The U.S. cannabis industry is expected to grow more than five-fold over the next five years, from $2.2-2.6 billion in 2014 to an estimated $7.4-8.2 billion by 2018, according to new report by MMJ Business Daily. While growers and dispensaries will likely take the lion’s share of the revenue, the highest margin opportunities may be in licensing the seeds used to grow specific optimized strains.
Cannabis growers use a variety of different cannabis plants, which are sold to dispensaries and into medical and recreational end markets. Unfortunately, very few of these varieties have a registered genetic background that can provide high-quality and reproducible CBD-to-THC profiles. Medical cannabis breeding in scientific settings is also limited with very little cooperation.
BreedIT Corp. (OTC: BRDT) aims to solve these issues by breeding and licensing high-quality cannabis seeds through joint-venture partnerships. With its innovative state-of-the-art iBreedIT® software and expertise, the company helps breeders cost effectively optimize their cannabis plants and ultimately license them to third party growing operations interested in their genetic profile.
In a recent CannabisFN interview, BreedIT Ltd. Chairman and CEO Dr. Sagee provided a brief overview of the enormous opportunity in seed breeding and explained why the company is well positioned in the cannabis market.
In April, BreedIT Corp. finalized its first joint venture agreement with Sheifa Le’Haim, a leading cannabis growing operation in Israel. BreedIT’s Chief Scientist, Professor Haim Rabinowitch, will work closely with Sheifa Le’Haim’s Dr. Barry Nadel to determine the best and most efficient breeding strategies aimed at developing cannabis seeds with specific cannabinoid profiles.
The joint venture will focus its efforts on developing cannabis strains with high CBD-to-THC ratios important for medical indications. While many doctors and patients are interested in ratios of 1:1, 2:1, and 20:1, the market produces primarily THC-dominant strains designed for recreational purposes. CBD must be high in proportion to THC to get the best therapeutic effects for medical purposes.
Sheifa Le’Haim will use iBreedIT® software to optimize both general and floral traits. For example, general traits might include yield, hardiness, and resistance to common pests. Floral traits involve elements like cannabinoid levels, cannabinoid profiles, resin quality, taste, and color. As an experienced, licensed, and certified grower, Sheifa Le’Haim will ensure these new strains quickly make it to market.
Shackelford Brings Expertise
In April, BreedIT also announced the expansion of its Scientific Advisory Board to include Dr. Alan Shackelford, a practicing physician and expert in cannabinoid medicine. After completing post-graduate medical training at Harvard Medical School, Dr. Shackelford moved to Colorado and established a private practice caring for patients with serious medical conditions using cannabinoid medicines.
Dr. Shackelford will be focused on improving the number and stability of cannabis varieties that have distinct medical applications. In particular, he will help identify the ideal CBD-to-THC ratios for various medical indications, which will provide guidance to the joint venture partnerships in developing customized strains and ultimately provide doctors and patients with the best treatment options.
An educated and experienced board and management team will back Dr. Shackelford’s efforts. BreedIT Corp. Chairman Itschak Shrem’s high tech career spans more than thirty-five years in finance and marketing, while CEO Mr. Yoel Yogev is an experienced angel investor that specializes in emerging companies. BreedIT Ltd. Scientific Advisor Professor Haim Rabinowitch also has extensive industry experience heading research at the Hebrew University of Jerusalem.
Market for CBD-Rich Strains
BreedIT’s focus on CBD-rich strains of cannabis could pay off down the road as medical marijuana becomes increasingly established. CBD is one of at least 60 active cannabinoids identified in cannabis, accounting for up to 40% of the plants extract as a non-psychotropic phytocannabinoid. Many believe CBD has a wider scope of medical applications than THC or any other components of cannabis.
An orally administered liquid containing CBD developed by GW Pharmaceuticals plc (NASDAQ: GWPH), known as Epidiolex, has already received orphan drug status in the U.S. from the FDA for the treatment of dravet syndrome. Cannabis Science Inc.’s (OTC: CBIS) CS-TATI-1 is also working on targeting newly diagnosed and treatment-experienced patients with drug-resistance strains of HIV.
BreedIT aims to provide its iBreedIT® software as a one-stop solution for breeders to cost-effectively develop cannabis products. Through joint ventures with cannabis breeders and alliances with major seed firms, the company aims to establish itself as a leader in the breeding of both recreational and medical cannabis strains, in order to increase quality/consistency and meet the future demands of both end markets.
Numerous Catalysts Ahead
Research and development surrounding medical cannabis has grown dramatically over the past couple years. According to NORML, more than 60 U.S. and international health organizations now support granting patients immediate legal access to medical marijuana under a physician’s supervision, while others like the American Cancer Society and AMA support wide-scale clinical trials.
In addition to medical cannabis markets, the legalization of recreational cannabis in Colorado and Washington has led to an enormous expansion of those markets. Legalized cannabis has been tied to lower crime rates, reduced enforcement costs, and higher tax revenue for state and local governments. These efforts could be greatly expanded if the federal government takes action down the road.
While some companies, like Tranzbyte Corp. (OTC: ERBB) and Next Generation Energy Inc. (OTC: NGMC), are focused on setting up dispensaries and growing operations, investors may want to look towards the seed market for higher margin opportunities. BreedIT Corp. is well positioned to capitalize on the growth in these markets and ultimately unlock significant long-term shareholder value.
- Company Website (http://ibreedit.com/)
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