The U.S. cannabis industry is growing at a stunning rate, whether it’s for recreational or medical strains. In 2016, total sales in the United States were estimated at around $6.7 billion. But perhaps even more interesting than the growth of the regular marijuana industry is the rise of a non-psychoactive, sister market: the CBD market.
According to projections, the market cap for the CBD industry will surpass $1 billion by 2020 – remarkable considering that CBD was pretty much unheard of just a few years ago.
The arrival of hemp-derived CBD products
The industrial hemp plants being used to make the CBD products that are legal throughout the nation are of the same botanical family as the cannabis plants used to make high-THC recreational strains, but their cannabinoid profile is significantly different. Hemp plants are low in THC, but higher in non-psychoactive CBD, a compound with plenty of mental and physical medicinal qualities.
Despite officially being cannabis sativa, the Drug Enforcement Administration (DEA) is unable to prosecute companies stocking hemp-based products with no THC, following a ruling by the U.S. Ninth Court of Appeals. This has allowed the hemp-based CBD market to flourish.
Hemp is hardly a new plant, it has been used by civilizations all over the world for millennia, and not just for therapeutic purposes. Hemp can be used to make clothing, rope and even paper, but it’s the CBD market that has really brought the plant to the fore. In 2016, the CBD market was estimated at $170 million by Brightfield Group, and the same organization is anticipating that to rise to more than $1 billion by 2020.
Yet despite the huge growth in interest and sales for CBD, Medical Marijuana Inc. is incredibly the only small-cap stock that’s set to benefit. And amusingly, Medical Marijuana Inc. doesn’t even sell medical marijuana, and that they will never do so while cannabis is a federally controlled substance.
The products sold by the company are all hemp-derived, with Real Scientific Hemp Oil (RSHO) being their most recognizable product. Red Dice Holdings, a subsidiary of Medical Marijuana Inc., sells CBD prodcuts in Colorado under the Dixie Botanicals name.
In addition to hemp CBD oils, edibles, creams, e-liquids and more have flooded the market over the past couple of years. The creams have caught the eye of mainstream beauty companies thanks to their skin-promoting properties.
Medical Marijuana Inc. market cap tops $300 million
The Motley Fool reports that with a market cap in excess of $300 million, Medical Marijuana Inc. is one of the biggest cannabis stocks out there. A market cap of that size means that the company could be considered the only small-cap stock targeting the hemp-derived CBD market.
CW Hemp (Charlotte’s Web) shot to prominence in 2013 when their CBD oils were featured in a CNN documentary showing how their products could help treat medication-resistant epilepsy, and have around 7 percent of the CBD market.
With roughly 5 percent of the market share is CV Sciences – they make Plus CBD Oil. Hemp Life Today and Elixinol are also considered big players, but the most exciting thing about the CBD industry is the sheer number of other competitors that contribute, giving consumers phenomenal choice.
With a market cap under $25 million, CV Sciences is classed as a nano-cap stock, while Isodiol International is a microcap stock, as its market cap falls below $200 million.
Motley Fool is rather cautious about the $1 billion CBD market cap claim, despite the boom. However, it’s hard to see sales slowing down with more and more Americans learning about CBD and its capabilities.
Could the expansion of medical and recreational marijuana legislation prove a burden to the CBD market? Possibly, but many consumers feel more secure with hemp-based products, knowing there is no risk of experiencing psychoactive effects when medicating, as the products are required by law to contain less than 0.3% THC.
Furthermore, the innovation of the hemp-derived CBD market is another indication that the industry has plenty of scope for growth. Companies are always looking to best each other with new CBD products and more efficient methods of consumption – both of which are great for CBD users.