Your Guide to Investing in Hemp
There is no doubt that 2019 is going to be one of the best years to invest in Hemp. With the passing of the Farm bill of 2018, the US legalised Hemp and with it, opened up a potential $22 billion market by 2022. We have long been believers in the potential size of the Hemp market which many analysts now believe could be even bigger than marijuana. So, without further ado, here are some of the best ways to play the hemp market
Charlotte’s Web
Charlotte’s Web (CSE:CWEB) is the global market leader when it comes to hemp-derived Cannabinoid (CBD) products. The Colorado-based business was founded by the Stanley brothers. The 7 brothers (yup — big family) founded the business as a result of little Charlotte Fiji and her struggle with a very aggressive form of childhood epilepsy.
The undisputed market leader in the US with over 14% of the market, Charlotte’s Web have developed unique and protectable IP in the form of various hemp strains that are used to treat a variety of conditions including insomnia, anxiety, stress and inflammation-related pain.
The company, founded in 2012, became the largest every hempIPO in 2018 when they raised over $115 million at $7 per share. Since then the share has been a stellar performer, currently trading at over 3 times the IPO price.
Their hemp products are made from IP protected strains and are whole-plant based, meaning that the entire plant is processed to produce proprietary extracts that include CBD and all related plant terpenes (flavours) that work together to create the entourage effect.
From their humble beginnings offering only one hemp-derived product to market, the Stanley brothers now have over 150 different products offered in over 3,500 retails stores across the US.
As if that were not impressive enough, the company also generate 60% of their revenue through their direct-to-consumer e-commerce channel. This means higher margins and control fo the end user.
The result — Charlotte’s Web is one of the very few cannabis companies currently generating a profit. For the 9 months ending in September 2018, the company produced over $48 million in revenue (an increase of over 75% on the previous year) and generated a net profit of $16 million. Very few cannabis companies can boast this level of profitability.
As the current market leaders, they show no sign of slowing down and relinquishing that title. With the passing of the Farm Bill of 2018 and the booming US demand for CBD wellness products, Charlotte’s Web is one of the best pot stocks to buy in 2019.
CV Sciences
Our second hemp stock worth investing in 2019 is CV Sciences (OTC:CVSI). Founded in 2010, this vertically integrated company cultivates, manufactures and distributes its CBD-wellness products across the entire US market.
The company essentially operates two divisions. A pharmaceutical division and a hemp-derived CBD wellness division. Their pharmaceutical division focusses on the production of synthetic cannabis-focused on the treatment of smokeless tobacco.
The drug — CVSI-007 — is still in the preclinical stage and hence is pretty far off from being commercialised. Although this division has much promise, this is not the reason investors should be excited about the company.
The real reason is their consumer products division that supplied their PlusCBD wellness brand to the American market. The range covers a wide variety of channels including beauty, nutraceuticals, and vapes. Their reach is impressive and this is evident when investors consider their financial performance.
As with Charlotte’s Web, CV Sciences are profitable and growing at hyperbolic speed. For the 9 months ending in September 2018, they reported revenue of $34 million (an increase of over 150% on the corresponding previous period) and generated a gross profit of $24 million. Phenomenally profitable, CV Sciences was the breakout stock of 2018.
If there was one issue, it would be the fact that they are probably going to have to raise some capital in the coming months in order to continue to drive growth and expansion.
However, to date, they have outperformed analyst’s expectations, and with a solid management team and market presence, and with a potential uplisting to the NASDAQ later this year, there is no doubt that this presents one of the best opportunities for people looking to invest in hemp in 2019.
Elixinol Global
Elixinol (ASX:EXL) represented one of the best stocks to own in 2018, and without a doubt, should be on the best pot stocks to buy in 2019. The company operates three separate divisions covering the industrial hemp, dietary supplements, and emerging medicinal cannabis sector.
Elixinol Global is its hemp-derived CBD wellness play. Hemp Foods Australia is their hemp food and seed play, and finally Nunyara, their Australian Medicinal Cannabis play.
Elixinol US is their primary revenue driver and main business unit. The Colorado-based business operates as a vertically-integrated producer. They grow and cultivate their own hemp from their operations in Colorado and has contract growing agreements in Oregon and Kentucky.
From there they manufacture and distribute their hemp-derived dietary products to the US market and another 40 countries (yeah — you read that right). The first to export oils to Japan and New Zealand, the company continues to grow and expand.
And like their peers, the passing of the Farm Bill of 2018 radically increases the potential TAM. This is where the real value lies right now and should continue to drive expansion and performance throughout 2019.
The other two divisions operate out of Australia. The Hemp Foods business sells hemp food products and seeds through both retail and wholesale channels. They are constantly bringing new products to market and recently launched a range of Hemp burgers which have quickly gained traction in the market and have encouraged the company to take the products to the US. Watch this space.
And finally, their Australian Medicinal Cannabis division. A late-stage applicant with the Office for Drug Control (ODC), the company is all-in when it comes to medicinal cannabis and the potential for growth in the Australian market.
The company recently changed the name from Elixinol Australia to Nunyara (a local word for healing) and purchased land for the construction of their medical cultivation facility. The Australian market is very nascent with only 3,500 registered medical patients. However, according to the latest report from Prohibition Partners, this number is set to explode and reach 450,000 by 2028. That’s hyperbolic growth if we’ve ever seen it.
They also just acquired a 25% stake in PetReleaf, a hemp-derived CBD product targeted towards (yeah, you guessed it), the pet industry. Many companies are starting to pay attention to this growing industry and why not. Stats showed that in 2017, American spent $13 million on CBD for their pets. This number is expected to grow to $125 million by 2022. That’s serious growth (and that’s in the US alone).
This is a hemp investment that offers investors the opportunity for gains over three operating divisions (make that four if we add Rufus and co. in) and if they all perform, this will be one of the best hemp stocks to buy in 2019.
Hemp it your way
If you are considering investing in hemp in 2019, then the above three stocks offer the best potential for significant gains in 2019. The CBD market is booming and growing at over 25% year on year. Industrial hemp has over 25,000 commercial uses and when combined with the $22 billion market potential for CBD, hemp stocks look set to take off in 2019.
Originally published at https://thegreenfund.com on April 12, 2019.
