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PODCAST EDUCATION

Real Estate Investment Opportunities With CBD

Episode 046

John Larson and the Real Estate Cowboys talk passive income real estate investing.

Hear new episodes every Sunday morning at 8 a.m. The Cowboys talk about how emerging markets, like the CBD industry, affect and benefit real estate investments.

Keep the #CowboyCoffee hot while listening to John, and the Cowboys talk about how to #BeACowboy and earn passive income in real estate.

Episode Transcript

Keith Weinhold: Hey, this is Keith Weinhold from the Get Rich Education podcast. You are listening to my friend John Larson and the Real Estate Cowboys. Don’t quit your daydream.

Robert Helms: Hey everybody, it’s Robert Helms, host of the Real Estate Guys radio show, and you are listening to the Real Estate Cowboys.

Announcer: Have you thought about becoming financially free through real estate investing, but don’t have the time or knowledge to get started? Welcome to the Real Estate Cowboys podcast. Each week we discuss passive income investment opportunities in the red hot Texas market. John Larson and the Real Estate Cowboys will show you how to leverage their team to build wealth in real estate through passive investment opportunities. And now here’s John.

John Larson: Hello everyone. This is John Larson and welcome to the Real Estate Cowboys podcast. This week we are going to be discussing real estate investment opportunities with CBD or cannabidiol. Uh, for those of you that do not know, CBD is a derivative of hemp, not marijuana. Hemp. And after the 2018 Farm Bill, the passing of the 2018 Farm Bill, it took hemp off the banned substance list, which now means you can grow hemp all over the U.S. and you can sell CBD products or products containing CBD, cannabidiol all over the U.S. This to me as an investor, as a businessman piqued my interest even before the Farm Bill was passed because I saw a lot of people putting out CBD product lines. Um, I heard in the news and through research that CBD was helping, um, people with a lot of different ailments, from anxiety to arthritis, uh, even cancer patients were taking CBD at high dosage and discovering that it was, it was assisting with some of the pain associated with, you know, obviously with cancer and things like that.

So very, very excited about this opportunity. And that’s why we’re actually, uh, raising funds currently through our private lending program, uh, for our CBD business, Mile High Bio-science to grow that business, get extraction equipment to pull the crude oil from the raw material hemp. From raw hemp biomass, and convert it into CBD isolate, which is the purest form of CBD or THC-free distillate. This active ingredient, these active ingredients end up going into different products like lotions and, uh, even edible things. Gummy bears, honey sticks, uh, can go into water-soluble form through nanotechnology or then it could be a cola, it could be in water, uh, iced tea, so on and so forth. We actually have a few retail brands that are going to be coming out here shortly. Uh, one called Bleu CBD, BLEU CBD, Earth Blend and a health and beauty line called Omorfia, which means beautiful in Greek.

Very, very excited about the opportunities with CBD. Uh, love the business in terms of uh, there’s a lot of money to be made at this point after the Farm Bill was passed in 2018. But also this is a drug technically that helps people and it’s an all natural drug. Very excited about the opportunities with CBD and for those of you who have not had an opportunity to review our marketing package on our current raise or review our PPM, you can go to American Real Estate Investments, website, AREIUSA.com or RealEstateCowboysDFW.com put in your information and a member of our team will reach out. You can just download the marketing package right from American Real Estate Investments website. You’re not going to find that on RealEstateCowboysDFW.com, but you can still inquire through our Real Estate Cowboys website as well.

I’m also excited to announce that this is the first deal that we’re offering that is paying a 12% annual rate of return and we are also giving our investors the opportunity to let their money accrue interest at that 12% while it sits in escrow until the deal closes. That is something that’s a first for us. We have never offered that before. Normally your money sits in escrow and is not working for you until we close on the actual project. Uh, I believe this project to be so lucrative are the potential to be very lucrative is there. So we’re offering 12% and also offering our investors the opportunity to let their money accrue interest while it sits in escrow. So we’ve never done this before. So like I said, if you’re interested in learning more about this opportunity, go to AREIUSA.com put in your information, download the marketing package. If you’re an accredited investor, you will receive the PPM. Review that. Speak with a member of our team and we will talk about how to move forward with the next steps and get your money working for you at 12%. And that’s a year term on this deal. So very, very excited about this opportunity. Let’s get into it.

The 2018 Farm Bill passed this past December, which removed hemp from the list of controlled substances like I said. This has totally opened the flood gates for hemp derived products. Everyone and their mother, it seems like, it’s starting a CBD line right now. It doesn’t mean it’s a good CBD line. A lot of lines are going out into the market because of the opportunities out there to white label other people’s products, right? You just come up with a brand, stick your label on it and your logo and uh, ship it out.

