In this post, investors learn how investing in CBD oil can help them diversify assets and potentially generate more profit.
In this article:
- What Are the Health Benefits of CBD Oil?
- Why Is Investing in CBD Oil Stocks Beneficial?
- Is Investing in CBD Oil Ethical?
- What Are the Ways to Invest in CBD Oil Stocks?
- How Can You Invest in CBD Oil Stocks?
- What Are Some of the Leading CBD Oils Stocks to Watch Out for in 2019?
- What Are the Opportunities and Challenges in Investing in CBD?
Investing in CBD Oil Stocks | What You Should Know
What Are the Health Benefits of CBD Oil?
Before going into the discussion of investing in CBD (or cannabidiol) oil stocks, it may be beneficial to look at the possible health benefits of this oil first. This allows shareholders to better understand why many are venturing into this investment.
Several studies have found that CBD oil may:
- Help reduce the risks of developing diabetes
- Help fight cancer
- Combat anxiety
- Aid in chronic pain relief
In fighting cancer, for example, CBD provides an antitumor effect that promotes the death of tumor cells in leukemia and colon cancer. Another study showed that this phytocannabinoid can aid in stopping the spread of cancer cells in the case of cervical cancer.
It also has anti-seizure properties, which was supported by a randomized, placebo-controlled trial. The study revealed that CBD provided an anti-seizure effect on young adults who have Dravet syndrome.
This condition is a type of epilepsy where patients experience seizures induced by fever. Patients who were administered with CBD experienced a decrease in seizure attacks by a median of 38.9%.
It can also potentially be a complementary treatment for Crohn’s disease, an inflammatory bowel disease affecting the gastrointestinal tract. An Israeli study showed those who took it for two months experienced reduced symptoms and a better quality of life.
CBD oil or hemp oil is unique because it is non-psychoactive. This means it does not produce the same effect that is associated with the use of cannabis.
Why Is Investing in CBD Oil Stocks Beneficial?
The biggest question any investor may have before venturing into the marijuana industry is if it’s safe to buy pot stocks. While there’s no way to guarantee how a certain stock share will perform, investors can still use highly effective techniques to analyze the potential market movement.
Aside from medical demands for CBD oils, its growth in the stock market may reach an increase of 700% by 2020. with a compound annual growth rate (CAGR) of 11%. What’s even more impressive is the fact that it could surpass $3 billion in 2021.
Plus, with the number of recreational marijuana users switching to CBD, it may even be possible to reach these figures sooner. Since states are beginning to legalize the use of cannabis, the demand for the plant continues to rise.
Leading hemp research organization the Hemp Business Journal confirmed this when their marketing research team analyzed trends in the marijuana industry.
Additionally, many big companies have reported great success in their investments with medical cannabis. This is a good sign that investing in CBD oil stocks might be worth a try.
Is Investing in CBD Oil Ethical?
A lot of investors avoid investing in marijuana stocks as they consider it unethical. If an investor wants to avoid investing in sin stocks, but still wants to hold a few shares of some of the best CBD companies, then investing in CBD oil might be a good option.
Some investors do not like investing in the marijuana industry as they do not support the idea of using recreational marijuana. However, people have to understand that cannabidiol, or CBD, oil is different from the marijuana plant itself.
Tetrahydrocannabinol (THC) and cannabidiol (CBD) play a key role in the effects of recreational and medical marijuana. Ethical investors will be glad to know that hemp-derived CBD is legal in all 50 states, while THC isn’t.
In layman’s terms, CBD and THC are the medical and recreational parts of marijuana, respectively. If investing in illegal substances is against an investor’s principles, they won’t have to worry since CBD is legal and professionals examine it for medical purposes.
What Are the Ways to Invest in CBD Oil Stocks?
There are multiple opportunities for an investor to get into the CBD industry. One can start small and invest in a retail store for CBD hemp oil.
There are very few retailers for CBD as of now. But considering the increasing demands of the product, investing in CBD oil stocks with a retailer could be a great opportunity.
One also has the option to invest in an oil distributor. Here, there’s no need for a license to sell CBD products.
The distributor only needs to collaborate with a distribution company to start selling.
How Can You Invest in CBD Oil Stocks?
Before an investor becomes a company’s shareholder, there are a few considerations they might want to take note of.
1. Learn More About the Company
If one is eyeing a company to invest in, researching the success rates of the company and how they operate is a good start. One can include finding how the hemp plants were grown if they are interested in investing in companies that deal with the production of the plant or how the oil is being extracted.
