Green is in the Investment Forecast
Despite Economic Uncertainty Due to Global Pandemic, Hemp Entrepreneurs and Farmers Hope Green is in the Investment Forecast
By Steven Hoffman and Heather Collins
Money might not grow on trees, but for many hemp entrepreneurs, farmers and investors, they are placing bets on the strength of the hemp plant to carry them through this uncertain economic time. The financial impact of the novel coronavirus has been felt industry-wide and has many farmers, entrepreneurs and producers asking questions about what’s in store for industrial hemp for the remainder of 2020.
The market for cannabidiol or CBD, which has driven the growth of the modern-day hemp industry, had been depressed going into the coronavirus, due in large part to FDA’s conflicting views on the substance, reported MarketWatch. Mainstream retailers have been hesitant to offer ingestible, hemp-based CBD products due to FDA’s position – announced in November 2019 – that CBD cannot be added to conventional food or marketed as a dietary supplement.
However, writes Josh Long in Natural Products Insider, “That’s expected to change if FDA issues regulations authorizing CBD to be sold in food, beverages and supplements.” In fact, in a February 2020 speech, FDA Commissioner Stephen Hahn admitted, “People are using these [CBD products]. We’re not going to be able to say you can’t use these products. It’s a fool’s game to try to even approach that.”
Natural Products Insider also reported that BDS Analytics, a market research firm, estimates the market for cannabinoid-infused food and beverage products will reach $5.9 billion by 2024 across all channels, including cannabis dispensaries. That’s up from $906 million in projected sales in 2019, with $560 million, or about 62%, coming from dispensaries, Jessica Lukas, senior vice president of commercial development with BDS Analytics, told the Insider.
Additionally, in late May, promising peer-reviewed research linking high-CBD cannabis extract to helping prevent COVID-19 had the public markets responding positively to CBD stocks. Publicly held companies including Charlotte’s Web, Sundial and others saw their slumping stock prices surge as much as 50% in late May, according to a May 27 article in Forbes – “a very big rally in context,” said Forbes writer Chris Roberts.
“In an unprecedented economic situation such as this, investors will be discerning between those businesses and brands that offer a critical need vs. those selling a ‘want,’” said Patrick Rea, CEO and Founder of Canopy Boulder, an investment firm specializing in brands, tech and services in the cannabis industry. “Also, investors that got burned may be taking a break from the market. However, we are still in the early innings in the development of the hemp industry. There is still significant upside and there is opportunity for investors as public and private company valuations have come down,” he said.
Rea noted that investors are looking at all of the hemp cannabinoids and not just CBD, and also at all the other uses for hemp in fiber, building construction, bioplastics more. “There’s more primary research being done now than ever on cannabinoids, and we should be expecting new science and applications to be rolling through the industry over the next 18 to 24 months for the minor cannabinoids in hemp,” he said. However, Rea cautions, “Investors are getting back to the basics. Just because something can be made from hemp doesn’t necessarily mean it should be made from hemp. There are so many cool applications, but you’ve got to have the right margins, supply chain and a sustainable path to the future to make a good idea into a good investment and a good business.”
For companies, Rea recommends focusing on the things you can control. “For a branded product, that could be putting energy into ‘Direct to Consumer’ or supporting retailers. For suppliers and processors, they may seek to lower their risk; for example, instead of purchasing all the biomass up front – a significant outlay – companies could alternately partner with their supplier and say, give us the biomass up front, and we’ll share in the profits on the back end.”
Also, Rea advises to adjust expenses to lengthen the amount of time businesses have to reach their goals. “In an economy like this, conserve cash. Very few investors at this time will object to a founder cutting their burn and extending their runway.”
Even though no one can really predict what the market will do, investors can look back and see how the commodity did during other times of crisis. For instance, take into account that hemp has endured and survived the 1918 Flu Epidemic, the Great Depression and Prohibition. And here it is today – a green light beacon inspiring innovation, sustainability, and community.
Investor Outlook Featured at the Experience Hemp SUMMER SOLSTICE Event
Realizing there are more questions than answers around today’s investment environment, the organizers of NoCo Hemp Expo’s Experience Hemp SUMMER SOLSTICE Virtual Conference and Trade Show, June 16-19, 2020, will be dedicating a 90-minute, live webcast “Supersession” on the financial future of the hemp industry. The ‘Investor Outlook’ discussion will feature accredited investment professionals, financial analysts, and business leaders dedicated to the industrial hemp market. The panel will share their perspectives on the current hemp investment landscape, specifically in light of the recent coronavirus pandemic.
“The financial and investor outlook session is a must-attend for any hemp/cannabis investor, entrepreneur, and business owner,” said Morris Beegle, Let’s Talk Hemp Media Co-founder and Producer of NoCo Hemp Expo. “The panel will address key topics on how our industry can continue to thrive. Expect to hear conversations about innovation and what we can do as a community to grow and be successful not only this year but for years to come.”
The ‘Investor Outlook’ discussion will take place on Tuesday, June 16, at 2:00 pm MDT and is one of six, 90-minute live webcasts, taking place throughout the week.
Register today for the FREE Experience Hemp SUMMER SOLSTICE Virtual Conference & Trade Show. If you participated and registered for the NoCo Hemp Expo EARTH WEEK virtual event this past May, attendees can log in on June 16, 2020, with the same email address.
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