The total amount of CBD products sold in 2018 reached 591 million and it is expected to grow to a $22 billion industry by 2022. And after the Farm Bill passed, large, large corporations like Coca Cola is even starting to get into the game and starting to develop CBD products that will be on the shelf soon, I believe. So let’s start off with the Farm Bill. What, what is the Farm Bill? Well, the Farm Bill is the expression of the fundamental government policies regarding the agricultural industry in the U.S. About every five years the Farm Bill is reviewed, changed and renewed by the in-office administration. The impact of the provisions in the Farm Bill. It’s, it’s huge. They affect international trade, farm credits, farm subsidies, nutrition programs, conservation efforts, agricultural research and more. And so what’s new about the 2018 Farm Bill specifically and how does that tie into the CBD industry?

Well, after decades of the government not distinguishing between hemp and marijuana, the 2018 Farm Bill allows the broad cultivation of hemp. Previously legal hemp cultivation was limited to small pilot programs designed to study him. The 2018 Farm Bill also provides for hemp derived products to be transported across state lines and the marketing and commercialization of hemp-derived products, including CBD. Further, as long as the growing and cultivation of hemp is conducted according to federal law, there are no restrictions on the sale, transport or possession of hemp or its derivatives. This set the foundation for exciting upswing in the cannabinoid market. We were already in the business before the Farm Bill passed, but after that passed, it just basically changed everything. It took everything from a small scale to an extremely strong, extremely large, large scale. So now let’s talk about hemp and CBD. Some clarification about hemp CBD and THC may help you to better understand the cannabinoid industry better.

CBD is short for Cannabidiol, one of many compounds found in the cannabis sativa plant. CBD is extracted from the hemp plant, a variety of cannabis sativa. THC is a compound that causes the “high” associated with cannabis. THC comes from the marijuana plant, which is also in the cannabis sativa family of plants. CBD has only trace amounts of THC and does not cause the psychoactive sensations associated with marijuana use. It just gets you the health benefits. When people talk about the cannabinoid market today, they’re referring to the CBD market. So why is CBD hot? Well CBD is popping up in a wide variety of products including oils, lotions, soaps, and beauty goods. The newest niche is the food and beverage industry where businesses have added it to snacks, coffee, ice cream, and cocktails. By 2020 CBD is expected to make its way into yogurt, soups, and even salad dressings according to a report on the 2019 food trends from snack maker, Kind. So some of you are probably wondering what are the benefits of CBD. In order for there to be a market for anything, there must be consumer demand, right? There’s a lot of demand for CBD, specifically CBD oil and isolate, which we produce. The market for CBD is expanding exponentially and with good reason. CBD has been linked to a variety of health benefits including pain relief, anxiety relief, and more. Project CBD, and you can go to their website ProjectCBD.org, reports at least 50 symptoms that can be alleviated with CBD. Even more benefits of CBD may emerge as CBD is studied more aggressively by the scientific and medical community. And there’s a lot of universities out there that are testing CBD right now. The University of Kentucky’s a large institution that’s studying the effects of CBD as we speak.

So we’ll take a quick commercial break when we come back, I want to talk more about how the real estate industry is affected by the cannabinoid market and how the real estate industry was really affected by the passing of the Farm Bill in 2018 just this past December. So stay tuned. We’ll be right back.

Welcome back to the Real Estate Cowboys podcast is your host John Larson. This week we are discussing something that I’m very passionate about. Cannabidiol, CBD, something that I take myself something my wife takes, my, my dog Franklin, he takes CBD also. Um, many of my friends and family take CBD products and have been finding that it’s helping with a lot of ailments out there. I mean a lot of people in the U.S. have anxiety. A lot of people in the U.S. you know, have some sort of pain back pain, joint pain, arthritis. CBD has been shown to help with those types of ailments. And so back in, uh, late last year we started a company called Mile High Bioscience up in Denver. What we do is we extract the crude oil from hemp and we convert it, we isolate it, isolate the molecule and sell wholesale, that isolate to manufacturers that put these, this active ingredient into retail products. Uh, we also produce THC-free distillate, which also has the same cannabinoids in the oil, uh, which include primarily CBD, that can then go into the same consumer products. And so we’re wholesaling those active ingredients to companies out there that have retail lines, consumer lines, um, and also putting our own active ingredient in our own product lines. And so today or this week, we are discussing the real estate investment opportunities that you can find with CBD.

And so, you know, any type of burgeoning industry like this, you know, if you’re a real estate investor, you have to look at these opportunities and say, hey, how can this affect the industry that I’m in? Right. And so me being a real estate guy who has started a CBD company, I started looking at some ways where you could potentially profit in the real estate market with the growing popularity of these CBD brands and these CBD companies that have seemed to be popping up, uh, every day.

So, you know, how is the real estate industry affected by the cannabinoid market? I would say that there are multiple opportunities for real estate investors who want to get in on the cannabinoid market. First, there’s an increased demand for commercial lease by retailers who want to specialize in selling CBD products. While many of these retailers are permitted to sell, sell CBD products, there are so many different varieties of CBD products that it makes sense to have an entire store dedicated to them.