This gives the investor insight into the company’s background and potential business growth.
2. Think About How Much Should Be Invested
Next, consider how much to invest. Starting small, like investing in a retail store for CBD oil, may be an ideal option as it can help one create an estimate of how much to gamble.
It’s always better to not invest more than one can afford to lose.
3. Consider the Timing
Timing is another consideration. The period of when to buy and sell is essential, just like in any other type of investment, as it largely affects the investment’s performance.
An investor can enjoy selling CBD oil stocks incrementally when the stocks are rallying or buy these stocks incrementally when the prices decline to take advantage of good returns.
4. Look for a Trusted Broker
In addition, selecting a broker is another consideration. One can sign up online with trusted brokers who have potential CBD oil stocks reports.
Once an investor has arranged with a broker, they may now buy the stock. But be careful when choosing which broker to invest with.
The marijuana industry is a complex market and investors need someone who specializes in investing in CBD stocks. Why would one want to work with a real estate expert when they’re getting investment advice on legal cannabis products, right?
It’s always important to know the type of stock one is buying: the market order and the limit order.
Market Order Definition: A buy or sell order at the current market price. It’s perhaps the simplest type of order.
Limit Order Definition: It’s a direction given to brokers telling them to buy/sell stocks at a specific price.
5. Sell the Stock
The last step is to finally sell the stock. One may do this if they’ve already gained enough returns from the stock they bought.
Keep in mind that, like buying a stock, it still follows the market and limit orders policy. Make sure to remember all the rules and policies that come with buying and selling cannabinoids stocks.
It might be best to consult with a professional broker before selling CBD oil stocks. An experienced broker may have some useful insight on market trends and how one can maximize profits.
What Are Some of the Leading CBD Oils Stocks to Watch Out for in 2019?
After learning about the benefits of investing in CBD oil stocks, it’s time to filter out which CBD companies are worth the time and money. These leading cannabis stocks might be worth considering in an investor’s portfolio.
1. Terra Tech Corp (OTCMKTS:TRTC)
It’s a retail cannabis company that’s “hoping” to dominate the California cannabis market. As of April 2018, their market cap is around $11 million, which makes them one of the biggest companies to watch.
For the third quarter of 2018, stockholders of the company had equity amounting to approximately $93.1 million. This means there was an increase of approximately $16.3 million compared to the equity of the last quarter of 2017, which was only $76.8 million.
2. Kush Bottles (OTCMKTS:KSHB)
Just like Terra Tech Corp, Kush Bottles is also a California-based company. They first started out as a packaging business that soon ventured into the cannabis industry.
A comparison of the stockholders’ equity from August 31, 2017 ($40.9 million) to May 31, 2018 ($72.3 million) showed a huge increase of more than $30 million.
3. 1933 Industries Inc. (TGIF:CNX)
Formerly known as Friday Night Inc., 1933 Industries Inc. carries an array of cannabis wellness products many users purchase for medical purposes.
Data also shows the company’s success:
- Revenue Increase — During a three-month period ending on July 31, 2018, the company experienced a revenue increase of 18%, from $3.3 million CAD to $3.9 million CAD.
- Equity — They also enjoyed an increase in shareholders’ equity for 2018. For July, they had $36.9 million CAD, which rose up to $41.4 CAD in October.
4. GW Pharmaceuticals (NASDAQ:GWPH)
One of the pioneers in the CBD and marijuana industry is GW Pharmaceuticals. They are a well-known British pharmaceutical company that offers nabiximols, the first cannabis plant-derived medicine for multiple sclerosis to gain market approval in any country.
It started in 1998 as a public limited company. Today, it has a public offering on American Depository Shares and Nasdaq Global Market.
Data showed that the company has shareholders’ equity of $674.08 million as of the last quarter of 2018, which ended December 31. This revealed a large increase from the previous quarter of the same year ending September 30, which earned only $415.16 million.
5. Aurora Cannabis Inc. (TSE:ACB)
This company is a licensed Canadian cannabis provider. It has a public offering on the Toronto Stock Exchange as ACB.
As of 2018, it has five sales licenses and eight production facilities in 18 countries across the globe. In 2017, it hit around $13.5 million in revenue in sales.
Its shareholders’ equity for the last quarter of 2018 was $4.292 billion CAD, a decrease from the previous quarter of the same year, which was at $4.4 billion CAD.
