CBD Floods the Stock Market

Written By Enjonai Jenkins

CBD is everywhere, products in their various forms promising relief from ailments that we all face. It seems like there’s a new company every day throwing their hats into the CBD race, and with good reason. Last year Bloomberg stated that as many as seven percent of Americans are using CBD products. Research estimates that the U.S. market for CBD could be worth almost $24 billion by 2023.
In Canada, the legal sales of cannabis are estimated to reach $4.7 billion by 2023 according to BDS Analytics – and because of CBD’s assortment of products, annual sales are estimated to be potentially larger.

The cause of all this potential growth was the 2018 December Farm Bill. It legalized the cultivation and selling of industrial hemp for the formation of CBD. The update to the Farm Bill also increased protection by permitting farmers who grow hemp to be protected under the 1980 Federal Crop Insurance Act. This allowed hemp farmers to take out insurance against any unexpected crop losses incurred during a normal production cycle, such as loss due to forest fires or droughts – just as they could with their other crops.

Since hemp is the easiest plant to extract CBD oils from, its legalization has created a large economy and has made hemp a very popular plant.

American farmers in Colorado, Montana, Kentucky, Oregon, and many other states are jumping into the hemp industry, hoping to seize the lucrative opportunity. In this year more than 20,000 acres of hemp are licensed to be planted – up from 25,000 acres just two years prior. The demand for CBD is keeping hemp farmers busy and creating even more business ventures. 

Since December 2018, the CBD industry’s market value is already $591 million, more companies want to invest in CBD to reap their part in the forecasted $24 billion in the upcoming years. And according to the National Institute for Cannabis Investors, 2019 is turning out to be the best year for CBD firms.

In the past 9 months, at least 10 cannabis IPOs with as many as 42 private cannabis companies are scheduled to go public by the end of the year.

The biggest issue for “pot stocks” in America is that many marijuana companies are penny stocks and are traded mainly in the Over the Counter (OTC) markets – increasing investor skepticism and investment perception. The Cronos Group was the first pure cannabis company to begin trading on Nasdaq in February 2018. Canopy Growth Corp. became the New York Stock Exchange’s first cannabis company for trading in May of the same year. Both companies remain as major players in the cannabis race.

Due to regulatory uncertainty and obstacles for companies to list on major exchanges in the U.S., more American cannabis companies have headed north of the border to the Canadian exchanges. The Canadian Securities Exchange (CSE) trades about 60 U.S.-based cannabis-related companies.

Cannabis companies can be mainly classified under four operating realms: Cultivation/Operation Investing, Pharma/Biotech Investments, Ancillary Business Investments, and Marijuana Business Services Stocks. Investopedia explains each of these categories, and lists the top companies involved in the market of each category.

The statistics are interesting and impressive. The growth potential may be substantial enough to encourage anyone to invest.