“Hemp and marijuana come from the same species of cannabis,” CNN breathlessly advised its readers over the weekend, “but if you try to smoke hemp, you’ll probably just end up with a headache.”
“The only thing you’re going to accomplish by smoking hemp is wasting breath, time and lighter fluid,” confirmed Sen. Ron Wyden of Oregon.
CROP Infrastructure (CROP.C) and LiveWell (LVWL.V), 1933 Industries (TGIF.C), Quadron Cannatech (QCC.C), TGOD (TGOD.T), Heritage Cannabis (CANN.C) and Plus Products (PLUS.C), are just a few of the companies we cover in the hemp/CBD business.
Since Canadian legalisation of recreational cannabis on October 17, 2018, weed stocks have been battered across the board.
“There are many reasons why your weed investment is down,” stated Equity Guru’s Chris Parry in a recent searing viral article, “some simple and obvious, some dark and twisted.”
Despite the gloomy mists enshrouding the brilliant green marshes, we are 100% sure that weed and CBD are not going away.
The CNN article contains numerous points of interest pertinent to hemp and CBD investors.
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There is still skepticism about the medical properties of CBD.
Hemp gets a lot of hype because of CBD products such as oils, supplements and vapes,” stated CNN, “Although CBD can come from marijuana, too, it’s simpler for companies to use hemp-derived CBD because the extract is legal in all states.
Hemp has extremely low levels of THC, the compound in marijuana that gets people stoned. It’s higher in CBD, a compound that many people believe helps them with anxiety, arthritis, stress and other conditions.
Surely, we are beyond the “many people believe” stage.
Cannabidiol (CBD) passes stage 3 clinical trial for treatment of epilepsy in children.” – NEW ENGLAND JOURNAL OF MEDECINE, MAY 2017
“Nearly Half Of People Who Use Cannabidiol Products Stop Taking Traditional Medicines” – FORBES, AUGUST 2017, Dr. Perry Solomon, the Chief Medical Officer of HelloMD.
“Autism added to the list of CBD’s medicinal benefits” – THE NATIONAL ACADEMY OF SCIENCE, OCTOBER 2017.
Take-away: CNN’s skepticism, in the face of hard data, suggests that CBD’s medicinal properties may not be fully baked into the stock price of hemp/CBD companies
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There is skepticism about projected revenues from CBD
“Because growing hemp has been so tightly regulated, the domestic market for hemp products is extremely small,” states CNN.
Previously, farmers could only cultivate hemp for research under pilot programs monitored by their state and the US Department of Agriculture, a provision made possible by the 2014 farm bill.
The 2018 bill loosens a lot of restrictions on hemp production, and farmers can also apply for USDA crop insurance and grant programs.
What does CNN think about the commercial potential of CBD?
“Hemp-derived CBD sales in the United States reached $190 million last year,” stated CNN, “and one report projects the CBD oil market will reach $1 billion by 2020.
That is true, although the report is 16 months old, which is early Mesozoic Era in normal retail years.
More recently, The Brightfield Group of Chicago estimates the North American market for CBD could grow 2,000% in the next 4 years to US$22 billion by 2022.
Take-away: The gap in the revenue projections (and the willful linking to outdated data) suggests that CNN can not grasp the size of the market.
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Senator Mitch McConnell is a huge hemp cheerleader
“Sen. Mitch McConnell was a major leader in getting legislation on hemp passed,” states CNN, “He signed the final version of the 2018 farm bill — and used a pen made from hemp to do it. “
If you’re wondering how the Republican Senate Majority Leader became one of the biggest proponents of a plant once considered a cousin of marijuana, look to his home state of Kentucky.
Anti-smoking campaigns and ballooning cigarette taxes have injured Kentucky’s once-mighty tobacco industry.
This year, Kentucky farmers grew 55,000 acres of tobacco. That’s down 8,000 acres from 2017. Thirty years ago, tobacco harvests were over 200,000 acres.
Kentucky is looking for a new cash crop.
CNN points out correctly that the transition from tobacco to hemp will have challenges.
“A lot of plant breeders are starting from scratch in figuring out what pests and diseases they’re up against,” states CNN.
“They no legitimate reason why Kentucky farmers shouldn’t be allowed to grow hemp and capitalize on this growing market,” McConnell wrote in an op-ed for The Courier-Journal.
Take-away: McConnell’s hemp activism suggests that Kentucky soil may be fertile ground for hemp investors.
How to play Kentucky?
A company called Sugarmade (SGMD.OTC) recently made a $1 million investment in Hempistry – which is producing “ultra-high CBD-content” Kentucky hemp.
Hempistry controls 100 acres of high grade, CBD rich, industrial hemp legally grown under a Research Pilot Program authorized by the 2014 Federal Farm Bill.
Certificates of Analysis (COAs) via private laboratories indicate high CBD levels, and low THC levels.
“We had a near optimal mix of sunshine and ample rain, which produced strong premium quality plants with impressive flowers.” stated Mr. Matt Longo, COO.
Sugarmade’s Kentucky hemp partner is positioned for explosive production growth.
It’s CNN’s job to be skeptical about hemp and CBD.
To be fair – there is a trendiness factor to the CBD buzz with celebrity endorsers like Oliver Stone, Nate Diaz and Whoopi Goldberg.
[trivia: this is the first recorded instance of iconic film director, a UFC fighter and comedian publicly endorsing the same product].
Current scientific data suggests that CBD has real medicinal value.
Current CBD sales data suggests the market is growing so quickly, it is impossible make an accurate 5-year projection.
CNN’s article proves they don’t quite get it.
Full Disclosure: Crop, LiveWell, 1933 Industries, Quadron, TGOD, Heritage Cannabis and Plus Products are Equity Guru marketing clients and we own the stock.