With its impressive performance, it’s no wonder plenty of analysts are telling investors to watch out for Aurora Cannabis Inc. this year.
6. Isodoil Inc. (CSE:ISOL)
Globally known as a top provider of industrial hemp and CBD products, Isodiol Inc. continues to raise awareness about the medical benefits of cannabis-derived goods. Their goal as a company isn’t solely to sell their products but also to educate the masses on using medical marijuana.
The company experienced a 5,276% increase in revenues in a one-year period from March 31, 2017 to March 31, 2018, from $355,959 to $19,137,266.
7. Canopy Growth Corp. (TSE:WEED)
Formerly Tweed Marijuana Inc., the company adopted the name Canopy Growth Corporation in 2015. The Tweed brand is quickly gaining traction all over the world.
In fact, The Motley Fool dubbed it one of the best marijuana stocks to watch out for this coming 2019. Its sales and popularity give it an edge over its market competitors.
For their shareholders’ equity, they had $7.2 billion CAD for the last quarter of 2018, which was a significant increase for the previous three quarters of the same year, which were at $1.15 billion CAD, $1.13 billion CAD, $1.6 billion CAD respectively.
8. Golden Leaf Holdings Ltd. (CNSX:GLH)
This Portland-based company is currently one of the largest providers of CBD oil in North America. They pride themselves in being a results-driven brand that focuses on addressing the needs of their customers.
For Q3 2018, the company reported revenues of $5.1. million, a 63% increase from Q3 2017’s $3.1 million.
What Are the Opportunities and Challenges in Investing in CBD?
Investors can make a thorough decision when it comes to investing in hemp or CBD stocks if they have more knowledge about the industry’s outlook. For that, it’s time to look into the opportunities and challenges.
1. Food Trends
Hemp CBD will go beyond the dispensaries. Today, chefs are already considering it as one of the top food trends for 2019, according to a survey by the National Restaurant Association.
Restaurateurs are infusing food with the oil not only to enhance the flavor but also to give in to consumer demand.
The cannabis-infused beverage market could grow to more than $1 billion by 2024, which is 15 times higher than its value in 2018. Companies such as Life on Earth and Canopy Growth will lead the pack.
Regulation, though, remains to be a challenge. New York, for example, is already cracking down on the use of such cannabis products, especially in food.
2. Legalization of Cannabis
Marijuana growers may have more reason to rejoice. More states are planning to legalize the sale of such products even for recreational use.
Recently, Illinois passed a bill that allows its medical dispensaries to sell recreational weed. They are also permitting these places to open a second location, possibly doubling their number by next year.
In Mexico, the topic of cannabis use, sale, and manufacturing remains controversial. Medical marijuana or cannabis is legal while the recreational kind is not.
Those who consider investing in CBD and weed in the country, however, can insist on using the case-law. Since 2015, the Supreme Court had already ruled banning growing cannabis for recreation as unconstitutional.
This doesn’t mean products for recreational use are legal, but they can run to the federal court for help.
3. FDA and DEA Perspectives
Unlike marijuana, CBD products are legal under the Farm Bill law, which re-classified hemp from a controlled substance. So is investing in CBD stocks and even ETFs in the United States.
The hemp industry, however, finds a tough battle with the Food and Drug Administration (FDA). It continues to assert its authority over the regulation of CBD or hemp-based products.
According to it, CBD is still a drug ingredient, and thus, products that contain it should still go through the approval process. Note, though, the FDA has already approved a drug with CBD called Epidiolex, which is for seizures.
So far, both parties, the sellers and the FDA, are conducting hearings. Those who sell such products hope the agency relax their regulations.
Meanwhile, the Drug Enforcement Agency (DEA) classified cannabis-derived drugs approved by the FDA and containing 0.1% THC and below as Schedule 5. This means they are legal as long as the consumption is based on a prescription.
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Watch this video first if you feel like investing in CBD oil stocks!
Investing in CBD oil stocks is certainly an option worth exploring when looking to add to one’s portfolio. The market is growing due to strong medicinal demands with only a few businesses operating in the industry.
Perhaps the best thing one can do as a potential stock investor for this marijuana investment is to research and invest wisely with their eyes open. Just like any other stock share, always analyze the industry with an open mind to effectively predict potential market trends in the future.
When investing in CBD oil, which stock shares would you add to your investment portfolio? Let us know in the comments section down below!
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Editor’s Note: This post was originally published on August 17, 2018, and has been updated for quality and relevancy.