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2020 is going to go down in history as a year most of us want to forget. That applies as much in the investments sector as anywhere else, with most businesses hunkering down and just trying to survive the storm. There have been a handful of exceptions to that, however, industries that have managed to keep on growing despite, or even because of, this year’s unprecedented events.
The legal cannabis industry is a perfect example. People are more interested now in natural remedies or products that will help maintain good health, than ever. CBD has been hailed as the great panacea of our times, and sales are expected to grow by something in the region of 400 percent between now and 2030. It’s no surprise investors are becoming increasingly interested in this market. But there are some important things you need to know about CBD if you intend to join them.
CBD has its distinct audience
There are cannabis stocks, and then there are cannabis stocks. CBD is one of more than 100 cannabinoids in the cannabis plant, but the biggest thing to remember is that it is quite distinct from THC, and, to the greatest extent, so are its buyers. Cannabis products with THC are typically aimed at recreational users who want to get high. CBD buyers, however, are purchasing for health and wellness reasons.
Legality is a minefield
The farm bill, signed into law by President Trump in December 2018, made CBD legal across the United States, and it enjoys similar legality across the western world. So what’s the problem? The complication is that the bill specifically relates to hemp plants, which are high in CBD and contain only trace amounts of THC. In other words, you need transparency and traceability when it comes to the source of the oil, or there could be trouble ahead.
Technology could be a game-changer
Tech can move the goalposts in any sector at a single stroke, and the CBD industry is no different. Right now, the vast majority of CBD is extracted using established techniques that involve “bucket chemistry” processes like solvents, hydrocarbons, heat, distillation and so on. But industry leaders like Cronos Group are exploring alternative methods that could ramp up production as well as yields by targeting specific strains of hemp plant for cultivation.
Many claims, one indication
Researchers are hugely excited about the medical possibilities of CBD, and that is understandable given the results of clinical studies. However, these are still at early stages and it is worth keeping in mind that in the eyes of the FDA, CBD officially has no medical benefits, and only one indication. There is still, therefore, a degree of gambling involved in putting your money behind CBD. Furthermore, there have been rumblings from the FDA that it will take action against retailers making unproven claims about CBD, especially now that it is being stocked by the likes of CVS and Walgreens.
