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Investing in hemp

Investing in Hemp: What you need to know

Investing in hemp and cannabis businesses has been a hot topic since the end of 2018. But what do you need to know before making an initial investment?
Hayley Smith
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Investing In Hemp in 2024

Investing in hemp has been a hot topic of interest over the last few years.

When, in December of last year, the 2018 Farm Bill made it legal to cultivate hemp nationwide, investing in the hemp industry became a more attractive proposition than ever.

Diversifying an investment portfolio helps to minimize financial risk, but it’s important to remember that hemp represents a new, and therefore, unpredictable opportunity.

Learning how to invest in hemp stocks and which hemp stocks to buy takes time and requires dedicated thought.

Let’s take a deeper look at the hemp stock market and at CBD stocks and shares in particular.

investing in hemp

Should I Invest in Hemp Stocks or Cannabis Stocks?

Cannabis is currently one of the fastest emerging industries in the world, partly due to the perceived health benefits of its two primary cannabinoids: THC and CBD.

The CBD niche sector has exploded and has been strengthened, for the most part, by the compound’s non-psychoactive makeup.

Experts believe that the CBD market is setup for exponential growth over the coming years and has the potential to become a mega-industry all of its own.

What’s interesting, is that CBD is not only found in cannabis but is also found in abundance in the hemp flower.

With the recent changes to federal law, as laid out in the 2018 Farm Bill, hemp is able to offer a more secure future for investment purposes. Not only is it possible to sell hemp-derived CBD products across state lines and throughout the majority of the U.S., but it’s also cheaper and easier to grow hemp rather than marijuana.


A Deeper Look at CBD

According to some sources, the hemp plant has up to 50,000 different uses.

Hemp can be cultivated for its fibersseeds, or for its cannabinoids.

But, as the demand for CBD consumer products continues to rise, many experts believe that the best hemp stocks are those directly related to CBD-infused products.

As an extract, CBD can be used to infuse a broad variety of consumer products and it’s gaining market share in industries as wide-ranging as beauty, wellness, fitness, pets, food, and beverages.

Studies are regularly conducted on the usefulness of CBD and experts believe there is still a lot to be learned, which could further increase its investment value.

CBD offers hemp a very bright future as new research from the Brightfield Group predicts sales to increase by 700% in the U.S. in 2019. The Brightfield Group is a consumer intelligence firm that collects user data and makes informed predictions related to CBD and the regulated cannabis market.

Its current estimates place CBD revenue at around $23.7 billion by 2023, suggesting that the best way to invest in hemp is by investing in hemp agriculture or companies focused on CBD manufacturing.

How to Invest in Hemp Farms

Thus far, 2019 has been a tough year for many farmers…

Planting season was incredibly wet and some farmers were duped into buying seeds and clones falsely advertised as female. As a result, some farmers have watched as entire crops have “seeded out”.

Despite the shaky start to a legalized industry, farmers are looking forward to 2020 undeterred and confident that great profits can still be made from growing hemp rich in CBD.

Well-versed farmers know that the cultivation of premium hemp begins with the seed.

Feminized seed strains offer the highest levels of CBD and the lowest levels of THC, which helps to remain 100% compliant under new farming laws and regulations.

hemp on the stock market

How to Invest in Hemp Stocks

If you’re not interested in hemp farming yourself, but are instead looking for industrial hemp companies to invest in, then you still have time as the initial stocks haven’t exploded at quite the same rate as the industry itself has thus far.

Companies that are cultivating and distributing good quality hemp-derived CBD products stand to make significant profits in the years to come.

Getting involved while stock prices are low could prove lucrative.

Major players to watch out for include Charlotte’s Web Holdings, who have a massive head start over other companies in terms of distribution, and Canopy Growth Corporation, who have recently announced plans to launch in the U.S.

If the idea of investing in a single stock presents itself as too much of a risk, but you believe in the future of the hemp market, then you could consider a cannabis index fund or an exchange-traded fund.

These types of funds allow you to invest in groups of hemp stocks, as opposed to single hemp stocks, which means the main risk you carry is Wall Street’s valuation of the market as a whole, as opposed to the performance of a single business.

Predictions For A Bright Future

So, maybe money does actually grow on trees after all. Hemp trees. Always valued as a high cash crop, right up until the 1970’s when it got caught up in America’s War on Drugs campaign, hemp is back in the investment limelight once again.

If The Brightfield Group’s predictions are anything to go by, then hemp-derived CBD looks set to skyrocket over the next five years.

But knowing which rocket to back is the tricky part.

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