Pot for Pets
Cannabis, pets and the possible payoff
As the medical marijuana industry grew to $2 billion in revenue in 2014, according to IBISWorld, an Australian market research firm, some in the pet industry have taken notice.
Cannabis-derived pet products, including supplements, treats and over-the-counter (OTC) pet meds, are cropping up like the “weed” inspiring them.
Widespread legalization (23 states have legalized it in some form) has had a lot to do with the newfound acceptance of marijuana and by association hemp, both forms of cannabis, according to IBISWorld.
One of the early-in companies in the cannabis-for-pets trend has been Peak Pharmaceuticals Inc., a Boulder, Colo.-based manufacturer of hemp OTC products for people (products set for release in late 2015) and animals (already to market).
Peak acquired an exclusive worldwide licensing deal and rights to the products (cannabidiol, or CBD, pet supplements and dog biscuits) and technologies of Canna-Pet LLC of Seattle in late 2014 in exchange for royalties.
“You have to spend money to make money,” goes the adage, and Peak has done the first part by going in the red the last few years researching, developing and manufacturing its hemp health products.
But Peak Pharmaceuticals, or Peak Pharma as it is known, is starting to see its investment in Canna-Pet pay off.
In the first quarter of fiscal year 2015, ending Dec. 31, 2014, Peak saw a gross profit margin of around 72 percent, or more than $117,000 of profit, on revenues exceeding $161,000.
Peak acknowledges that first quarter 2015 revenue and profit came from Canna-Pet sales.
“This is an exciting time for Peak Pharma, as we have transitioned from a development stage company to full commercialization,” said Dr. Soren Mogelsvang, president and CEO, “and we are now generating income from our Canna-Pet veterinary products.”
While the first-quarter numbers might seem small, as of late 2014, Canna-Pet was only being offered on the company’s e-commerce canna-pet.com site and through select retailers.
But things are already picking up in the second and third quarters of 2015.
The company revealed in March that Canna-Pet has become a registered trademark and Canna-Pet capsules for dogs and cats and three top-selling flavors (Maple Bacon, Pumpkin Pie and Turkey Cranberry) of Canna-Biscuit dog treats had become available on Amazon.
This news was followed up with the April 2 announcement of the launch of MaxCBD Canna-Biscuits for dogs, which offer six times more CBD per biscuit than the standard Canna-Biscuit line.
With this latest product addition, Peak Pharma now offers six different biscuit types as well as seven different Canna-Pet capsule products for pets.
“We see enormous market potential for this product line and plan to aggressively market and grow this business,” Mogelsvang said. “Now that we are generating revenue and have demonstrated market demand through our e-commerce portal, we are actively pursuing additional distribution channels.”
Health Benefits for Pets
Companies making their way into the emerging cannabis-for-pets market are quick to point out that pet owners don’t have to worry about catatonic pets, because their CBD products don’t offer the “high” that comes with the THC associated with marijuana.
Isn’t THC, or tetrohydrocannabinol, the reason marijuana is effective in the first place as a medicinal?
Projectcbd.org reviewed and culled hundreds of scientific peer-reviewed articles on the health benefits of CBD and found the cannabinoid helped ease symptoms, much like research shows THC does, in everything from acne to migraines—50 conditions in all.
Yet because of cannabis’ outlaw status at the federal level in the U.S., CBD research has been stymied here in the states.
Julianna Carella, CEO of Treat-ibles, a brand of CBD dog treats owned by California parent company Auntie Dolores Kitchen, which makes medicinal marijuana treats for people, said more than 4,200 studies on the efficacy of CBD are out there, but it’s just a matter of getting the Food and Drug Administration (FDA) to open its eyes.
“Research is behind with regards to cannabinoid science and how animals may benefit, but this is due to general stigma around cannabis, as well as the Controlled Substance Act schedule 1 narcotic status, which excludes cannabis from all research into its medical benefits,” said Carella.
Carella pointed out that any results noticed by pet owners using Treat-ibles for their pets are “empirical and anecdotal.”
However, customers reported their pets experienced relief for separation anxiety, pain and immobility, hip dysplasia, arthritis, cancer, seizures and other problems through their consumption of Treat-ibles.
“We … do not make any health claims about cannabinoids or any of the other ingredients in our products, as that would be in violation of the FDA,” Carella said. “We consulted with regulators before we released [Treat-ibles] so our packaging would be in compliance with FDA regulations.”
