Proposed $65M hemp extract facility to employ up to 175 in Phoenix

Integrated CBD LLC is investing about $65 million to build a 154,000-square-foot manufacturing plant in Phoenix that is expected to employ between 125 and 175 people.

Launched in January, the Scottsdale-based company is a vertically integrated, pharma-grade manufacturer of industrial hemp-derived CBD products, said Jeff Dreyer, co-founder and COO of Integrated CBD.

The hemp-derived CBD industry is expected to reach $16 billion nationwide by 2025.

Dreyer also is a co-founder of Scottsdale-based Integrated Ag LP, a private equity fund that has spent about $70 million to acquire and develop 10,000 acres near Yuma in southwest Arizona over the past few years. That land, acquired from 29 sellers, will be used to grow hemp seeds that will produce the cannabis ingredient to be used in everything from skin care products to vitamin supplements. Both companies share offices in Scottsdale.

“We are not producing retail products of our own,” Dreyer said. “We are an ingredient supplier and custom formulator for Fortune 500 companies — large companies that sell in places like Walmart and CVS within the cosmetics, food and beverage industries.”

Unlike marijuana-derived CBD, hemp-derived CBD has no restrictions on interstate commerce or banking because industrial hemp has less than 0.3% THC, the psychoactive ingredient in cannabis, said Dreyer.

“We bank with JP Morgan,” he said.

This new commerce area is a result of the passage of the 2018 Farm Bill, removing hemp from the Controlled Substances Act — which means it’s no longer an illegal substance under federal law. Arizona Gov. Doug Ducey also signed legislation that authorized the Arizona Department of Agriculture to oversee the industrial hemp program in Arizona.

Gary Smith, an attorney with Smith Saks Kuzmich and founder of the Arizona Cannabis Bar Association, said the 2018 Farm Bill allows hemp to be farmed legally for the first time since the 1930s.

“Hemp doesn’t suffer any of the same prejudices in law that marijuana does,” Smith said. The only distinction between hemp-derived CBD and marijuana-derived CBD is the amount of THC in the plant. If THC levels fall below 0.3%, it falls under the definition of hemp.

“You can grow it legally with no fear of criminal entanglement at all,” Smith said. “The CBD industry is headed toward hemp.”

The manufacturing building at 48th and Washington streets will serve as an extraction and isolation plant to prepare the hemp-derived CBD ingredients for customers.

“The facility will have a full R&D component to it as well as labs,” Dreyer said. “We will do all of our own testing.”

Many of the jobs will be high-skilled positions in product formulation, along with accounting, inventory supply chain management and sales staff.

“Phase one of the plant will be operational in October of this year and we will be shipping product to customers by Nov. 1 this year,” Dreyer said. “This facility will be GMP certified and FDA compliant, ultimately. We will be following GMP practices and strict testing protocols with high levels of quality control meeting industry standards for this type of product today.” “SOURCE: Phoenix Business Journal”


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