Commercial real estate investors have likely already seen a spike in demand, right? For commercial space. Second, agricultural land investors will see increased demand for farmland on which to grow hemp, right? After the passing of the Farm Bill. If you have vacant land farmable land, land that’s zoned for agricultural use, you could lease or sell that land to a farmer who is wanting to farm hemp, right? Because the wider market for hemp and the renewed government financial support for farmers, even small farmers won’t have to worry about earning a good living. Existing farmers are already looking to extend their landholdings in order to grow hemp in addition to their current crops. And many experts are predicting a massive return to homesteading and living off the land, another indicator for real estate investors who buy and sell farmland. And then finally in places where real estate zoning restrictions previously prohibited the manufacturer of certain illegal substances, those restrictions will likely be adjusted to allow for the processing of hemp and CBD. This paves the way for commercial and industrial processing of hemp to extract CBD for its many uses. For real estate investors, this means more demand for commercial warehouse and manufacturing space, industrial space, so to speak. I believe big, big opportunities are on the horizon with the real estate market as well, especially if you have retail space, commercial space, industrial space. There’s new businesses popping up every day. Uh, so I believe that there is a, a very, very big opportunity if you have any sort of retail space or commercial space or land, farmable land. There is a big, big opportunity for you and you should definitely be looking into taking advantage of the growing CBD market and the growing market for the farming of hemp, right?

The more and more that research gets out there, the more and more people are talking about how CBD products are helping them with certain ailments, the more popular it’s going to become, the more hemp that’s going to be needed to, uh, you know, you’re going to need to grow more hemp to keep up with this demand. So I just expect this business to grow year by year to the point where in 2022, it’s a $22 billion industry and beyond that even more billions of dollars. So, uh, I am definitely on the train. I’m definitely on the CBD train and that’s why I started Mile High Bioscience late last year and now have three product lines that are ready to hit the shelves.

And so if you want to be a part of this opportunity, I recommend going to AREIUSA.com, coming on the debt side first. There will be equity opportunities in the future with our, whether it be with our retail brands or with are our manufacturing company, Mile High Bioscience. There’s a lot of opportunities out there in the future. But the first step is to get more equipment and cure the issues that we’re currently having with extraction. The main goal here is to buy two extraction machines that can process at least 6,000 pounds of hemp each day. Add that to the Mile High Bioscience structure. Once we control that extraction piece, we’ll be able to sell the services to other companies who need extraction. Because I’m telling you in 2019 after the passing of the Farm Bill last year, there’s probably going to be double the amount of biomass or hemp on the market this year than there was last year. And there already weren’t enough extraction solutions last year, uh, to extract the crude oil from hemp.

So I expect there to be obviously an increased demand this year. More more raw product, raw biomass on the market this year. And there’s going to be a huge, huge need for extraction. Just tolling the machinery out, you’re able to charge, you know, an average of $22 a pound for, you know, winterize the carved crude oil and our machines are going to be able to do that. So outside of just being able to process our own biomass and put that active ingredient, you know, convert it to isolate and distillate and put it in our own retail products, which will greatly bring down our cost to goods. Because now we’re not having to pay $22 a pound to extract crude oil from hemp. And it takes about, you know, for good material, 50 pounds of hemp to convert to one kilo of isolate. So right there I’d be saving $1,100 on my cost of goods per, per kilo of Isolate by having my own extraction solution.

Okay. And, and that’s just, that’s just one way that these, that these machines are going to bring in revenue. Like I said, we can toll this machinery out ourselves and charge $22 a pound. If you want a hundred kilos of white isolate, which a lot of companies will buy a hundred at a time, it takes 50,000 pounds of hemp to make those hundred kilos. So, like I said, I believe we have a huge opportunity to make some serious money in this industry and make some serious money for our investors and put them into a vehicle that will be able to pay them a 12% annual rate of return. And also, you know, put them in a position to be a part of a company that’s already generating revenue. Just looking for solutions to bring down costs to goods and also add another service to our, our business that commands a lot of dollars. So that is our, that is our goal there. That’s the play with the whole thing and getting into the CBD industry and also raising funds for this equipment that’s going to be added to our business model right now and add it to Mile High Bioscience to make it a much more profitable business.

So let’s discuss now what type of skills are needed to get into the CBD industry. And number one, it’s going to be a strong knowledge base about the science of the cannabis plant and CBD. And while the required skills vary depending on whether entrepreneurs are making CBD products for the food and beverage, health and wellness or beauty and personal care industries. A strong marketing ability will also be crucial for any new entrance into the business, hoping to stand out from the competition. And I believe that American Real Estate Investments, a team that we have here, we’re very, very good at marketing and you know, so that’s, that’s our competitive advantage I believe outside of getting this equipment, lowering our cost to goods, I think that we have a really strong competitive advantage on the retail side because of our marketing expertise.

