Marijuana grower Canopy Growth benefiting from regulatory changes

While Donald Trump’s certainly has his critics, new US farm laws which provide financial assistance for industrial hemp growers are causing a stir on the stock market. For those not aware, hemp is a form of cannabis plant which is used to produce cannabidiol (CBD). Even though this chemical was discovered back in the 1940s it is only just being legalised for public use. While cannabis is strongly associated with relaxation and its various hallucinogenic elements, CBD is a variation which will not induce a high.

So, what does this mean for marijuana stocks and those producing CBD on a commercial scale?

Canopy Growth sees shares surge

Canadian cannabis producer Canopy Growth has seen a significant rise in its shares after being granted a hemp licence by the New York State. The company has already announced plans to invest up to $150 million in its New York operations. The group believes this is a major shift in US politics prompting a significant rise in marijuana stocks across the board.

It is worth noting that this is not an across-the-board legalisation of recreational cannabis but more focused on medical issues. It has been common knowledge for some time that CBD is extremely effective in treating anxiety, movement disorders, pain and cognition. Perhaps the link with recreational cannabis use has undermined its potential medical benefits, which are still in their relative infancy.

The future of marijuana stocks

The use of CBD for therapeutic matters has long been a bone of contention and caused great friction between the FDA and medics. Recently there has been growing pressure to loosen the regulations surrounding hemp and CBD. Who would have guessed that Donald Trump would have been the man to push these changes through?

Opinion is divided amongst investors whether marijuana stocks are ahead of the game or simply reflecting the medium to long term potential. If you take a step back, and look at things from a distance, there is no doubt that the hemp/CBD market will be a multibillion-dollar industry in a very short space of time. Heavily regulated research has been ongoing for some time with regards to the medical benefits of CBD. Many treatments are ready to be rolled out as regulations are loosened across the board.

Pharmaceutical groups watching from a distance

There has long been speculation of an unhealthy relationship between the FDA and pharmaceutical groups which have massive influence in the US. There is a growing belief that the loosening of hemp regulations and growth in the CBD market could be the equivalent of the emergence of electronic cigarettes for the tobacco industry. It is inconceivable that the large pharmaceutical groups will sit back and watch the new kids on the block snatching their market share. So what will they do?

Over the next few weeks and months we will likely see more public interest in CBD and hemp production from the pharmaceutical giants. Growers will likely do deals with these influential companies looking to protect their markets going forward. Those producing and marketing CBD will already be on the radar of the large pharmaceuticals and we can expect takeovers and mergers in the not too distant future.

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