delivers hemp-derived CBD to the company’s entire value chain. Currently, the company has a network of more than 6,000 farmers and suppliers. The company markets and delivers hemp products from farmers to the retail market.
On November 6, KushCo Holdings CEO Nick Kovacevich noted, “We recognized early on that the CBD market would be an explosive one that is poised for substantial growth for many years to come, which is why we have been actively positioning our business to capitalize on this opportunity.”
KushCo also plans to launch supply agreements. These agreements let the company trade in legally compliant unrefined CBD oil, CBD extracts, CBD distillate, and hemp biomass.
The company examines the hemp biomass for the presence of pesticides, microbial, solvents, mycotoxins, cannabinoids, heavy metals, moisture, and other chemicals. KushCo’s new hemp trading business eliminates intermediaries from the process, providing transparency to the buyers and sellers.
The process involved in the new business
- Farming: KushCo promotes hemp transactions between farmers and a verified buyer network.
- Testing: The company ensures quality and regulation compliance through field testing for soil, water, and plants.
- Processing: The company connects farmers, extractors, and processors. It also provides hydrocarbons, solvents, and natural products required for processing CBD products.
- Branding: The company delivers compliant, standard, and custom packaging for branding the products. It also provides creative services from market research to use in marketing campaigns.
- Retail: The company executes mass retail placements and sales management for CBD products.
What to expect from KushCo’s new business
With the addition of the hemp trading business, KushCo Holdings can now secure products through its supply chain. In addition to facilitating these transactions, the company also brokers the distribution of processors’ offtake products.
Notably, KushCo Holdings is the sole packaging partner for its processors. It also provides hydrocarbons and solvents for its processing partners, which it views as a strong pipeline for its business.
KushCo Holdings predicts the expansion of THC-focused players into the CBD market. Plus, the company’s management believes that it is positioned to benefit from the emerging convergence of the THC and CBD markets.
The company expects to generate $25 million in revenue from its new hemp trading business in fiscal 2020. Plus, the company expects this new program to contribute to the company’s EBITDA significantly. Notably, this trend could help KushCo Holdings achieve adjusted EBITDA profitability in fiscal 2020.