On June 16, 2022, Liu Junyang of Shanghai Xiangchu Assets investigated Rhine Biotech and asked about the business progress of the US industrial hemp project. The following is the investigation record:
Q: How will the passage of the US MORE Act and CAOA Act affect the company's industrial hemp business? What is the current progress of the US industrial hemp industry regulations and the application of downstream brands?
A: The passage of the US MORE Act and the CAOA Act will have a positive effect on the company's industrial hemp project. The company's industrial hemp project will gain a piece of business income from the incremental market; even if it fails to pass, it will not affect the company's project. Development fundamentals and business planning. At present, the cultivation and processing of industrial hemp in the United States is fully legal, and the legalization of application is still in progress.
It is understood that there are already 3-4 states in the United States that explicitly allow CBD to be added to the food and beverage industry. Although CBD has not yet passed the FDA GRAS certification, this does not mean that it is prohibited from being added to the food and beverage industry. The safety in the food and beverage field will be generally recognized, which will help expand the scope of application and encourage large brands to enter the terminal application field.
Therefore, what the industry needs at this stage is the establishment of a unified industry or industry standard at the federal level of the United States, or between states, to strengthen the guidance of the industrial hemp market, to promote the research and development and launch of downstream end products, and to effectively connect and operate the entire industry chain.
It is understood that some major brands in the United States have been investing heavily in the research and development of CBD terminal application products. There are a variety of product SKUs in laboratories and exhibitions, and major brands are very cautious about the judgment of investment in new product research and development. They dare to continue the research and development of applied products, which can reflect from one side that the market for industrial hemp products in the future is optimistic, but it is only a matter of whether the market will break out sooner or later.
Q: Can you introduce the current revenue and business plan of the company's industrial hemp project?
A: This year, the company's industrial hemp project revenue goal is to break even. The main goal in the next few years is to make the output and market bigger and stronger, to build the brand awareness of the subsidiary in the field of industrial hemp extraction, and to enhance the right to speak in the industry. . At present, the company's industrial hemp team is also continuing to conduct market research to provide reference for the company to formulate business strategies, pricing, and production capacity release plans.
The main reason for the higher profits of industrial hemp products in 2019 is that the industrial chain is incomplete and supply is less than demand. At present, the price of industrial hemp raw materials and products has decreased compared with 2019. The company expects that the industry price is already at a low position. If the price drops again, market participants, especially raw material growers, will withdraw, resulting in insufficient supply, which will cause a rebound in prices, which will cause a rebound in prices. Similar to the cycle of agricultural products, the company will formulate reasonable business strategies with a full understanding of the industry chain.
