Applications of cannabidiol, or CBD, the non-psychoactive cannabis compound used to treat various medical conditions, is “poised to flourish” in 2019, according to analysts at one investment bank.
The 2018 Farm Bill, which was signed into law by President Donald Trump Dec. 20, excluded all cannabis products with 0.3% or less THC, the psychoactive element in marijuana that gets users high, from the Controlled Substances Act. In a research note, reported on by CNBC, Canaccord Genuity said this effectively means that it is now legal to manufacture, distribute and sell hemp-derived cannabidiol (CBD) anywhere in the United States.
Analysts pointed out that the impact of legalizing CBD, billed as a popular solution to treat everything from anxiety, epilepsy, acne and pain to schizophrenia, will be huge. They expect many mass-market retailers to begin stocking CBD products shortly and identified eight stocks, Charlotte’s Web Holdings Inc. (CWEB), Canopy Growth Corp. (WEED), Curaleaf Holdings Inc. (CURA), Liberty Health Sciences Inc. (LHS), 1933 Industries Inc. (TGIF), DionyMed Brands Inc. (DYME), KushCo Holdings Inc. (KSHB) and MJardin Group Inc. (MJAR), as the biggest potential beneficiaries.
From Canaccord’s list of CBD plays, only Charlotte’s Web was given a firm buy rating by the brokerage. The other six stocks were categorized as “speculative buys.” Charlotte’s Web was given a C$21.00 price target, implying 43% potential upside from its Wednesday closing price of C$14.67.
The Colorado-based company’s CEO Hesaam Moallem previously said Charlotte’s Web plans to pursue a listing on a major U.S. exchange if the farm bill passes. Canadian firm Canopy Growth, the world’s biggest cannabis company, also outlined its intention to enter the U.S. market after the bill was signed off.
Retailers No Longer Holding Back
When the Farm Bill was passed last year, many retailers were still unsure about the legal status of selling CBD as a dietary supplement. Canaccord now expects hesitancy from retailers to clear as the laws become clearer, noting that CBD products are already being sold in Safeway Inc. stores in some U.S. states.
“While the FDA’s stance has added some initial caution by retailers looking to enter the CBD space, we believe this to be transient, and expect many mass-market retailers to begin distributing CBD products over the course of 2019,” analysts wrote.