In a Flooded Bulk Cannabis Market, Cplant Turns to Consumers

(Bloomberg) -- With wholesale cannabis markets well supplied, Uruguayan producer Cplant is preparing its retail foray.

Cplant is looking to raise at least $10 million from institutional investors this year to fund an expansion into consumer and medical products, hiring an investment bank for a fourth-quarter funding round.

“Our main objective is to create a brand to offer retail products” directly to U.S. and European consumers in 2021, Lucas Crivilone, who co-founded the company with Guido Husni in 2018, said in a telephone interview.

Cplant plans to make consumer products such as cosmetics rich in cannabidiol, or CBD, in Switzerland and Uruguay. It’s in early talks with a pharmaceutical company to produce medical cannabis products rich in THC, the main psychoactive portion of the plant, in Germany, Crivilone said. The retail push comes amid falling wholesale prices for its CBD-rich hemp exports.

Uruguay is emerging as a major exporter of cannabis for medical and consumer uses after it was the first country to legalize most uses of the plant in 2013. Companies such as Fotmer Corporation SA, Cplant and Cannabis Uruguay Ltda have shipped about six metric tons of flowers high in either CBD or THC since late 2019, government and company data show.

Specialty Item

“Biomass is becoming a commodity, while flowers are a specialty item because they demand greater investment due to labor and conditioning requirements,” Crivilone said.

Even so, THC-rich flowers can fetch as much as $3,000 a kilo compared to the $400 to $700 that European importers pay for bulk shipments of high CBD content hemp flowers grown indoors, he said. Hemp biomass sells for just $15-30 a kilo after prices tumbled in the last year due to U.S. production, he said.

The company, which has shipped three tons of hemp flowers to Swiss buyers since July, plans to export 50 tons of biomass and flowers by the end of August 2021, he said.

Cplant expects to harvest its first THC-rich cannabis early next year. Initially, production will be small at just one or two tons a year, but it’s a market where demand and limited supply should underpin prices, Husni said.

“We think the high-THC medical market will have more growth in the coming years,” he said. “The CBD market is already very developed, while THC is just starting to develop.”

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