Thai Nippon Rubber Industry Public Company Limited (TNR) announces a big, major advance in the hemp, kratom and cannabis industry to cover the entire business stream from upstream, midstream to downstream and to mold the New S-curve to support growth by entering into a cooperation with Maejo University to research and develop new strains of hemp and to speed up the construction of the essence extraction factory with the latest machinery and to apply for GMP-level permits to produce ASEAN herbal solutions extracted from hemp and kratom for application in food, drinks, cosmetics, herbal products as well as for export to ASEAN countries and other regions that recognize the standards. The objective is to further develop and introduce products under the Company’s brand to the market, and to reach 1 billion Baht in revenue derived from hemp and kratom products.

Mr. Amorn Dararattanaroj, Chief Executive Officer of Thai Nippon Rubber Industry Public Company Limited (TNR), revealed that the Company is embarking on a major business expansion plan by advancing into the full-fledged “hemp, kratom, cannabis” industry covering the entire spectrum from upstream and midstream to downstream through TNR Bio Science Company Limited (TNRBio) which is a 100-percent TNR subsidiary with a 50 million Baht registered capital. TNRBio is charged with the business to extract and sell the active essence of the herbs. The business is expected to be the “New S-curve” that will help push for strong growth with the determination to become one of the leaders in this business which is considered to be the extension of the expertise in the current main business of being the producer of condoms and lubricating gel, products that are considered to be specialized medical equipment.

This is due to the fact that the Company recognized the opportunity presented by the government policy to liberalize, and declaring, hemp and kratom (Mitragyna speciosa) as the new economic crops and had them released from the official list of illegal narcotic drugs (Type 5). The Company started to study and to step into this business earnestly in the past year. The first phase of the business will involve initiating the hemp business at the “upstream” level. Currently, the Company has collaborated with an educational institution to support the research and the development of new strain of hemp from which higher quantity of cannabidiol (CBD) can be extracted as well as to set up the purchasing station for hemp buds along with a standard measurement and valuation center.

At the same time, the Company has ventured into the “midstream” business by investing in the factory to extract essential chemicals from hemp and kratom for sale as CBD and mitragynine (kratom) extracts that can be used in several products as well as to set up a testing laboratory to measure and evaluate CBD and THC along with any contaminants and heavy metals that may be present in both the hemp buds and the extracts. Also, a plan has been put in place to apply for the ISO/IEC17025 standard certification for laboratories within 2023. Further from that, the Company will also advance into the “downstream” business by developing drinks and health products that incorporate the extracts from hemp under its own brand to be introduced in the market. As for Phase 2, the Company will venture into kratom business by producing and selling both extracts and products, while also studying the opportunity to progress into the cannabis (marijuana) industry as the Phase 3 of the business expansion.

Presently, the Company has signed memoranda of understanding (MoU) at the plant level with institutions, namely, (1) Maejo University for support in the testing, research and development of the hemp industry for five years; (2) FGP (Thailand) Company Limited, the proprietor of the hemp strains to obtain hemp seeds to be used in the hemp-growing research and strain development; and, (3) CBD Bioscience Company Limited, which is an expert in hemp cultivation at the industry level, by entering into contract farming agreement to buy-sell dried hemp buds from the temperature- and humidity-controlled greenhouses. This particular agreement calls for the delivery of dried hemp buds to the Company at the minimum of 18,000 kilograms from April to December 2022.

Also, the Company prepares to enter into MoU’s with companies that are interested in applying the extracts from hemp plants as an ingredient in their products, Macrophar Company Limited and Supreme Pharmatech Company Limited. In addition, Mirrakech Company Limited is also engaged to be a joint sales representative along with the Company. On the part of kratom, the Company is ready to sign an MoU on the herbal research, medical equipment and medical food supplement with Prince of Songkhla University.

Mr. Sumate Masileerungsri, Chief Financial Officer of Thai Nippon Rubber Industry Public Company Limited (TNR), said that the essence extraction factory in the Pinthong Industrial Park in Chonburi Province, near the TNR’s condom and lubricating gel factory, is under the construction and the installation of the machinery is expected to be finished within April 2022 to be ready for inspection by the Food and Drug Administration (FDA). The result of the inspection is likely to be forthcoming within June 2022 and the startup of the extraction machinery can commence according to the business expansion plan for the hemp and kratom industry. Once the FDA approval of the extraction factory has been received by June 2022, it is expected that the essence extraction can start operation in the latter half of the year. It is projected that, by 2024, the hemp, kratom and cannabis business will create about 1 billion Baht in revenue for the Company as assessed from the revenue that can be realized from the sale of the extracts in both powder and liquid forms that will constitute the main products (not including revenue from the sales of the products under the Company’s own brands and the testing and valuation services). This is because the selling price of the CBD extract powder is rather high.

Mr. Tossaporn Nilkamhang, Chief Technical Officer of Thai Nippon Rubber Industry Public Company Limited (TNR), Added that the important aspect of the essence extraction factory is that the Company has applied for the ASEAN GMP standard certification to produce the extract that can be used in food, cosmetics and herbal products and can export these products to countries that recognize the ASEAN GMP standard. In addition, the factory has been designed to support the application for the highest level of GMP PIC/S to certify the extraction of the essence used in both conventional and traditional medicines.

The Company imported the extraction machinery from the United States consisting of (1) Extraction module; (2) Evaporative distillation module; and, (3) Crystallizer module – all of which were fabricated from stainless steel to meet the GMP PIC/S standards. The evaporative distillation module consists of three distillation towers that can extract CBD from hemp and terpene efficiently and quickly. The Company will offer three types of products from hemp plants, namely, (1) CBD distillate; (2) CBD isolate; and, (3) water soluble CBD which is suitable for incorporating into drinks. The machinery can produce extracts from dried hemp buds at a maximum of 720 kilograms per day (one shift operation). For this, the Company would require about 165,900 kilograms of dried hemp buds per year to produce 9,100 kilograms of CBD distillate per year. Also it is possible to extract mitragynine from kratom leaves. The properties of this substance include being energetic, pain relief and blood sugar level control, etc.

On the part of the herbal plant product research, medical equipment and medical food supplements made from extracts from kratom, the Company is preparing to sign an MoU with Prince of Songkhla University to set a guideline in the production of the Company’s ready-made products in the future.

The mainstream of revenue from TNR Bioscience Oc., Ltd. will be derived from two sources. The first one is from the sales of the CBD extracts from the hemp plant to manufacturers of consumer products for use in the development of their products, with the emphasis on CBD isolate and water-soluble CBD. The second stream of revenue will be from the application of CBD extracts from hemp in the development of products to be produced under the Company’s own brand, such as drinks and health supplements. These possible products are being developed by SVS Innotech Company Limited and Go Plus Healthy Company Limited, and likely products are expected to emerge in the third quarter of 2022. The development include the incorporation of hemp extracts in the production of condoms and lubricants for exports. From this beginning, the product development will be expanded to introduce products infused with the mitragynine extract from kratom, Mr. Tossaporn concluded.