The marijuana industry has become one of the fastest growing markets in the world. As of 2016, marijuana stocks have almost quadrupled in value. Moreover, we expect a 230% market growth by 2022. In fact, by that year, the CBD industry is likely to be worth close to $22 billion.
However, within the marijuana market, the best selling product is cannabidiol (CBD). The best CBD stocks on the market report annual growth of 147%. Therefore, with a market of this size and annual growth, we need to know which CBD stocks will be the most profitable. After all, investing wisely now means a big profit in the future.
What is Cannabidiol?
Cannabidiol (CBD) is a type of cannabinoid derived from cannabis and hemp plants. It has very low THC levels, and it doesn’t have any psychoactive effects.
CBD products have already helped countless patients. Some of the conditions they can help treat include:
- Anxiety and depression
- Chronic pain
- Some neurological conditions
Keep in mind that there is a difference between CBD extracted from cannabis and the one we get from hemp plants. While CBD extracts from hemp have very low THC levels, CBD from cannabis is a different story. Depending on the strain of the plant, CBD derived from cannabis plants can differ in quality and THC levels.
In December 2018, the US federal government passed a law making hemp cultivation legal. The law, known as the Farm Bill, has removed hemp from the list of controlled substances. Currently, it is up to each country to vote and decide whether they want to sell hemp-based products in retail stores. That being said, there are no shortage of companies – like Royal CBD, an Anaheim based CBD oil and gummy manufacturer – from opening up shop and selling hemp-derived CBD products online.
Still, different laws apply to cannabis plants. Additionally, under FDA guidelines, it is illegal to add any sort of CBD to any foods, beverages, and dietary supplements.
Since the passing of the Farm Bill, the CBD market has seen massive growth. However, the marijuana industry is still not fully regulated. Before we can start investing, it is important to figure out the best CBD stocks currently on the market. Here are our top four picks.
1. Charlotte’s Web Holdings
Charlotte’s Web Holdings is a US-based company operating from Colorado. It has become the market share leader in hemp-based products only six years after the company first opened its doors.
According to NASDAQ, Charlotte’s Web has excellent potential for growth. By the end of 2018, their products were in over 3,680 retail stores across the US, and the company generated over $69.5 million in sales in 2018 alone. Moreover, they have been operating profitably for the past two years.
Charlotte’s Web accounts for 74% of organic hemp production in the US. With these kinds of statistics, it has some of the best CBD stocks currently on the market.
2. CV Sciences
Next, we have CV Sciences, a company whose recent market growth has attracted the attention of numerous investors. CV Sciences focuses on supplying retail stores with hemp-based products. By the end of 2018, their products were in over 2,200 stores all across the US.
In 2018, they reported a net income of $10 million and a growth of 133% compared to the previous year. Wall Street investors predict that the company will have a steady growth over the next ten years. Additionally, their estimated income will reach $119 million in the next two years.
However, CV Sciences could face some legal pushback. They were working on a new product that combines CBD with tobacco. Yet, when they got rejected by the US Patent and Trademark Office, they didn’t disclose it to their investors. A lawsuit could derail their market growth and decrease their stock value.
3. Medical Marijuana, Inc.
We can also gain exposure to the CBD market by investing in a penny stock. Medical Marijuana, Inc. is a great place to start. As the name implies, Medical Marijuana is a manufacturer of hemp-based products. They create their products specifically for medicinal use.
Medical Marijuana has taken its brand globally and is now present in many international markets. The company has shown a 116% growth in the third quarter compared to the previous year. Back in November, their reported revenue was over $16.8 million. Moreover, they’re planning to open 100 retail stores across the US and in other parts of the world.
However, before investing, there are a few things to note about the company. In the last quarter, they reported a revenue of $0.6 million after expenses. Additionally, they could face a loss of $156 million due to company restructuring.
4. GW Pharmaceuticals
Last but not least, we have GW Pharmaceuticals. By investing in GW, we can gain direct access to the CBD market. GW Pharmaceuticals is the only company that manufactures a drug derived from cannabis that has FDA approval.
GW Pharmaceuticals has created a drug that is used to treat two types of childhood-onset epilepsy. The drug’s commercial name is Epidiolex, and it has been able to reduce between 30% and 40% of seizures. Additionally, it has shown the highest efficiency rate in comparison to the placebo treatment.
While we can’t precisely predict the company’s annual growth, investors say their sales could reach between $500 million and $1 billion in the following year. What’s more, GW has sold over $4.7 million worth of Epidiolex. Thus, we would highly recommend GW Pharmaceuticals as one of the best CBD stocks with the most potential to grow. It is a company that would definitely add to our investment portfolio.
The Bottom Line
When looking for new investment opportunities, we need to make sure the company we’re considering is stable and has excellent growth potential. Still, while the marijuana industry has certainly taken off, there are some issues. First, it’s a fairly new market, and we don’t know that much about it. Additionally, the laws are still a bit unclear, which can sometimes lead to confusion.
As with any other investment, we recommend doing extensive market research. Look for companies with a good management team and innovative products. Moreover, keep track of trends and consult other investment companies.
Despite the concerns, if you are looking to expand your investment portfolio, we definitely recommend taking a look at the CBD market. As the marijuana market keeps expanding, gaining access will become more challenging. For this reason, we recommend investing as soon as possible.