Green Mountain CBD Brings ‘Full-Spectrum’ Cannabidiol Products
When new industries are created overnight, there is a justifiable flurry of activity in its value chain starting from the investor to the consumer. The legalization of cannabis for recreational and medical use is one such case in point. Elsewhere , we have covered the story of how technology is stepping in to ensure that only the highest quality of product makes its way into the legal market. Today our focus will be on Green Mountain CBD – a Cannabidiol (CBD) producer based out of Vermont.
There is no doubt that the global cannabis market is poised for growth. By 2027, the total legal market for cannabis is expected to be $57Bn globally with 67% of the market catering to recreational use and 33% focused on medical uses.
Broadly, these markets are classified based on the constituent substances in the produce. CBD (Cannabidiol) is the non-psychoactive substance which is used for medical purposes while THC (Tetra Hydro Cannabinol) is the psychoactive substance which has recreational value. (This infographic illustrates the various cannabinoids and their properties). CBD is usually consumed either as a capsule or as an oil (internal or external consumption). CBD producers in states which have legalised on the use of cannabis for medical purposes must ensure that the total content of THC in their product is non-psychoactive and falls below 0.3%
The global market for CBD is also poised for rapid growth. The global CBD oil market is expected to meet a CAGR of 31% between 2017 and 2022 growing from $700M to $2.7Bn. The US CBD oil market is estimated at between $350M – $450M in 2017 and is expected to grow to $1.8Bn by 2022. It is in this market that Green Mountain operates.
Green Mountain was founded in 2016 by Alejandro Bergad and Jacob Goldstein who had grown up together in the same NY neighbourhood. Bergad previously served as the Chief Agricultural Officer of a hemp farm. The pair took over a 52 acre farmstead in Hardwick and got to work, showering meticulous attention to detail on every aspect of their farm. Currently their revenue stands at $2M and they provide full time employment to 20 employees with additional seasonal employment.
After the very first season, they got offered $250,000 by Evergreen Capital but the deal fell through at the last moment due to differences in vision. Earlier in 2018, they accepted $7M in venture capital funding from One Better Ventures and intends to change its name to Sunsoil in early 2019. They plan to lease and additional 50 acres of land in the same area and also plan to purchase 300acres in the Champlain Valley. The company also publicly announced their intention to drive down prices with the ensuing increase of scale.
Green Mountain CBD offers two major product lines – CBD oil and capsules. The company prides itself on its efficient, organically farmed produce. Although the FDA does not have a legal category for “pesticide free” farming, the firm claims to not use any pesticide in its farms.
Their CBD oil is full spectrum CBD oil, rather than isolated CBD. This means that each batch contains all the possible cannabinoids in hemp (THC, THCA, CBN, CDB, etc.). Therefore, the onus is on the company to prove that each batch produced in the farm adheres to the THC composition norms specified above. Hence they publish their lab analysis reports online and batch wise reports are available from the company on request.
Their CBD oil extraction and delivery mechanism is through coconut oil. The lipid profile of coconut oil seems to make it ideal for delivering and extracting cannabinoids. Studies have shown that this method of delivery enhances CBD uptake by the body to around 30%, thereby increasing the product’s efficacy. This is different from other Vermont farms which use CO 2 extraction
Their capsules are among the cheapest in the market retailing at approximately $1/20mg capsule which is significantly lesser than their Colorado competition. Their end product earns a healthy 8.9/10 rating on CBD Oil users but is not rated among the best in terms of quality.
In the short term, the firm looks to be focussing on replicating its farming quality success to its newer farm locations. However, at some point, the firm will need to focus more on their marketing strategy.
Their commitment to passing on the benefits of low costs to consumers is laudable but comes at a risk. Consumers may focus too heavily on the price and may not consider that Green Mountain CBD have one of the cleanest products in the market. To counteract this, their challenge will be to go from getting good reviews to great reviews, thereby shifting the focus to their high quality and away from their low price. This can only be done through careful consumer research and focusing on attributes that consumers care about.
Achieving this short term goal is of paramount importance in the long term. The biggest long term challenge for any small hemp/ recreational marijuana producer is to stave off takeover bids from big tobacco and alcohol companies . Passing the entire benefit of low cost to consumers, risks putting the firm in a vulnerable position where large corporations may acquire them forcefully. Can Green Mountain (soon to be Sunsoil) grow fast enough to hold their own?
Based in Hardwick, Vermont, Green Mountain CBD produces full spectrum CBD capsules and oil extracted from the hemp they grow using organic coconut oil.