• by Steve Ellwanger , August 29, 2022

Hemp-cigarette marker Hempacco Co. Inc. will go public on Tuesday in a bid to disrupt—without getting crushed by—tobacco kingpins, while navigating federal regulations regarding smoking cessation products.

The California-based company, which operates under the Disrupting Tobacco trademark, sells The Real Stuff and Hempbar nicotine-free smokables that contain CBD and federally legal levels of THC.

It plans to raise approximately $6 million in the initial public stock offering—the proceeds of which will be used to increase distribution of its products, among other investments.

As of its June IPO filing, Hempacco’s brands were sold in more than 200 retail locations in the San Diego area, and the company owned some 600 vending machines under the HempBox Vending brand.

Hempacco’s goal is to offer products in over 100,000 convenience and liquor stores in the United States while building international sales and distribution channels for its own products and white label offerings to other brands.

“Our goal is to build a portfolio of non-tobacco smokables brands, become the United States market leader in the space and subsequently build exclusive master distribution relationships in other countries,” the IPO document stated.

Distribution carries significant stumbling blocks.

“We compete with other smokables companies, including with ‘Big Tobacco’ manufacturers and distributors, not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by our distributors, many of whom also distribute other smokables brands,” according to the document.

And while competing with both tobacco- and hemp-based smokables, “Some of these competitors are placing severe pressure on independent distributors not to carry competitive hemp brands such as ours,” the document continues.

Three months ago, Hempacco competitor TAAT Global Alternatives Inc. acquired HLND Holdings Inc., the parent of a major tobacco distributor in Ohio, ADCO Distributors Inc.

At the time, TAAT said it would use the deal to “further strengthen its presence in Ohio and the north-central region of the United States.”

Although hemp cigarettes are a nascent category, early research by Nielsen and Hemp Industry Daily shows that around one-third of cigarette smokers show an interest in trying hemp smokables.

Thus current or former tobacco smokers are expected to be among the primary targets of the smokable hemp market over the next five years.

This is where the FDA comes in The sale of hemp-derived cigarettes is legal under federal law as long as they’re not promoted as smoking cessation products, which fall under the FDA’s purview.

Hempacco has entered into several joint ventures, including with Cali Vibes D8, which focuses on Delta 8 THC smokables; Hemp Hop Smokables, a joint venture with rapper Rick Ross and Rap Snack CEO James Lindsay; and Cheech & Chong-branded hemp smokables.