CannabisNewsWire
Editorial Coverage: The 2018 U.S. Farm Bill
changes the way that CBD-based products are legally classified.
If the federal government permits the sale of cannabis-sourced
products online, established companies in the space could reap huge
rewards.
- The legalization of cannabis in Canada and some U.S. States has
demonstrated the latent demand for cannabis-based products.
- CBD is used to make numerous products and its potential uses
are growing.
- Research suggests that the market for CBD products could grow
to an estimated $22 billion over
the next four years.
There are likely big changes coming to the cannabis sector this
year. The 2018 U.S. Farm Bill took a major step towards the
normalization of cannabis-based products. Now that the bill has
passed into law, industrial hemp — and its byproduct CBD — will be
regulated by the U.S. Department of Agriculture.
SinglePoint Inc. (OTCQB: SING) (SING
Profile) is in a good position to take full advantage
of the changes in how CBD products are regulated. Major producers
such as Cronos Group Inc. (NASDAQ: CRON) (TSX:
CRON), Aphria Inc. (NYSE: APHA) (TSX:
APHA), Medical Marijuana Inc. (OTC: MJNA)
and OrganiGram Holdings Inc. (OTCQX: OGRMF) (TSX.V:
OGI) are also well-placed to expand into the CBD space,
but they may have to compete with a new class of growers.
There are more than 80 kinds of psychoactive compounds found in
the cannabis plant. While most people are familiar with THC, which
is used recreationally, CBD has shown promise in
treating everything from insomnia to serious neurological
disorders. The 2018 Farm Bill leaves THC-based products under the
jurisdiction of the Drug Enforcement Agency (DEA) but gives
jurisdiction of CBD-based products to the individual states. Most
industry experts predict that the popularity of these products will
explode as they become easily available due to the new
regulations.
To view an infographic of this editorial, click here.
A Waiting Market
Until now, CBD-based products were subject to federal
regulations, which made them impossible to distribute nationally.
They have been sold on a statewide basis in areas that allowed
their use, but anyone who dealt with these products was shut out of
the federal banking system because the crop — and its subsequent
products — were categorized as illegal at a federal level.
With the signing of the new legislation, that appears likely to
change. SinglePoint
(OTCQB: SING) is an established distributor of CBD
products and owns a decade-old web domain. Not only does the
company have experience with marketing and distributing CBD-based
products, it also has a background in payments processing.
CBD-based products are a new, largely unfamiliar area that may
pose challenges for new companies entering the space. Universal
standards for many CBD products have yet to be established or
identified, so having a positive market image will likely be a
significant benefit. Established companies with an existing client
base and a positive reputation may be in a better position to
leverage growth in the CBD sector. SinglePoint seems to fit this
criteria well.
Wide-Open Potential
There is a big difference between cannabis grown for medicinal
use and hemp that can now be used as a feedstock for CBD in the
United States. Major cannabis producers have a much higher cost of
production than hemp growers. With new changes that the 2018 Farm
Bill creates for hemp farmers, the price of CBD may fall substantially.
Instead of being cultivated in near-laboratory conditions,
industrial hemp is grown like any other commercial crop. Now that
CBD can be refined out of commercially produced hemp, it will be
difficult for anyone but U.S. hemp farmers to compete on price when
it comes to CBD.
Additionally, the 2018 Farm Bill normalizes the CBD economy at a
federal level. For the first time, hemp growers can use the banking
system, insure their crops, and even sell their future hemp
production via futures. Like any new market, it will take time for
the infrastructure to be developed, but early movers in the space
may have a significant advantage.
Big Changes for CBD
SinglePoint is in a unique position in the emerging CBD space.
As both an online marketer and payments processor, the company
looks to be in a strong position to help deliver CBD products to
their target markets. The company has a strong strategy to grow its presence in the CBD space.
Unlike many of the other publicly traded, cannabis-focused
companies, SinglePoint has no connection with cannabis plants and
cultivation, so the company should be able to take full advantage
of the recently passed 2018 Farm Bill.
It appears that there is no shortage of potential CBD-based
products. Currently, CBD is integrated into everything from lotions
and edibles to beer and oil. With the legalization of CBD widely
anticipated, research will almost certainly lead to additional
discoveries into CBD properties and benefits, as well as the
creation of new products targeting specific market segments.
The emerging CBD economy is also supported by the ability for
hemp producers to raise funds publicly. Much like the Canadian
cannabis producers that were able to expand quickly because of
their publicly traded equities, U.S. hemp producers can now go
public and leverage public interest in CBD to expand their
operations.
Changing Production Profiles
The 2018 Farm Bill is a huge positive for U.S.-based hemp
producers and CBD consumers.
One of the largest publicly traded cannabis producers available
to U.S. investors, Cronos Group (NASDAQ: CRON) (TSX:
CRON) owns two fully licensed cannabis producers in Canada
and has other interests spread around the world. The company has
maintained a multibillion-dollar valuation, despite some weakness
in the publicly traded cannabis sector. In addition to producing
cannabis in Canada, the company is involved in the distribution of
cannabis products in many of the markets in which it operates. In
the third quarter last year, the company reported increased
revenues by 186 percent and sold 213 percent more kilos of cannabis
than in the same time a year earlier.
Aphria (NYSE: APHA) (TSX: APHA) has grown its
presence in the Canadian cannabis space via acquisitions and
strategic investments and is one of the largest publicly traded
cannabis producers. The company made two high-profile acquisitions
last year, taking over Broken Coast Cannabis and buying Nuuvera, a
Canadian cannabis company with already-existing strategic exposure
to German and Italian markets. The vast majority of the company’s
production capacity for cannabis is concentrated in a single
facility, called Aphria One, which is located in Leamington,
Ontario.
Medical Marijuana (OTC: MJNA) has been
operating in the legal cannabis space for longer than most. The
company owns numerous subsidiaries, including HempMeds, Kannalife
and Kannaway. It also operates an international division, which has
developed a substantial presence in Brazil, where it was the first
company to introduce legal cannabis-based medicines to the
Brazilian market. The company also has a direct marketing structure
for cannabis products and appears to be well-placed to grow in the
emerging CBD market.
OrganiGram Holdings (OTCQX: OGRMF) (TSX.V: OGI)
is the parent company of Organigram Inc., one of the largest
licensed producers of cannabis in Canada. The company delivers
industry-leading yields from its growing facilities and is focused
on expanding in the Canadian market for recreational and medicinal
cannabis. Organigram developed a portfolio of brands for a variety
of uses, including The Edison Cannabis Company, Ankr Organics,
Trailer Blazer and Trailer Park Buds. In addition to growing
cannabis, OrganiGram also distributes it.
With the passage of the 2018 Farm Bill changing the legal status
of CBD, it is estimated that the CBD market will grow to be a $22
billion industry by 2022. SinglePoint has created a solid platform
to be a part of that industry.
For more information on SinglePoint, visit SinglePoint Inc.
(OTCQB: SING)
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