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CGP strengthens its role in the hemp industry

Posted on April 13, 1999

Monterey, California — As industrial hemp becomes a more discernable part of the weave of modern agriculture and the woof of public discourse — with such unlikely supporters as former CIA director R. James Woolsey representing the North American Industrial Hemp Council — Consolidated Growers & Processors Inc. (OTC BB:CGPR) (CGP) has announced a series of corporate developments strengthening its role as the world’s first multinational industrial hemp company.

A public venture formed in 1997 to expand the global market for hemp, CGP is accelerating its activities worldwide: completing its capital formation and strategic development, appointing a new executive management team and forging affiliations with farmers, researchers, manufacturers and even the United Nations in its conviction that hemp will one day be traded as commonly as wheat or cotton.

“In the last few years, the demand for hemp-based products has risen among consumers as well as major U.S. and foreign multinational companies,” stated newly appointed Chief Executive Officer Larry Siddens. “We are encouraged by those who recognize the `eco-benefits’ of hemp, both economic and ecological, including governments such as Canada and Germany, where the use of natural fibers in the automotive industry has actually been mandated.”

With the versatile and environmentally friendly crop now grown legally in two dozen countries, Siddens also points to a recent U.S. News & World Report article (3/15/99) that characterizes the global sales of hemp as “booming,” rising from $3 million in 1993 to $75 million in 1997, the U.S. market accounting for two-thirds of those sales. Other sources have projected a $250 million market by 2000.

Having made substantial inroads in the sale of raw material, CGP intends to maximize its processing of industrial hemp to produce both raw material and value-added products that include: 1) novel “nutraceutical” and pharmaceutical products derived from hemp through biotechnology; 2) high-nutrient foods and supplements utilizing hemp nuts and hemp oil; 3) cosmetics incorporating hemp oil; 4) fine fiber for use in automobiles and insulation; and 5) fiber for paper products, plastics and metals.

Verifying the company’s rising prominence in an emerging industry, the United Nations Food and Agriculture Organization (FAO) last month appointed CGP as its primary contact for information on industrial hemp, recognized as a promising food crop for developing nations.

Business Developments

With headquarters in Monterey, Consolidated Growers & Processors has strengthened its subsidiaries and affiliations on three continents: North America (the United States and Canada), Europe (France, Spain, Germany, Austria, Hungary and Ukraine) and Australia. This strategy ensures the reliable supply of raw materials in proximity to emerging markets for hemp.

North America

In the area of biotechnology research — identifying and enhancing beneficial traits unique to hemp — CGP this week finalized an agreement with Photosynthetic Harvest Inc., a corporate research sponsor affiliated with Rutgers University. Under the direction of leading plant biotechnologist Dr. Ilya Raskin, a team is already engaged in analyzing hundreds of plant species, and with this agreement will apply its proprietary methods to hemp.

“I believe this is one of the most promising alternative crops whose potential, as far as producing valuable products for people, is tremendous and underutilized,” stated Raskin. “Having been unduly placed in the dark corners of agriculture during this century, I hope that our work will help restore its reputation.”

CGP Canada, located in Winnipeg, Manitoba, is chiefly focused on growing and processing hemp in Western Canada. The company is aggressively expanding its Canadian operations, increasing its planting acreage to nearly 20,000 in 1999 and 70,000 in 2000 under long-term contracts with local farmers.

Also integral to that expansion is this morning’s on-site announcement of two processing facilities to be built in Dauphin, Manitoba, commencing in September. At full capacity, these flagship facilities will employ 100 people and process up to 100,000 tons of hemp straw and 15,000 tons of hemp seed annually, its end products to include nutraceutical oil, foods, paper and auto parts.

By the end of 2003, CGP expects to plant 500,000 acres and build 20 processing facilities in three primary growing regions.

