If there were ever a time to invest in hemp, it’s right now.
Looking at history for just a moment, during the marijuana scare of the 1900s, hemp got lumped in with “weed.” We’re still seeing some of the effects from that today. It’s not uncommon for intelligent, well-informed people to have no idea what the difference is between marijuana and hemp.
In 1970, hemp was even classified as a Schedule I drug, which made it illegal to grow and sell most of the time.
But we’ve seen quite a bit of progress since then – remember the 2018 Farm Bill? That bill is how hemp production got signed into law, and we may just see it rock the stock market. Why?
Because now that industrial-grade hemp can be sold at the federal level, the US is starting to see hemp’s major potential.
Hemp has been used in the manufacture of tons of stuff, including clothing, paper, and rope. In fact, Hemp fiber is many times stronger than steel, and hemp can produce up to 4x more paper per acre than a tree!
As a wellness product alone, hemp is seeing massive growth due to the CBD it contains. What is CBD? You can almost think of CBD as THC’s legal, more mature cousin. Where THC (the active ingredient in marijuana) gets you high, CBD works for most people just as a way to relax.
1606 filtered hemp pre-rolls use CBD content to soothe cravings for things like nicotine and tobacco, making them one of the most potent methods for quitting nicotine—ever
Analysts have estimated hemp’s market potential at a pretty wide range. By 2022, it’s expected to hit anywhere from $1.3 billion to $22 billion.
And now that hemp is back in such a big way, entrepreneurs and manufacturers have begun capitalizing on hemp’s market potential. But this is just the beginning, and investors have started carefully looking into the hemp situation.
Is it worth it to invest in hemp? What are the risks and benefits? Let’s talk about the 3 main hemp avenues for investors who are ready to go down this promising road.
3 Ways to Invest in Hemp
1. Hemp Growers
Growers cultivate and harvest hemp. A lot of US farms have taken advantage of the high demand for CBD. and they’ve dedicated thousands of acres to the cultivation of quality hemp. In 2017 (before the Farm Bill), hemp cultivation took up about 23k acres in the US.
By 2018, with the signing of the Farm Bill, that number has increased to 77k acres. Some farmers report that it’s more profitable to cultivate hemp than other plants.
Even a “poor” hemp harvest can be more lucrative than a good tobacco crop.
Expansion in US hemp growers is expected to continue, but before you invest in hemp growers, check out a grower company’s balance sheet.What types of distributors do they do business with? Is their business well-established with serious financial backers? Are they just beginning in the hemp industry? What distributors do the growers work with?
2. Medicinal CBD Businesses
One of the biggest reasons for hemp’s surge in popularity is its CBD content. Studies show that CBD offers numerous potential benefits to its users, and for some, CBD seems to deliver pain relief similar to what you’d get from THC—only without the high.
This is extremely appealing to those who are looking for non-opiate, non-marijuana options in pain relief.
In fact, CBD has been shown to act as a pretty effective means of getting off of opiates. From anti-anxiety to sleep assistance and epilepsy management, the studies on CBD are reporting a lot of exciting potential.
And filtered hemp pre-rolls—like those sold by 1606—contain significant amounts of CBD. This is a huge reason to invest in hemp.
Of course, “medicinal” is kind of a broad category here, so it depends on how you want to define the terms. But this investment window represents all companies that produce hemp/CBD products intended for use that is, in some form, beneficial to the user.
And with studies continuing to illuminate hemp/CBD’s potential, this could be one quite profitable way to invest in hemp.
3. Accessory Hemp Companies
As the hemp industry grows, it won’t be alone – businesses that specialize in accessory products and supporting services will thrive too. Provider companies supply hemp businesses with things like packaging, soil, environmental components, accessory equipment, and more.
These supporting companies are probably the safest way to invest in hemp because their stocks aren’t as volatile as those dealing with actual hemp.
Companies in the support segment will typically see business regardless of how the hemp market fares.
It’s unlikely that they devote all their resources to the manufacture/provision of hemp supplies – they probably have a number of departments, each dedicated to supporting a different industry.
A business like this would probably be able to switch gears pretty quickly and rely on its other departments while rededicating its former hemp department to meeting some new market need.
Alternatively, if a supply company is providing something with multiple applications like packaging, they can turn around and do business with any company in need of packaging materials.
That said, with a lower risk comes a lesser reward…
Falling hemp stocks won’t burn those who invest in ancillary companies, but should hemp stocks rise, those same investors won’t see as much return on investment as those who bet on the hemp companies directly.