But with state after state legalizing marijuana and even D.C. voters legalizing small amounts of marijuana, the political winds seem to be changing.
U.S. Senators Cory Booker, Rand Paul and Kirsten Gillbrand introduced a bill in March that if passed and signed into law would end the federal prohibition of medical marijuana.
There is even a bill pending in Nevada that would allow pets to be given medical marijuana, noted Carella.
Passing it Around
As hemp-based products continue to gain traction among pet consumers and companies realize the amount of money on the table, startups as well as established companies will keep chomping at the bit to get in.
“We plan to develop other treats for other animals, but all animals can currently eat Treat-ibles dog treats,” Carella shared. “We have even heard from bird owners who use crumbs from our treats for their birds.”
HempMeds, which has several CBD product lines for people, is another company looking to break in to the pet industry.
The company, headquartered in Poway, Calif., has a line called aNew that includes protein bars, oils, baked goods, nutritional supplements and other products for people, and now, several not-yet-available hemp-based products exclusively for pets.
“Based on the great response and interest at Petfood 2.0 [a yearly pet food industry trade show], we are moving forward with our aNew pet nutrition line,” said Andrew Hard, a company representative. “This includes initial products we introduced at the show as well as several other great products for pets.”
Hard said HempMeds is looking to get its aNew pet products on the shelves of large pet retailers such as PetSmart in 2015.
One of the stumbling blocks has been the pet-owning public’s misconceptions about hemp-based pet products.
“There is confusion and misunderstanding when discussing cannabis, especially when it comes to marijuana versus hemp and the different attributes of the cannabinoids found in the plant,” Hard said.
“We’ve seen the potential health benefits that CBD and hemp can have in human health and nutrition, and felt that pet owners and veterinarians would want access to a natural product that could benefit the animals they love and care for,” he added.
In Canada, True Leaf Medicine International Ltd. began trading on the Canadian Securities Exchange in February as it looks to eventually bring hemp-based nutritional products to market.
True Leaf was an early applicant under Canada’s Marijuana for Medical Purposes Regulations and submitted an application for a license a year ago but continues to wait for approval from Health Canada, reported Accesswire.
“We see a real opportunity in the development of hemp-based nutritional products for pets,” said Darcy Bomford, True Leaf International’s CEO.
Should its license go through, True Leaf already has secured a manufacturing facility in Lumby, British Columbia, which could employ up to 10 full-time workers and take $3 to $4 million to bring up to code, according to Bomford.
Bomford isn’t limiting True Leaf to pet nutrition only.
“There’s a huge opportunity to develop medicines for pets using cannabis,” Bomford said. “That has to be backed by clinical trials and, ultimately, veterinary drug approval. That’s a long process and takes millions of dollars, but that’s where we can use our license down the road.”
The Bottom Line
In 2014, the two biggest sectors in the U.S. pet industry were food, which generated revenue of nearly $23 billion and over-the-counter meds, which took in almost $14 billion, reported MarketWatch.
Forty one percent of pet owners have tried alternative therapies in order to improve their pets’ health, including nutritional supplements (29 percent), herbal remedies (7 percent) and homeopathy (4 percent), reported MarketWatch.
“Capturing just a fraction of the $13.72 billion over-the-counter pet medication market with its [Peak Pharma] CBD-based products could generate significant long-term value for shareholders,” MarketWatch sayid about Peak Pharma’s outlook. “Just 1 percent of the market would equate to $137.2 million per year in revenue.”
There are literally millions of pet owners, millions of pets and billions of dollars for the “hempreneurs” to go after.
Cannabis terminology can be perplexing to the uninitiated.
Simply put, marijuana and hemp are different forms of the cannabis plant.
Tetrohydrocannabinol (THC) is the psychoactive agent in marijuana that causes the “high” experienced by users. Conversely, hemp has very little THC but higher amounts of cannabidiol (CBD) than marijuana.
Both CBD and THC have been studied clinically; each cannabinoid has been determined to have health benefits.
Nonpsychoactive, hemp-based CBDs are excluded from the Drug Enforcement Agency’s Schedule I Controlled Substances list, making anyone free to sell nonpsychoactive, hemp-based nutritional supplements or other foods.
Hemp-based products are legal to import into the U.S., and about $500 million in hemp-based products are imported into the U.S. every year, according to the Summerland, Calif.-based Hemp Industry Association.