So some of the barriers to entry you’d find is finding shelf space, finding shelf space at retailers. Uh, it’s going to be a challenge due to the heavy concentration in new brands. Now, like I said, most of the brands that are hitting the market are just a white label and the packaging and the products, they don’t look very visually appealing. They’re not very attractive. You have a lot of people that are breaking into the industry with not a lot of startup cash. And so most of these people are just trying to sell these products online. But it’s definitely our goal, uh, to get our products on the shelves of major retailers and I have connections in order to do so. The downside I would say is the passage of the 2018 Farm Bill, uh, is expected to make CBD legal in all 50 states, like I said, which could usher in competition from larger companies, making it harder for startups.

And that’s true, but I think we kind of beat that, uh, to the punch we got into the business before the Farm Bill was passed. We set a lot of foundation or we set a great foundation to be successful in the future with this business. But the brands like Coke, Cola, Pepsi, Johnson and Johnson, other large food and beverage retailers, uh, food and beverage companies are going to be getting into this business. It just makes too much sense not to. And the competition, considering that CBD didn’t exist as a product category five years ago, the competition is heating up at a rapid pace with hundreds of CBD companies offering thousands of products. And a lot of the products are the same just with a different label. Here’s a look at some of the major players in the industry right now, Colorado-based CBD oil producers, Charlotte’s Web Holdings reported $40 million in revenue in 2017 and nearly 18 million just during the third quarter of 2018, up 57% year over year. That’s insane. Nevada based CV sciences, which sells CBD products and is developing a synthetic CBD based medicine for a range of conditions, reported sales of more than 20 million in 2017 and increased by 87% from 2016 so the overall growth in the U.S. CBD industry grew by nearly 40% in 2017 to 367 million. According to recent reports from New Frontier Data, an analytics company specializing in the cannabis industry, the market is expected to reach 500 million in 2018, which it did. As I said earlier and analysts at an investment firm Canaccord Genuity, estimates the U.S. market for CBD beverages alone will reach 260 million by 2022. So that just shows the insane opportunity that there is in the CBD market. And that’s why we as a real estate company have branched off and started a CBD business. And so all we’re doing is just giving our investors another vehicle to earn passive income to earn monthly cash flow in a business that is really burgeoning. You can review this information on our website, you can go on Google and just type in CBD products, CBD industry, so on and so forth. And you’ll see so much information that just points to the CBD industry just booming over the next few years here. And I believe it’s going to continue to boom into the future. So this is something that you’re interested in, this is something that you’d like to learn more about. Like I said earlier, you can go to our website, AREIUSA.com, download the marketing package, review that, digest that information. If you’re an accredited investor, you can get the PPM right away. You can review that PPM and then set up a call with a member of our team and they’ll reach out and discuss the opportunity in more detail. I’m never shy to get on the phone and talk about the opportunities either and talk more about what we have going on in the CBD industry with Mile High Bioscience and the retail brands that we are unveiling here shortly.

If you are interested, go to our websites. You can also go to RealEstateCowboysDFW.com ton of education information on that website, blog posts that go out weekly. Um, you can also get access to the Passive Income Guide, which is my book, Passive Income Guide: What’s Your Return on Life. Uh, you can get that on Amazon or from our websites. And a short read and talks all about how to basically earn passive income in real estate. And now we’re talking about how you can earn passive income in businesses like CBD. And so if you’re interested in getting that book, you can get that on Amazon or on our websites. Like I said, I’m just very, very excited about the opportunities that we have on the horizon with the CBD business and also with American Real Estate Investments and Real Estate Cowboys.

You know, we’re doing bigger deals, we’re going bigger doing, getting into multifamily, getting into commercial. Uh, but our private lending program has just been a huge success so far, so thankful for that. And I’m so thankful for my investors who have trusted us and put their hard earned money with us to go and do these great deals in the DFW area and break into industries like the CBD market. Um, it’s really truly been a blessing. So as I said, if you’re interested in learning more, all you have to do, we’re just one phone call or one click away. We will reach out with more information. So thank you for tuning in this week to the Real Estate Cowboys, our CBD real estate edition. I hope you learned something this week and I hope that you tune in again next week for another great episode. And once again, everyone remember what is your return on life? Have a great week everyone, and we’ll see next week.

Announcer: All opinions expressed by the host of the show are the opinions of American Real Estate Investments LLC and do not reflect the opinions of guests or sponsors. No personal or professional advice on this program should be considered an endorsement to follow a real estate financing or investment strategy. Before acting on any information, seek advice from your financial tax, mortgage or real estate advisor, as the information is not guaranteed and investment strategies have the potential for profit or loss.