Your CBD stock questions answered and CBD companies that may be worth a look.
CBD Stocks Introduction
CBD and Marijuana stocks were the “can’t miss investments” in 2018, following the passage of the Farm Bill, which legalized hemp cultivation. On the whole, CBD stocks have struggled to maintain, or surpass, those peaks in 2018, with the 'WEED' ETF (encompassing legal marijuana stocks and CBD) down around 65% over as of mid-2020. However, as CBD has exploded in popularity since the passage of the Farm Bill, now may be the time to consider buying the next dip in CBD stock prices. We’ll walk through a few key things to look for as you consider adding CBD to your portfolio.
Public CBD Companies and MMJ Companies with a CBD brand:
Before you can properly evaluate whether CBD stocks are right for you, you should know some of the public companies in the space:
Charlotte’s Web (CWBHF)
Cronos Group (CRON)
Cresco Labs (CRLBF)
Canopy Growth (CGC)
HEXO (also their stock symbol)
Constellation Brands (STZ)
The above is not a list of recommendations, nor is it exhaustive. Rather, it is a starting point for your research. These are just a few of the well known companies in the space that have taken the step to go public. Many more are sure to follow in the years to come.
How do I separate out CBD stocks from marijuana stocks? As we've discussed on our blog and in our infographics, CBD, or cannabidiol, is a cannabis compound that, in our opinion, has numerous potential benefits without the “high” traditionally associated with marijuana. Any product that is under .3% THC is considered federally legal nationwide under the Farm Bill and a true CBD product. When looking at a stock you might invest in, the company will need to disclose on their products and website whether their products are below .3% THC or above .3%. If above .3%, those products are only legal in select medical and recreational marijuana states. Many states have gone one step further to explicitly legalize CBD at a state level, even though CBD is already federally legal.
Many consumers of CBD also tend to be proponents (we're generalizing) of legalizing THC federally. If that is your situation, you will get the dual benefit from some stocks listed above, as they offer brands for both CBD nationwide and legal marijuana in legal states. If you prefer to only invest in CBD, ensure that none of the products being offered by the company exceed .3% THC. Charlotte's Web and Elixinol are two companies that focus specifically on CBD, as a starting point.
What do I need to look out for with CBD stocks?
Watch for the hype machine. Many companies in the legal marijuana and CBD spaces have been spending investor dollars freely to try and gain scale through acquisition and expansion. In some cases, this has put the company in a precarious financial position. As you build your portfolio, we recommend investing in brands you know and trust. We recommend checking their balance sheet to ensure they have ample cash reserves to run the business across your investment time horizon. By buying what you know, or companies you frequently purchase from, you hedge your bets against some of the hype that has driven the MMJ stocks and CBD stock prices in recent years. CBD Stocks are not exempt from tried and true investing advice. Not only is it important to understand individual companies, it is crucial to have a depth of knowledge of the industry in which they operate and the regulations that might impact the trajectory of the company. We try and keep our readers aware of major regulation changes in our newsletter, which you can sign up for on our homepage.
Why CBD Stocks?
As individual states continue to explicitly legalize CBD, which is already federally legal, the opportunities to invest are rapidly expanding. CBD usage continues to grow, with recent studies showing 1 in 7 people are on some type of regular CBD regimen. CBD can now be consumed via oil, gummies, edibles, flower and in many other forms. The broad product types and widespread availability should give solid footing to CBD companies heading into the future. As with any other company or industry, widespread acceptance is a potential signal that the CBD trend is here to stay. Several prominent investment blogs and websites anticipate 25%+ growth in marijuana and CBD stocks in the coming years, which is encouraging for CBD investors.
Which CBD companies should I buy stock in?
Much like our stringent vetting process when it comes to which CBD companies we review on our site, we highly recommend doing intense research into any CBD company you plan to invest in. Due to the “wild west” nature of the CBD world, new companies pop up every day, many claiming things that just aren’t true. Registering with the SEC is a big step towards credibility, but is far from the only checkbox. We recommend reading analyst reports and as many consumer reviews as you can. Luckily, the regulatory measures in place continue to be refined which will crack down on the fly-by-night companies who are not trustworthy in the products they provide, nor the investment opportunities they present. Over the coming years, we expect many not-so-savory companies will be weeded (pun intended) out and more reputable companies - and hopefully your investments - rising.
The Closing Bell
At CBDtop10.com, we clearly believe in the many benefits of CBD products and our belief in CBD also extends to the stock market. We see the potential for tremendous growth in the CBD market in general, which means companies supplying high quality products should benefit from that growth. If you're not sure where to start, we recommend clicking the link below to view some of the CBD companies we have rated highly. That said, we tend to scope our expertise on the products themselves. We love to share our thoughts on CBD products and guide you through the shopping process, but when it comes to investing, we prefer to leave that up to the experts and, as always, your own educated research.