On April 11, the high-profile mandatory national standard for e-cigarettes (hereinafter referred to as "e-cigarette national standard") was officially released. This also means that China's electronic cigarettes have ended the production stage without national standards and entered a new stage.
The new national standard for e-cigarettes announced that from October 1 this year, all e-cigarette products must be produced in accordance with the national standard, and the 101 additives allowed by the national standard should be added in limited quantities.
In addition, on April 1, the US Federal Medical Marijuana Legalization Act (MORE Act) was approved by the House of Representatives for the second time, expanding the scope of cannabis legalization. Then, domestic e-cigarettes also ushered in new standards, and companies that deploy e-cigarettes and overseas cannabis at the same time will benefit from it.
Industry supervision is liberalized, domestic and foreign consumer giants accelerate their layout
On April 1, the U.S. Federal Medical Marijuana Legalization Act (MORE Act) was approved by the House of Representatives for the second time, which includes the removal of marijuana from the list of some controlled substances and the support for providing bank loans to marijuana companies, which also means that the international The market ushered in a broader space.
As of the end of 2021, 19 states in the United States (including Washington, D.C.) have legalized adult-use marijuana, and 39 states have legalized medical marijuana. Now, with the expansion of the legal marijuana market, companies in this track have also ushered in larger market opportunities.
According to data from New Frontier Data, the legal marijuana market in the United States in 2021 will be $27 billion. With the continuous advancement of legalization in various states, the legal market in the United States is expected to reach $72 billion in 2030, with a CAGR of 12% between 2022 and 2030. In addition, according to global market insights data, the global CBD market will be worth $12.8 billion in 2021, with an expected CAGR of 22% between 2022 and 2028.
Tianfeng Securities (601162) believes that with the continuous improvement of industrial hemp regulations and policies in the United States, the market is expected to expand rapidly, which is beneficial to enterprises in the industrial chain, especially foundries and brand enterprises with large-scale production capacity. .
In fact, before the U.S. liberalized the control of marijuana, domestic and foreign giants had already begun to seize market share.
On March 23, CrescoLabs, a large cross-state medical marijuana operator in the United States, announced that it would acquire New York-based ColumbiaCare for a price of US$2 billion. After the merger, the company may become the top medical marijuana operator in the United States, with a sales area covering 55 countries in the United States. %s population.
At the beginning of this year, British American Tobacco has piloted the launch of the electronic atomization device VuseCBDZone in Manchester, UK, becoming the first global atomization technology company to launch CBD atomization products. Shares, become its largest shareholder, and develop CBD-related products.
In addition, consumer goods companies such as Constellation Group, Heineken, and Colgate have also continued to promote the application of medical cannabis in their products and improve the layout of related products.
The advancement of the legalization of the use of cannabis in the United States is a huge benefit for Shunhao Co., Ltd. (002565), the first domestic industrial cannabis company that deploys cannabis. Yunnan Luxin, a wholly-owned subsidiary of Shunhao Co., Ltd., obtained the industrial hemp cultivation license in January 2019, and obtained the industrial hemp processing license on October 22, 2021. Exploration and application in downstream fields such as new tobacco.
In fact, Shunhao Co., Ltd. established a subsidiary LUXIN HEMP in the United States to provide forward-looking market information support for the company's industrial hemp business development. At the same time, the subsidiary was approved to carry out industrial hemp processing and manufacturing related businesses locally and obtained approval in the United States and other legal countries around the world. Legal qualifications to conduct sales.
At the beginning of 2022, E1011 LABS, a wholly-owned subsidiary company of Shunhao Co., Ltd. in the United States, and TAAT Global Alternatives Inc., a leading international industrial hemp cigarette company, signed a letter of intent for the production of industrial hemp heat-not-burn appliances and industrial hemp heating rods. The two parties will jointly develop under the brand name of TAAT. An industrial hemp heat-not-burn appliance and three proprietary flavors (Original, Smooth and Menthol) industrial hemp heating rods, the product does not contain tobacco and nicotine, and users can create an invisible cannabinoid release by heating inhalation And delivery system, to maximize and efficiently promote the absorption of CBD and other cannabinoids and beneficial terpenes in the human body, relieve the anxiety, anxiety and other psychological problems that are prone to occur in modern people, and help the human body to relax.
