Five Plays on CBD: Speculating on Cannabidiol

04/09/2019 5:00 am EST

Focus: CANNABIS

Timothy Lutts

Publisher, Cabot Heritage Corporation

CBD — which is simply shorthand for cannabidiol — is a non-psychoactive component of cannabis plants, explains Timothy Lutts, editor of Cabot Marijuana Investor.

Some CBD comes from marijuana plants, so they may or may not have THC (the stuff that gets you high) in it, while other CBD comes from hemp, which is not only THC-free, but is also legal to grow and sell nationwide, courtesy of December’s Farm Bill.

CBD has been proven effective against two forms of childhood epilepsy and has been FDA approved for a drug made by GW Pharmaceuticals (GWPH), an English company.

But there have been no thorough studies of CBD in this country, because it was illegal to study until December, so no one knows for sure exactly what CBD really does.

Still, there is no shortage of claims! Migraines, backache, nausea, insomnia, PMS, anxiety, arthritis, acne, menopause, irritability, blood pressure, diabetes. You name it, someone has probably claimed that CBD can treat it.

Today millions of Americans are already self-medicating with CBD ahead of official approval from the medical industry, motivated both by word of mouth and the endorsements of celebrities.

Charlotte’s Web Holdings (CWBHF)

Charlotte’s Web of Colorado is possibly the most famous of the bunch thanks to early media exposure and its founding family, the Stanley Brothers, who are named (no kidding) Joel, Jesse, Jon, Jordan, Jared, Josh and Austin.

The company, which is not in the marijuana business, says it’s the #1 brand of CBD by market share, with more than 4,000 retail locations, and 300 acres of hemp planted in 2018.

Fourth-quarter results, released just last Thursday, showed revenues growing to $21.5 million, up 71% from the year before, with 57% of revenue coming from e-commerce. The stock has been strong and is now right back up where it peaked last October.

Curaleaf (CURLF)

Curaleaf, based in Massachusetts, grows and sells both marijuana and CBD. It was the first multi-state operator to launch a national CBD product line, Curaleaf Hemp. And this CBD is one of the brands on the shelves in those CVS stores.

The company opened seven new dispensaries (selling both marijuana and CBD) in the fourth quarter in key markets such as Florida and Arizona, bringing its count to 42 dispensaries, 12 cultivation sites and 11 processing sites in 12 states. In the quarter, revenue was $32.0 million, up 409% from the year-ago quarter. The stock has been strong.

CV Sciences (CVSI)

CV Sciences is all about CBD, but it operates two distinct business segments: a consumer product division focused on manufacturing, marketing and selling hemp-based CBD products, and a drug development division focused on developing and commercializing therapeutics based on CBD.

The company says its PlusCBD Oil is the top-selling brand of hemp-derived CBD and that its retail channel included 2,238 stores nationwide at the end of 2018. In the fourth quarter of 2018, sales increased 96.4% to $14.2 million. The stock has been quiet for the past seven months but is starting to wake up.

Green Growth Brands (GGBXF)

Green Growth Brands got a late start, but the company is pushing hard to be a force in retailing both cannabis and CBD.

It plans to have 108 CBD stores in Simon Property Malls by mid-summer and is also building and acquiring cannabis businesses in Nevada, Massachusetts and Arizona. In the fourth quarter, revenues were $3.1 million, up from nothing the year before. The stock has been cooling off since peaking in January.

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