Arcadia Biosciences (NASDAQ:RKDA) stock rose 2.6% as the company announced on Tuesday a new joint strategic venture with Legacy Ventures Hawaii. This new venture, Archipelago Ventures, will see Arcadia combine its expertise and resources in science-based approaches to crop quality enhancement with Legacy's experience in extraction and sales.
As a result of this venture, Arcadia's supply chain is now vertically integrated, which allows Archipelago to deliver high quality hemp-based CBD products. First sales are expected in late 2019.
"Hawaii has special significance for Arcadia; it's where we first began our hemp research and cultivation, and it's where we continue to see the greatest opportunity for innovation and growth in industrial hemp," said Matt Plavan, CFO of Arcadia Biosciences. "Our new partnership with Legacy not only positions us to lead the rapidly evolving market in producing superior hemp – from seed to extract – but to quickly scale our operations following key regulatory approvals."
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Legacy Ventures Hawaii's principal members are natives of the Pacific Islands and include two-time MLB World Series champion Shane Victorino. "Archipelago recognizes the tremendous market opportunity for premium Hawaiian CBD. We believe hemp has the potential to transform Hawaii's economy – and the lives of its farmers and local communities – by creating an entirely new agricultural segment based on bringing innovation, scientific integrity and investment to the islands," said Victorino. The company also counts on the support of equity partner Vapen CBD, a subsidiary of Vapen MJ Ventures Corp (OTCQX:VAPNF), which will assist in the construction and operation of Archipelago’s Hawaiian hemp extraction facilities.
Hawaii's unique climate and geographic location provide a competitive advantage for growing and harvesting hemp year-round compared to mainland cultivators. Arcadia Biosciences will also gain access to hemp and CBD markets in Asia through its new deal with Legacy.
The recent passage of the US Agriculture Improvement Act of 2018—commonly known as the Farm Bill—allowed for the federal legalization of hemp, the term given to non-psychoactive cannabis containing less than 0.3% THC. The Hemp Business Journal estimates that in 2018, the hemp CBD market totaled $190 million—an astounding growth rate for a category that didn't exist five years ago. By 2022, cannabis research firm The Brightfield Group projects sales to reach $22 billion.
This could mean very good things for Arcadia Biosciences in the future.
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