It is worth noting that TAAT has a 25,000-square-foot processing plant in Las Vegas, USA, and its healthy cannabinoid brand Beyond Tobacco has been sold legally and compliantly in more than 20 states in the United States and in the United Kingdom, Ireland, and Australia. In the future, both parties will expand their international market share in this product field through the advantages of their respective products and channels. In the future, Shunhao Co., Ltd. will strive to expand legal overseas markets such as the United States, Europe and Southeast Asia, continue to strengthen R&D investment, accumulate relevant patent technology reserves, and seize the international market demand for industrial hemp extracts such as CBD and terminal products.
The introduction of new regulations on electronic cigarettes opens the second growth curve of Shunhao Co., Ltd.
According to the disclosure, the national standard for electronic cigarettes will be implemented from October 1, 2022. The standard stipulates that the concentration of nicotine in e-cigarettes should not be higher than 20mg/g, and the total amount of nicotine should not be higher than 200mg. Limit requirements for atomized impurities and pollutants such as heavy metals and arsenic. The additives and the maximum usage amount allowed in the vape are clarified, and it is required that the electronic cigarette should have a child-proof start function and a protection function to prevent accidental start.
Regarding the release of the new regulations on e-cigarettes, on April 12, Shanghai Securities stated in a research report that the new regulations on e-cigarettes continued to ferment, and the long-term growth was still significant. "In the national standard of electronic cigarettes, the competent authorities have an attitude of encouragement and support for the electronic cigarette industry, especially to improve the overall technical level of the electronic cigarette industry, and to build a market-oriented, industry-university-research collaboration, upstream and downstream, with electronic cigarette enterprises as the main body, market-oriented A technological innovation system for industrial integration and development.”
The 2022 global e-cigarette market report released by the research firm Reportlinker shows that the global e-cigarette market is expected to grow from $18.15 billion in 2021 to $21.63 billion in 2022, a growth rate of 19.2%, mainly due to e-cigarette companies. To resume operations and adapt to the new normal, while recovering from the impact of the new crown, the restrictive measures taken under the previous epidemic have had a certain impact on the operation of the e-cigarette industry. The global e-cigarette market is expected to reach USD 38.5 billion by 2026, with a CAGR of 15.5%.
Shunhao Co., Ltd., as the layout of the entire electronic cigarette industry chain, is expected to benefit from it first. The company not only has a full license layout in the electronic cigarette industry, but also has the advantages of technical support, industrial norms and the advantages of China Tobacco industry chain companies.
Yunnan Sike Technology Co., Ltd. (hereinafter referred to as "Siveco"), a subsidiary of Shunhao Co., Ltd., which focuses on the field of heat-not-burn, is dedicated to the R&D and production of tobacco flavors and fragrances. Technology Co., Ltd. (a subsidiary of Shunhao Co., Ltd. and Dongfeng Co., Ltd. (601515)) is a joint venture company with a registered capital of 100 million yuan. It is the professional R&D, production and sales of low-temperature heat-not-burn products with the most abundant capital in China.
Since its inception in 2019, Siveco has been recognized by capital with a compound annual growth rate far exceeding the 32% predicted by international authorities. Currently, Siveco's domestic distributors are mainly located in first- and second-tier cities in China, and consumers are located in all provinces, municipalities, autonomous regions and municipalities directly under the Central Government.
In fact, in addition to Siveco, Shunhao Co., Ltd. has been deeply deployed in the new electronic cigarette industry chain. Except for upstream raw materials, new tobacco R&D and manufacturing, brand operation, and sales and retail channels are all deployed.
On the R&D, production and manufacturing side of new tobacco, 6 companies at home and abroad, including Shenzhen Jiapin Jianyi Technology Co., Ltd., Siveco, Hainan Baoxin Biotechnology Co., Ltd., and Heilongjiang Shunhao Hemp Biotechnology Co., Ltd. Get deeply involved. Among them, in the field of atomized electronic cigarettes, Shenzhen Meizhonglian Technology Co., Ltd. and Shanxi Shunwu Aoorte Technology Co., Ltd. under Shunhao Co., Ltd. are deeply deployed. Under the new regulations, the rational layout of industries in multiple provinces and cities is expected to provide more possibilities for companies to apply for licenses and manage their future industry management.
It is worth noting that in the new standard of electronic cigarettes, mandatory national standards and a series of strict requirements have further standardized the development of the industry. As one of the suppliers of the national team "China Tobacco", Shunhao Co., Ltd. has a stronger reputation endorsement than some small brands in terms of qualifications. With the advantages of production and research and development, and the layout of the entire electronic cigarette industry chain, Shunhao is expected to usher in
the second growth curve after the introduction of the national standard for electronic cigarettes.
