The Canadian hemp stocks we’ve dug up could see significant upside following the passage of the Hemp Farm Bill in the U.S. Congress
SmallCapPower | December 17, 2018: The Hemp Farming Act of 2018 was a proposal to amend the status of hemp (less than 0.3% THC) under federal law, by removing its status as a Schedule I controlled substance, and instead classifying it as an agricultural commodity. The bill has passed the U.S. Senate, as well as the House, and is now awaiting a signature from the President before it becomes law. Following the passage of the bill into law, according to Brightfield Group, the industry could grow from its current size of US$800 million to over US$20 billion by 2022. Not surprisingly, hemp stocks have reacted exceptionally well to this news, with Hempco Food and Fiber (TSXV:HEMP) adding more than 70% to its market cap in the previous five trading days. Today we have identified four Canadian hemp stocks that could continue to see further upside as they begin to tap into an emerging industry.
*Market Cap and share prices as of December 12, 2018.
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Charlotte’s Web Holdings Inc. (CSE:CWEB) – $16.00
Hemp
Charlotte’s Web produces and distributes hemp-based, cannabidiol wellness products in the U.S. The Company operates under a vertically-integrated business model, overseeing the cultivation, manufacturing, and distribution of its products. The Company produced 63,000 lbs of hemp in 2017 and is targeting production of 250,000 – 350,000 lbs for 2018. Charlotte’s Web distributes its products through direct to consumer ecommerce channels, such as cwhemp.com, as well as over 2,700 retail locations. The Company has been reporting increasing gross profit margins over time, increasing from 65% in 2016 to 78% in 2018, in addition to posting strong revenue growth.
- Market Cap: $1.5 Billion
- 1-Month Returns: +10.4%
- YTD Returns: +65.0%
EastWest Bioscience Inc. (TSXV:EAST) – $0.14
Hemp
Based in Vancouver, EastWest manufactures and distributes premium products for the Canadian retail consumer hemp market. The Company operates under a seed-to-sale model, and so it oversees growing and processing of raw materials, R&D, manufacturing of health products, conducts in-house testing and analytics, and ultimately distributes and sells its products. In addition to offering a line of hemp-based supplements, EastWest also operates a pet food and supplements business, as well as hemp-based skin care products business.
- Market Cap: $10.5 Million
- 1-Month Returns: +36.4%
- YTD Returns: -22.2%
Naturally Splendid Enterprises Ltd. (TSXV:NSP) – $0.16
Hemp
Naturally Splendid Enterprises is a vertically-integrated biotechnology and consumer product company specializing in industrial hemp products. The Company’s line of products target a range of markets with various uses, including hemp protein isolate, hemp-based performance products for athletes, superfoods, meal replacements, energy bars, and pet food. Naturally Splendid distributes products to the U.S., Canada, Australia, Germany, and South Korea. The Company’s production capacity currently exceeds 22,500 sq. ft. and operates the only organic-specific hemp processing facility in North America. The Company reported $499,538 in revenue for the three months ended September 30, 2018.
- Market Cap: $16.3 Million
- 1-Month Returns: -5.9%
- YTD Returns: -59.0%
Hempco Food and Fiber Inc. (TSXV:HEMP) – $1.43
Hemp
Hempco Food and Fiber is a Canada-based company, providing hemp-based products for human and pet consumption. The Company is engaged in research and development, manufacturing, distribution and marketing of its hemp products. The Company’s “tri-crop strategy” centers around developing hemp foods, hemp fiber, and hemp nutraceuticals. The Company has plans to build a 56,000 sq. ft. facility in Nisku, Alberta, with monthly production capacity exceeding 240,000 kg. Aurora Cannabis Inc. (TSX:ACB) holds more than 50% of Hempco’s outstanding shares.
- Market Cap: $87.2 Million
- 1-Month Returns: +25.4%
- YTD Returns: -31.9%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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