By Matt McCallJan 02, 2019
2018 was a year of historic changes.
On May 14, the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992. This gave states the ability to decide whether to legalize sports gambling.
On October 17, Canada became the first industrialized nation in the world to legalize marijuana for recreational use from border to border. Several U.S. states made similar moves, but marijuana remains illegal on a federal basis.
Then on December 11, the Senate passed the 2018 Farm Bill by a vote of 83-17. The House of Representatives passed it by a vote of 389-47 on December 12, and President Trump signed it into law on December 20.
The bill legalized hemp – a cannabis derivative – for the first time in nearly a century, opening up what could be a $20+ billion industry in a relatively short amount of time. As hemp-derived cannabidiol (CBD) oil hits the mainstream, we’re looking at an industry with the potential to be 55 times larger in just five years.
CBD oil is derived from marijuana and hemp plants, and it has been used by wellness and medical professionals for years as an alternative to traditional pharmaceuticals to treat everything from anxiety and depression to chronic pain to inflammation to childhood epilepsy.
If it were a drug, we could call it a wonder drug.
CBD is considered one of the most beneficial compounds available to humans, and it does not have the nasty side effects that many drugs do.
That’s why I chose Charlotte’s Web (CWBHF) as my pick for InvestorPlace’s Best Stocks for 2019 contest. This company is the best positioned to benefit from the passage of the 2018 Farm Bill. You can read all about why I chose it for the contest here.
Hemp and marijuana are in the same cannabis sativa family, but there are important differences between the two. The biggest is the amount of tetrahydrocannabinol (THC), which is the chemical compound that gets you “high.” Marijuana can contain up to 30% THC while the hemp plant has less than 0.3%. Hemp also contains more CBD.
That’s a golden combination – more CBD with only a trace of THC. Hemp gives you all of the benefits without feeling stoned.
That’s why the passage of the 2018 Farm Bill is so important. Hemp no longer has any restrictions. And considering the chemical makeup of CBD from marijuana is virtually identical to CBD from hemp, it is about to become much more readily available to consumers.
Charlotte’s Web is already the leader in the hemp-derived CBD space, and as the market leader it has the ability to scale quickly to meet the soon-to-be booming demand for products.
The company is currently bringing in decent sales, reporting $17.7 million in revenue in the third quarter. Looking ahead to next year, that number is expected to increase to $176 million.
Several other key opportunities have opened up for Charlotte’s Web as well. The first is that it can now work with banks and other financial institutions such as credit card companies. It can also expand into e-commerce avenues that would have avoided doing business with CWBHF because it engaged in an activity that the federal government deems illegal.
Second, Charlotte’s Web can uplist to a major U.S. stock exchange like the NYSE or NASDAQ. Today the stock trades on the U.S. OTC market. It also trades on the Canadian Securities Exchange under the symbol CWEB. Not only would this bring more media attention to the company, it would also open the door to large investments from institutions and funds that are only allowed to invest in stocks that on major exchanges.
Finally, there is the positive press that the hemp and CBD industries have been receiving since the Farm Bill was passed. I expect this to continue well into 2019 and provide a nice boost to the sector and CWBHF in particular.
Prior to hemp being legalized, it was considered a Schedule 1 drug by the Drug Enforcement Administration (DEA). Schedule 1 drugs have a “high potential for abuse” and “no currently accepted medical use.” We’re talking about heroin, cocaine, ecstasy, and the like.
The fact that hemp and CBD were ever classified as Schedule 1 is laughable. As you know, CBD has many medical uses and little potential for abuse because it doesn’t get you high.
Now that the Farm Bill has been passed, hemp has been removed from Schedule 1. That means good things for companies like Charlotte’s Web, specifically in terms of production.
In 2017, CWBHF produced 63,000 pounds of hemp. That number is expected to have increased significantly in 2018 to between 250,000 and 350,000 pounds. Now that the Farm Bill has been passed, the company has an even greater opportunity to ramp up production around the country.
It can also open more distribution outlets as chain retailers start to become the largest sellers of CBD. If you are a major retailer and need instant inventory, it is natural to turn to the market leader, which as you know is Charlotte’s Web.
I expect to see the number of retail outlets almost double from 2,700 to closer to 5,000, if not more, in the next two years. As the mass adoption of CBD grows, it will lead to increased demand from the market leaders.
According to Brightfield Group, the hemp-CBD market will reach $591 million this year. And by 2022, it will soar to $22 billion. That is a five-year compound annual growth rate of 132% and a 40-bagger!
Charlotte’s Web stands to capture a lot of that growth. It is the number one hemp grower in the United States. And with CBD now poised to go mainstream, the company’s profit potential is about to increase dramatically.
Regular MoneyWire readers know that I believe the legalization of marijuana is one of the great investing opportunities of the next decade.
On this topic, mark your calendar for Tuesday, Jan. 23rd. That day marks another opportunity to cash in on the marijuana mega-trend. Whatever you’re doing, I suggest you rearrange your schedule, because you’ve got the chance to make a heck of a lot of money, beginning on this exact day.
Even if you don’t know a thing about the marijuana markets… even if you’ve never bought a stock before. If you have a just small stake, you could make a lot of money over the next 12 months. Click here to learn more about this incredible story.
Marijuana has been outlawed most everywhere for decades… but now a wave of legalization is starting to sweep the world. This will create massive new markets and massive stock market winners. Learn more here.
If I had to make one bet for 2019 it would be that betting is going to be big. The Supreme Court’s May 14 ruling cleared the way for states to allow sports gambling. And in my 25 years of investing experience, I honestly cannot remember many things that come close to magnitude of the investing opportunity that opened up to us. Massive amounts of money are involved in sports betting, and I expect massive amounts of money will be made, too. Learn more here.
Self-driving cars – aka “autonomous vehicles” (AVs) – represent one of the biggest investment opportunities of the next 25 years. This innovation will transform huge portions of our economy and create trillion-dollar ripple effects through time. It will create huge new winners in short periods of time. It will demolish losers in equally short periods of time. It’s critical that you stay on the right side of this trend. Learn more here.
Don't miss out on the incredible megatrends that are shaping today's market. Gain access to the most powerful market insights and stock advice from Matt McCall absolutely FREE. Join Today!