According to recent estimates, the global legal cannabis industry might exceed the $19 billion mark in 2020. In fact, experts project that by 2024, those figures might surpass $40 billion.
Taking a leap into the lucrative yet unpredictable cannabis industry should be a cautious and well-calculated move with the first step in determining what kind of cannabis compounds to deal in.
5 Ways to Invest in the CBD Industry
1. Invest in CBD Farms
The signing into law of the 2018 Hemp Bill by President Donald Trump lifted the restrictions around the growing, sale, distribution, and use of hemp extracts. Hemp is a variant of the cannabis plant that’s characterized by its low levels of the psychoactive compound, tetrahydrocannabinol (THC).
With the new law, it became legal to deal in CBD-based products, provided that those products contain a maximum of 0.3% THC concentration. The new law also opened up a significant sector within the cannabis industry that traders can invest in – CBD farms, or more commonly hemp farms.
The U.S teams with numerous expansive hemp farms that you can invest in, with a majority of those farms concentrated in five states – Montana, Colorado, Kentucky, North Carolina, and Oregon. Terra Tech Corp (OTC Pink: TRTC) and GrowLife Inc. (OTC Pink: PHOT) are some of the leading CBD growers in the United State that you can invest in. GrowLife Inc. offers high-end hydroponic supplies for both medical and recreational cannabis growers.
2. Consider Ancillary Hemp Companies
Another way you can cash in on the profitable CBD industry is by investing in businesses that offer CBD-related services. This can range from CBD retailers like NuLeaf Naturals to distributors, marketers, et cetera.
One of the best things about ancillary CBD companies is that they don’t deal directly with cannabidiol. As an ancillary hemp company, you might choose to supply things like hydroponic devices, soil, packaging, etc.
Since you don’t necessarily handle cannabidiol, it’s relatively easy to start and operate an ancillary hemp company. Also, the element of diversification makes it easier to stay afloat even during austerity times. You won’t need to fret even when the CBD industry appears bearish, as you’ll still continue offering your services to other companies.
CBD support companies keep on mushrooming every other day, and notable names in this sector include Scotts Miracle-Gro, which offers ancillary services to both hemp and marijuana growers through its Hawthorne Gardening division. The main reason to invest in Scotts Miracle-Gro is that the company has registered tremendous growth since it listed on Wall Street. Over the last one year, its shares have surged by 38.9%, against the industry’s 26.5% decline. There’s also KushCo Holdings, which supplies FDA-approved packaging to hemp-based companies.
3. Become a Venture Capitalist:
We started by highlighting the positive outlook of the cannabis industry. As that information is in the public domain, it’s likely that there could be a few cannabis startups in your location seeking to cash in on the craze.
However, businesses don’t succeed merely on the basis that an industry is booming. So, you’ll also encounter numerous startups that are struggling to stay afloat. You can support these businesses by becoming their “angel investor”.
As a venture capitalist, you’ll need to assess a startup keenly and establish that investing in such a company is a financially-viable decision. Always give due consideration to businesses that present the most creative ideas.
For instance, we might soon experience a massive imbalance between the demand and supply of cannabis products like CBD. So, you can prioritize businesses that present innovative ways of synthesizing rare cannabinoids like.
4. Invest in Medicinal CBD
Cannabidiol is best known for its medicinal properties. CBD can help with scores of medical conditions, including pain, anxiety, seizures, inflammation, insomnia, etc.
However, not all cannabidiol is intended exclusively for therapeutic purposes. We have full-spectrum CBD products that carry psychoactive properties due to the presence of THC in them.
If you’re ever torn between investing in medicinal or recreational CBD, always go for the former choice.
One major benefit with medicinal CBD is that you’ll face fewer legal bottlenecks when trying to establish your company. Remember that many opponents of cannabis use denounce the herb due to its psychoactive properties. So, you’ll look more acceptable in the eyes of the law if your products are exclusively aimed for therapeutic use.
Once you’ve established yourself as a medicinal CBD retailer, you can gradually incorporate recreational CBD into your product line. Examples of companies that are reaping big in the medicinal CBD sector include GW Pharmaceuticals (NASDAQ: GWPH) and Charlotte’s Web (OTC Pink: CWBHF). In Fact, Charlotte’s web reported sales of $17.7 million in Q3 of 2013. However, due to COVID-19 many of its retail stores, online delivery channels remained shut, thereby decreasing its stock price. Now would be a good time to start looking at it, as stores are reopening, so sales & cash flow would be steadily increasing.
1. Acquire Shares in Publicly Traded Cannabidiol Companies
Last but not least, you won’t go wrong investing in publicly traded cannabidiol companies like Neptune Tech and Bioresources (NASDAQ: NEPT) and Amyris Inc. (NADAQ: AMRS) Purchasing shares in publicly traded CBD companies is recommended only for risk-tolerant investors, as the industry can be volatile. With a stock price of $2.60, Amyris Inc. is one to start looking at in this space.
Investing in the CBD stocks allows you to earn without involving yourself in the company’s day-to-day operations.
Evidently, there are numerous ways to invest in the CBD industry. If you’ve been considering taking a leap into this lucrative industry, now is the time to start evaluating your options.
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