CBD, or cannabidiol, continues to be a high-growth theme, with analysts looking for massive growth over coming years, including almost unheard of CAGR numbers heading out for a half-decade or more. The key behind the idea is something microeconomists call “mainstreaming” – when a new trend evolves from a micro-level affair to an everyday household theme across an economic system.
In this case, CBD was a micro-level niche market just a few years ago, doing something like $50 million in annual sales. Now, we are seeing a billion-dollar market become a $25-50 billion market, with the bulk of that growth anticipated to hit in a predictable glidepath over the next 3-5 years.
This represents a big opportunity for growth investors. With that in mind, we take a look at a handful of highly active names in the space, including: Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF), MCTC Holdings Inc (OTCMKTS:MCTC) aka Cannabis Global Inc. (OTCMKTS:MCTC), cbdMD Inc (NYSEAMERICAN:YCBD), and Medical Marijuana Inc (OTCMKTS:MJNA).
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) recently announced that it has closed its previously announced underwritten public offering for aggregate gross proceeds to the Company of C$77,625,000.
According to the release, a total of 11,500,000 units of the Company, at a price of C$6.75 per Unit were sold pursuant to the Offering, including the full exercise of the over-allotment option by the Underwriters. The Offering was led by Canaccord Genuity Corp., together with a syndicate of underwriters including Cormark Securities Inc., Eight Capital and PI Financial Corp.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.
Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers. The company was formerly known as Stanley Brothers Holdings Inc. and changed its name to Charlotte’s Web Holdings, Inc. in July 2018. The company was incorporated in 2018 and is headquartered in Boulder, Colorado.
Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-based cannabidiol wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into whole plant hemp extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Industrial hemp products are non-intoxicating.
Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) managed to rope in revenues totaling $28.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($75.5M against $42.2M).
MCTC Holdings Inc (OTCMKTS:MCTC), now doing business as Cannabis Global, Inc. (MCTC), has been gaining traction as a fundamentally-driven IP story in the CBD and cannabinoid products space over recent months. It would appear shares may play catch-up as the foundation of R&D starts to translate into clear sales growth.
Clearly, to help foment the actualization of that dynamic, the company announced a few days ago that it has completed initial product development of the Hemp You Can Feel™ product lines, and the launch of the next phase of the Company’s operations, which will focus on bringing the product lines to the marketplace. Over the coming weeks, Cannabis Global will be launching several new product marketing initiatives designed to move its innovative hemp extract and rare cannabinoid products into the marketplace.
“It has been approximately one year since we reorganized the Company, which today is known as Cannabis Global, Inc. During the first year, we concentrated on designing products that are distinct from the competition with established advantageous barriers,” commented CEO Arman Tabatabaei. “We are very pleased with the results in that we not only have a unique product set, but also one based on both quality ingredients and solid intellectual property.”
As noted, Cannabis Global (OTCMKTS:MCTC) has, as noted above, recently filed six patents on cannabinoid extraction technologies and delivery systems. Management is currently working with patent counsel to protect various other technologies it has developed or is currently developing, including its programs pertaining to cannabinoid glycosides, polymeric cannabinoid nanoparticles and nanofibers, and its hemp extract-based alcohol replacement technologies.
“Our unique infusion and production technologies provide Cannabis Global with a product purity advantage as well as a clear path to low cost leadership,” commented CEO Arman Tabatabaei. “The THC-V cannabinoids are synthesized and entirely free of impurities. While there were some upfront technology development and intellectual property protection costs, we expect our ongoing variable production costs to be less than half of any potential competitor. Via our technologies, we turn one of the cannabis industry’s most expensive items – pure THC-V cannabinoids – into a cost-effective solution that sets a new standard for product purity in the cannabinoid-based products marketplace.”
MCTC Holdings Inc (OTCMKTS:MCTC) had no reported sales in its last quarterly financial data. But it appears to be closing in on commercial-stage operational gains for shareholders and has a strong IP edge in the industry.
cbdMD Inc (NYSEAMERICAN:YCBD) recently announced that it was recently added to NSF International’s dietary supplements Good Manufacturing Practice (GMP) registration. GMPs are guidelines that provide a system of processes, procedures and documentation to assure a product has the identity, strength, composition, quality and purity that appear on its label.
In September 2019 NSF International announced it had begun providing a wide variety of independent testing, verification, auditing and certification services to manufacturers of consumer products containing hemp and hemp-derived CBD. NSF International independently registers manufacturers as meeting GMP requirements.
cbdMD Inc (NYSEAMERICAN:YCBD) also reported net sales of $9.4 million, a year-over-year quarterly increase of approximately 67%. The Company also reported a significant shift in online sales as an overall percentage of net sales, with direct to consumer e-commerce online sales reporting 72% of overall sales, up from 67% from the prior quarter.
The Company bills itself as a company that produces and distributes various cannibidiol (CBD) products. It owns and operates the consumer hemp-based CBD brand, cbdMD. The company’s product categories include CBD tinctures, capsules, gummies, bath bombs, topical creams, and animal treats and oils. It also offers pet related CBD products under the Paw CBD brand name.
The company distributes its products through an e-commerce Website, wholesalers, and various brick and mortar retailers in the United States.
We would also note that YCBD shares have been in breakout mode and the stock has become a clear leader in the space in terms of relative performance.
cbdMD Inc (NYSEAMERICAN:YCBD) generated sales of $9.4M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -7.4% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($14.9M against $5.8M).
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Medical Marijuana Inc (OTCMKTS:MJNA) remains a chronic laggard in the space. And for good reasons. It’s a chronic dilution story as well. But it ranks as one of the names often listed as an active CBD play in the small- and micro-cap stock space, so we include it here.
The company most recently announced that its investment company Kannalife, Inc. (OTCQB: KLFE) has been issued patents in 12 key European territories for its patent known as WO2015/106108A2 and titled, “Novel Functionalized 1,3-Benzene Diols and their Method of Use for the Treatment of Hepatic Encephalopathy”.
According to the release, these territories include Switzerland (CH), Germany (DE), France (FR), the United Kingdom (GB), Ireland (IE), Italy (IT), Spain (ES), Belgium (BE), Sweden (SE), Turkey (TR), the Netherlands (NL), and Denmark (DK). “Europe is an ideal market for Kannalife to pursue as the continent made up over 23 percent of the world’s total pharmaceutical sales in 2018 and is expected to continue growing to $226 billion in the upcoming years,” said Medical Marijuana, Inc. CEO Dr. Stuart Titus.
Medical Marijuana Inc (OTCMKTS:MJNA) bills itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries. The company licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry.
Even in light of this news, MJNA has had a rough past week of trading action, with shares sinking something like -5% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -23%.
Medical Marijuana Inc (OTCMKTS:MJNA) pulled in sales of $16.9M in its last reported quarterly financials, representing top line growth of -4.2%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.2M against $11M, respectively).
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