The hemp industry is making a comeback in America after a hiatus of over 60 years when the US Congress outlawed all cannabis production. Even now, it is only legal in a handful of states. Its cousin, marijuana, is the controversial family member, but until the two varieties are separated and viewed in relation to their own unique qualities, this will be an ongoing issue for the hemp industry.
Historically, hemp has been used in all types of fibrous applications and now, the medicinal uses of the CDB (cannabidiol) properties are also being explored and used in a variety of applications from dog cookies to essential oil blends for humans. There are claims of over 25,000 uses for this simple but mighty plant.
Paradox will start in the highly profitable and underserved Artisan CBD Oil market and intends to maintain its position in that market through extensive market research conducted annually to advise growers which varieties will be most marketable, and then move into the fiber market when capital outlay will be reasonable with a rapid repayment of the investment.
The infancy of the industry is both an opportunity and a risk for those looking to grow hemp and have not only a saleable crop but access to seed, a methodology for harvest, and access to buyers. As in all start up industries, rumors, false starts and poor information lead to a well-founded hesitation to enter the industry, regardless of the potential payout.
Paradox is formed as a corporation that will create a network of partners to minimize the risk by formulating a well-informed, fully interactive vertical supply chain from seed to final product sale. This encompasses providing good, tested (and, when possible, certified) seed to a network of growers, assisting in soil and water requirements, testing and ultimately harvesting the crop. Before the plants are in the ground, the purchase orders will be in place for the growers, minimizing their risk as much as possible aside from Acts of God or other crop failure incidents that are unavoidable.
Currently, THC (tetrahydrocannabinol) is limited to 0.3% (.003). The crop location is registered with the State of Colorado who must be notified 30 days prior to harvest for testing to ensure the THC levels are not exceeded. If they are, the crop must be destroyed. This has been occurring across the State, resulting in approximately 700 acres needing to be destroyed. THC is the only regulated component in the hemp plant. However, the value for artisan CBD oil is in the CBD content. The higher the CBD content, the more valuable the oil. However, as CBD rises, so does THC.
In 2016, the average rate for CBD oil was $50/gram (approximately one drop). There are a variety of reasons for the high return: underserved markets, curiosity with the product, increased risk due to the lack of good seed, high costs of production (most growers are small operations and harvest by hand), and lack of industry norms.
Paradox is uniquely positioned to provide regulatory compliance information and assistance to growers as well as provide them with good seed known to be low in THC and high in CBD for a maximum return on the crop.
Paradox will also provide harvesting equipment to ease the labor intensive exercise of hand harvest while at the same time ensure that the most amount of seed is saved for the next crop.
Additionally, Paradox will operate research and development facilities in association with either Colorado Mesa University located in Grand Junction, Colorado, and/or Adams State University located in Alamosa, Colorado, making it their mission to increase CBD content while lowering THC.
Currently, State testing takes place only in Denver but it is the hope of Paradox to establish a testing facility operated by Mesa State University in Nucla, Colorado where the research and development facility will be located.
Once the crop has been harvested, Paradox will separate the seed for future crops, process the greens into oil for sale to a set of identified purchasers and process the stems for processing into fiber. All parts of this plant have value.
The real value for Paradox is to position itself into a position to provide information and movement throughout the hemp value chain so producers can find users and users can find the products they desire at the quality they desire. The partners each bring a specific skill set to the group that will be utilized for success moving forward.
Senator Don Coram will ensure regulatory compliance and the identification of end markets. David Coker is an expert at putting a team together for project purposes and will obtain capital funding. Gene Chuchuru is an Agronomist and will be involved in all grow operations as well as research and development. John Reams will provide administrative expertise and act as a liaison with schools and other educational groups in Nucla, Colorado.
Start-up education and costs for equipment are very extensive. The hemp industry is in its infancy and with that comes a huge amount of misinformation that hinders those participating and trying to create a value proposition for end users. So, the first order of business is to become well-informed and well-versed with varietal information that may be making its way throughout the industry, and have the expertise to interpret rationally that information.
Secondly, we will need to purchase high priced and difficult to obtain equipment. The purchase price for a hemp flax combine for harvesting is approximately $600,000 new. Used equipment is more of a gamble due to the unknown use, difficulty of replacement parts and the overall costs of repair.
The fiber processing equipment is called a “decorticator.” This machine breaks the outside hull of the plant and separates the fibers for further processing. The cost of this machine is estimated at $8 million to $10 million. Until sufficient known market is available, the fiber portion of the plant will be round baled and stored (good for up to 10 years) until processing can commence.
It is also the belief of Paradox that with the success creation and operation of this style of network business, the process can be licensed and marketed on its own as additional states legalize hemp throughout the United States, creating yet another revenue stream.
Funding Our Venture
Paradox is pursuing funding to accelerate our time-to-market plans and step up go-to-market approaches. Financing specifics are available on an individual basis. In addition, Paradox has access to State of Colorado Crowd Funding and grants through local and state governments. The goal is to achieve market share with the least amount of dilution.