September 29nd, 2020 – The Heartland Industries team has spent months focusing on the supply chain bottlenecks in the hemp industry. After extensive research, it has become obvious why no company has been able to create a supply chain that manufacturers across the United States can rely upon.
After the 2018 Farm Bill, there was a massive gold rush across the nation. Farmers, processors, and retail stores throughout America shifted their focus to CBD, and rightfully so. CBD could be grown, processed, and distributed at a scale that had never been seen before in the pharmaceutical, food, and supplement industries.
Unfortunately, this created massive price volatility as the supply and demand gap quickly shifted. Farmers who were expecting $60,000 per acre quickly found themselves sitting on bad product that they couldn’t sell. This created a kickback effect that left a sour taste in the mouths of farmers across America.
As industry leaders quickly discovered, CBD is a much different market than THC. Because CBD will be utilized as a commodity, the only way to profitably extract the oil is on a large scale. The THC equipment that was repurposed for CBD was made for small batch processing that relied upon solvents like butane, ethanol, and CO2. These solvents, along with small-batch equipment, made it nearly impossible for CBD companies to scale their operations. Any time a CBD processor was looking to expand, they were looking down the barrel of high capital expenditures (CAP EX).
This caused “industry leaders” to over-invest in equipment, which proved to be a fatal move. Because of the oversupply of CBD products, people across the CBD industry were left scrambling to distribute their product. This is why many of the leaders in the industry went bankrupt over the past 12-24 months. They were creating unprofitable and unsustainable businesses that were destined to fail.
After talking with dozens of industry experts, the executives at Heartland Industries found the gap in the CBD supply chain. Our team is laser focused on ‘skating to where the puck is going, not to where it’s been.’
As CBD becomes commonplace in pharmaceuticals, foods, and supplements, there is one mandate that will supersede all others: Solventless end products.
Currently, all CBD is extracted using some form of solvent, reagent, or inert gas. As previously mentioned, this typically comes in the form of butane, ethanol, or CO2. Once the CBD oil is separated from the plant matter, extraction facilities go through a process called remediation. This is where processing companies utilize expensive equipment to attempt to remove any solvent residue that is stuck to the oil. Unfortunately, no matter how hard these companies try, the product will always have residual solvents if they were used in the extraction process.
When large pharmaceutical companies are looking to buy out a CBD processing facility in the next 5-10 years, they will immediately cut out all the players who are utilizing these harmful chemicals. This will leave Heartland Industries as one of the top candidates for a buyout opportunity.
Since pharmaceutical grade and food grade products are held to the highest standards, Heartland Industries has built their model around satisfying demand without the use of these chemicals.
With low capital and operating expenditures, Heartland Industries is positioned to be the lowest cost producer with the ability to easily scale outputs based on demand. Without chemicals getting in the way, the Heartland Industries team can produce different types of solventless CBD oils and powders that will revolutionize how products in the industry are processed and consumed.
– Heartland Team