California Company Led By Ex-Police Officer-Turned- Cannabis CEO Could Pivot Into Hemp Space

Glass House Brands Inc. GLASF GHBWF would likely diversify its business by pivoting into the hemp sector, reported Green Market's John Schroyer, citing the company's leadership.

During the second quarter earnings call held on the heels of the company's earnings report last week revealing a record-setting second quarter for 2024, with revenue reaching $53.9 million, up by 21% year-over-year, CEO Kyle Kazan shed more light on the company's plans.

"We are actively having meetings with large distributors of hemp-derived cannabis, and we are considering DTC, or direct-to-consumer products, shipped from our farm in Southern California directly to people in the states which legally allow it," said Kazan, co-founder and chairman. He recently urged top officials to de-schedule marijuana on the federal level, added a final decision is yet to be made.

Glass House possesses multiple spacious greenhouses, not all of which are used for marijuana cultivation. One of the greenhouses is being cleared by a tomato farmer as the company looks to repurpose it for growing either marijuana or hemp.

In California, legal operators are struggling to stay afloat due to over-taxation that is enabling illicit operators to undercut legal businesses. Prices continued to drop over the past period, "below the lowest level seen in 2023," according to CFO Mark Vendetti who said "the current level of flower pricing is approaching an economically unsustainable level for many growers."

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That said, Kazan is expecting Glass House to benefit from being present in both the cannabis and hemp markets.

"What we would do in the greenhouse in terms of retrofit or operations is no different between the two markets. It's really just a different set of regulatory standards," Kazan said. "What we're looking at here would give us basically maximum optionality with minimal increased cost so that we can be potentially in both markets at the same time."

Companies Seeing Economic Potential Of Hemp-Derived Products

As recently highlighted by Benzinga's Rolando García, other big players in the cannabis industry have already taken the leap and changed their business strategy in favor of hemp.

One of the key players in the industry, Curaleaf Holdings CURLF with its new platform, The Hemp Company, joined a hemp market, which is dominated by companies like 3Chi, Bearly Legal Hemp Co., Diamond CBD, Skyhio, Boston Hempire, Area 5 and Hometown Hero.

"This move also highlights a broader divide in the cannabis industry. On one side, companies like Curaleaf see the economic potential of hemp-derived products," García highlighted in his recent story. "They are leveraging the legal framework of the 2018 Farm Bill. On the other hand, groups like the U.S. Cannabis Council are pushing for banning these products, arguing that the lack of oversight leads to consumer safety issues and easy access for minors."

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