Europe

CGP Europe, with its operations based in Geneva, Switzerland, is engaged in a range of activities. Through its wholly owned company Nachwachsende Rohstoffe GmbH (NaWaRo), CGP recently increased its ownership position in Germany’s first modern hemp processing facility, Badische Naturfaseraufbereitung (BaFa), the leader in providing fine hemp fiber for building insulation and automotive composites whose customers include Mercedes, BMW and Opel.

The European operation expects to purchase a matting facility this year near its German hub in Cologne in order to manufacture its own auto composites, building insulation and other nonwovens. With its plan to have three processing facilities by 2003, CGP will be well positioned to be the leading supplier of hemp materials to Europe.

In addition to hemp fiber, CGP is preparing to launch its own hemp beer and hemp oil-based cosmetics in the U.S. market. The European partner’s expertise in producing a high-quality, cold-pressed hemp oil — which contains the best profile of essential fatty acids critical to the immune system and a high-protein efficiency ratio — has led CGP to trademark and begin to develop its own “H3(omega symbol)” brand of hemp oil. Named after the structure of the essential fat omega-3, the product represents an equally essential component of CGP’s business strategy.

Through its Hungarian subsidiary, CGP is in final negotiations with one of the world’s largest security paper dealers to supply hemp fiber for use in currency and security paper. These documents would incorporate CGP’s patented, anticounterfeiting taggant StuffDust under an exclusive license from its nanotechnology affiliate NTECH Corp., with which CGP is also developing proprietary “hemp metals” and “hemp plastics.”

The Hungarian subsidiary is also focused on the production and distribution of hemp plastics, geotextiles, textiles and other products throughout Europe.

CGP has positioned itself to become the major supplier of top-quality hemp seed in the world market through its joint venture with the Institute of Bast Crops in Glukiv, Ukraine, where the company has made another important commitment to a region still suffering from the 1986 nuclear accident at Chernobyl.

In a venture between CGP and New Jersey-based Phytotech — a company founded by Raskin that has attracted institutional investment — industrial hemp is being used as an agent of “phytoremediation,” an emerging technology using plants to remove soil and water contaminants.

Because of its robust, fast-growing nature, industrial hemp was selected for initial experiments conducted 50 miles southwest of the Chernobyl nuclear power plant, proving effective in extracting radionuclides from contaminated soil and offering a promising solution to longtime residents who hope to return to their land.

Full-scale trials will begin later this year; the actual cleanup effort will commence in 2000, when CGP intends to license this technology globally.

Executive Appointments

CGP has also announced several key executive appointments that complete the company’s management team. They include: Chief Executive Officer and board member Larry Siddens, whose 30 years in the textile industry most recently included a three-year post as president/CEO of Reeves Apparel Textile Group, a division of Reeves Industries responsible for $130 million in sales; acting Chief Financial Officer and board member Joseph Attanasio, former Price-Waterhouse senior manager, president of South America Investment Banking and senior vice president of G.E./Kidder Peabody & Co., where he originated $1.5 billion in business opportunities; Chief Operations Officer and Executive Vice President of Agriculture and Production Bernard Geoffroy, who most recently served as president and board member of La Chanvriere De l’Aube, the world’s largest hemp producer/processor; CGP Europe President Jean Baptiste LeTexier, a 25-year managing director and board member of La Chanvriere De l’Aube responsible for developing new European markets for hemp products; and CGP Europe Vice President Emmanuel Geoffroy, whose diverse experience includes executive positions with product manufacturers in France, Sweden and Germany.

Established team members include co-founder and board chairman Susan Brana, an international venture capitalist who formerly served as an officer at Mitsui Bank and Far East Bank; CGP Canada President and Executive Vice President of Government Relations Douglas Campbell, former president of the Canada Grains Council; CGP Europe board member Werner Thelen, president of Nachwachsende Rohstoffe GmbH (NaWaRo); and CGP Europe board member Hansjorg Spoerri, who concurrently serves as managing director of Papierfabrik Nestal, a paper-making company in Nestal, Switzerland.

Copyright © 1999, Consolidated Growers & Processors. All rights reserved.