Glass House wants to eat the hemp game with THCA and Texas

When the 2018 Farm Bill was crafted by Congress, lawmakers included a section that was intended to boost the hemp industry for fiber and CBD production. However, they also built in a loophole now being exploited by savvy cannabis entrepreneurs like single-state operator Glass House Brands (CBOE CA: GLAS.A.U) (OTCQX: GLASF).

“Congress accidentally, or maybe intentionally, legalized a lot of cannabis,” Graham Farrar, the company’s co-founder and president, told Green Market Report this week.

Longtime experts in large-scale cannabis cultivation, Glass House decently positioned itself to capitalize on developing hemp plays across state lines, especially in populous low-THC markets such as Texas and elsewhere.

So much so, that management dished to investors on an earnings call last month about the plans, with CEO Kyle Kazan dubbing the prospect “quite interesting.”

Farrar says he’s “not afraid” of the potential competition from large, more well-known multi-state operators getting into the smokeable hemp game.

“We know what customers want: California cannabis,” he said. “We know we can grow it better than anybody else.”

In many ways, the rise of consumable hemp is forcing a broader conversation about the future of cannabis in the United States.

On a call with investors, Farrar touted Texas’ potential – with its currently limited low-THC medical marijauna market – as an avenue for revenue, saying he had seen “numbers upwards of 7,000 hemp dispensaries in Texas.”

“We’re gonna run some testing with hemp, and then we’ll see … where does the DEA shake out if there are any changes to the Farm Bill?” he said to Green Market Report this week.

He added, “Can we work with California to make sure that regardless of what they want to see sold in California, they don’t overly burden their California farmers from growing and selling something that Texas or Florida or New York are happy with?”

At the same time, grassroots support for hemp in the Lone Star State has become more visible, with veteran groups having been instrumental in advocating for access to hemp-derived products. It’s a conversation that extends past boardrooms and regulatory agencies, touching on issues of personal freedom and medical access for Texans.

“Weed’s more legal in Texas than it is here,” Farrar said, comparing it to California’s roughly 1,200 licensed dispensaries.

“Texas has a smaller population and seven times as many outlets … And maybe it wasn’t intended, and maybe it’s awesome, but the politicians there are actually super smart because they don’t have to make a big deal of it,” Farrar said.

Farrar’s vision for the future of cannabis is as ambitious as they get. Using hemp as a platform to practice moving product across state lines could provide valuable game in the long-run.

“I want to be the Casamigos … of cannabis,” he says. “I want to make cannabis that people can access, that is available everywhere, that’s awesome for a shot, that’s awesome in a margarita.”

It’s a vision that seems incompatible with the current patchwork of state and federal regulations. But many in the industry – including Farrar – see THCA hemp as a potential bridge to this future, a way to introduce consumers to cannabis products in markets where traditional marijuana remains off-limits.

“We’re setting up this next greenhouse for our next expansion,” he said. “We don’t do anything different at all. Zero things in the greenhouse changed, whether this is farm-bill hemp or licensed cannabis or federally licensed cannabis or interstate compact cannabis.”

In other words, positioning themselves to capitalize on whichever way the legal winds blow.