Since the signing of the farm bill late last year, cannabis companies have been jumping at the chance to enter what could potentially be a $22 billion market for CBD. It’s becoming one of the most popular wellness additives in the world and is showing up in lip balms, lotion, and coffee.
Even the National Restaurant Association predicts that CBD will be the biggest trend in recipes for 2019.
The CBD market has the potential to attract a whole new swath of consumers, those who would never think of trying cannabis because of its psychotropic properties. The fact that CBD is THC-free makes it an attractive prospect for plenty of consumers.
Here is a look at the top three companies best positioned to take on the CBD industry:
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Canopy Growth boasts a robust R&D CBD portfolio
Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) is making headlines with their medical cannabis moves across Europe, but the pot stock has been preparing their CBD portfolio since 2016. Just last year, Canopy harvested over 4500 square feet of industrial hemp from their cultivation site in Saskatchewan, with the hope to yield 7000kg of CBD extracts. According to the company’s press release, this cultivation site is prepared to produce this same amount of CBD every year.
Beyond growth and cultivation, Canopy is also focused on the research and development of new and competitive CBD products. Their acquisition of research assets from ebbu, Inc. boosted their portfolio with both THC-rich and hemp-specific breeding programs, and Canopy intends to use the hemp-specific intellectual property they acquired to stay competitive on this side of the cannabis industry.
Furthermore, the recent announcement that they now have a license in New York to cultivate hemp makes them the potential frontrunner in the U.S. cannabis market.
[Top chefs predict CBD will be the biggest culinary trend of 2019]
"Canopy has been preparing for and investing in this opportunity for several years now, through strategic acquisitions, infrastructure expansion, and extensive internal research and development," Canopy’s Co-CEO Bruce Linton explained. “Canopy has a strong supply of CBD, a significant channel presence, the IP to drive the CBD industry forward to the benefit of consumers, and the balance sheet needed to act now."
Investors will not be surprised that Canopy is one of the top pot stocks to watch when it comes to CBD. The company’s focus on research and development already makes them stand among the rest of the cannabis industry, and it is a move that will probably pay off in the CBD industry as well.
Tilray makes bold moves in the hemp industry
In their November conference call, Tilray (NASDAQ:TLRY) did not hesitate to predict that cannabis legalization in the United States could come as soon as 2021. And some investors cannot resist such a bold and optimistic attitude, especially after the passing of the farm bill. Since the legalization of agricultural hemp in the United States, Tilray plans to pursue more investment opportunities in America.
Staying true to their word (sort of), Tilray signed a letter of intent in December to acquire CBD isolate from LiveWell Canada Inc., a company that sources its hemp from both the United States and Canada.
A month later, Tilray signed an agreement with Authentic Brands Group. ABG, based out of New York City, is known for its recognizable brands, including Juicy Couture and Nine West, and Tilray intends to leverage their portfolio in order to develop, market and distribute a brand of consumer cannabis products, including CBD. Per the agreement, Tilray will be the preferred supplier of the cannabis and hemp-based CBD ingredients for the products, a move that is costing the company $100 million over the next 10 years.
“As we work to expand Tilray’s global presence, this agreement leverages our complementary strengths and will be accretive to our shareholders as we reach new consumers across the entertainment, fashion, beauty, home and health and wellness sectors. We look forward to working with ABG to bring unique and sought-after branded cannabis products to the marketplace,” CEO Brendan Kennedy said in the press release.
[Canopy Growth to enter US hemp market claiming "CBD advantage"]
Tilray’s optimistic attitude shows in their investment strategy. The company operates as if their predictions are already fact, and it is this kind of thinking that put the pot stock in direct competition with the biggest players in this industry. It may take more than a plucky attitude to take on the CBD industry on this side of 2019, but it sure does help.
Charlottes Web Holdings is building a reputation in wellness
A smaller pot stock to watch is Charlottes Web Holdings (CSE:CWEB) (OTCQX:CWBHF), a Colorado-based CBD wellness company. The company started in 2013 when a group of brothers developed a single strain of industrial hemp to help Charlotte Figi, a child suffering from over 300 seizures a day. From there, Charlotte’s Web is quickly evolving to become one of the most competitive hemp companies in North America.
From their farms in Colorado, Oregon, and Kentucky Charlottes Web underestimated their production capacity for 2018 and ended up growing 45,000kg more than they intended, a happy accident that resulted in over 150,000kg of hemp. The company boasts 300 acres of irrigated farmland in the United States, a 40,000 square foot production manufacturing and extraction facility that focuses on CO2 extraction methods, and nearly 3000 retail stores across the country.
On paper, these numbers cannot compete with the size and capacity of the likes of Canopy or Tilray. Instead, PotNetwork predicts that it is going to be brand recognition that sets this CBD company apart. Charlottes Web is looking to expand their distribution market to include national grocery chains, drug stores, and pet retailers where the company’s brand and personal mission is most likely to be recognized by consumers.
[CBD is exploding into the cosmetics industry, but does it make a difference?]
"In general, broader consumer awareness of the benefits of cannabinoids, namely cannabidiol (CBD), and whole plant hemp extract is driving increased uptake in both our retail channels and within our e-commerce platform,” said Hess Moallem, Charlottes Web President and CEO, in the company’s financial results announcement in November, adding that “a successful passing of the forthcoming 2018 Farm Bill by the US Congress will be a catalyst for the growth in our industry adding further momentum to the evolving market sector.”
The company currently stands with a market cap of almost $240 million and shares on the American OTC at $13.30.