cbd stocks motley fool

Cbd stocks motley fool

Since then, the company has shown it plans to expand. In July, it invested up to $20.5 million to buy land and build a 130,757-square-foot growing and processing facility in Phoenix to be leased by Tempe, Ariz.-based based cannabis company Mint. This month, Massachusetts’ Worchester Business Journal said the company spent $8.8 million on four properties in Fitchburg, Mass., that were co-owned by medical cannabis company Revolutionary Growers and Anwelt Heritage Condominiums.

The stock was trading for about $30 on Friday, a bit higher than its IPO price of $26 a share. It was only founded two years ago, but the company’s tenants already include such big names as Curaleaf Holdings, Cresco Labs, Trulieve Cannabis, and Columbia Care. As of June 30, the company had 27 properties that it said were 100% leased.

NewLake Capital Partners is well named

NewLake Capital Partners (OTC:NLCP) , Village Farms International (NASDAQ:VFF) and Hydrofarm Holdings Group (NASDAQ:HYFM) are not as well known as many other cannabis companies, but all three small-cap stocks have significant growth potential. They also have less exposure to the vagaries of marijuana prices or sales.

Hydrofarm is coming off a strong second quarter in which it reported revenue of $133.8 million, up 46.7% year over year; gross profit of 22.1% of net sales, up from 19.6% a year ago; and net income of $2.3 million, compared with $1.9 million in the same period in 2020. Including acquisitions, management said they expect net sales to be up 45% to 50% over last year.

Key Points

Hydrofarm has built its business through mergers and acquisitions, and in its second-quarter earnings call, management said they intend to continue to look for ways to grow the company through M&A activity. Its biggest recent move was its purchase of Greenstar Plant Products, a plant nutrient company, for $83 million earlier this month. That follows up the purchase of three Oregon hydroponics companies under the banner of Aurora Innovation, and the purchase of nutrient makers Heavy 16, House & Garden, and Mad Farmer, all since April. The company said it plans to open two new distribution centers this quarter; combined with the aforementioned purchases, its distribution center and manufacturing footprint should grow by 70%.

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Cbd stocks motley fool

For one thing, Rep. Peterson has both Democratic and Republican co-sponsors for his bill. Bipartisan support improves the chances of passage in the House.

Rep. Peterson’s move is basically an attempt to sidestep the FDA, which isn’t known for its quick action. Investors have been worried that the agency could take years to wrap up studies to determine the safety of CBD. With Congress entering the picture, though, it’s possible that CBD dietary supplements could become fully legal this year.

It’s a similar story in the U.S. Senate, even though Republicans are in control. Senate Majority Leader Mitch McConnell championed the 2018 Farm Bill that legalized hemp. Rep. Peterson’s proposed amendment would be good news for hemp growers, which could be key to securing Sen. McConnell’s support since his home state of Kentucky has a sizable hemp farming industry.

Prospects of passing

Last week, Rep. Collin Peterson (D.-Minn.) introduced a bill that would amend the Federal Food, Drug and Cosmetic Act to add CBD to the list of legal dietary supplements and exclude CBD from prohibited foods. These amendments would effectively make CBD foods and dietary supplements fully legal in the U.S.

If CBD foods and dietary supplements are fully legalized in the U.S., most marijuana stocks would probably enjoy a nice boost. However, a few stocks, in particular, should be the biggest winners.

Sidestepping the FDA

Hemp legalization overwhelmingly passed in the House. If Peterson’s CBD bill makes it through committee review, the chances of it also sailing through the chamber appear to be pretty good.

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In the meantime, companies that market CBD products are in a sort of limbo. Although they can sell topical CBD products across state lines, the big market opportunity is in ingestible CBD products. However, another pathway to opening up this significant market now appears to be on the horizon.