Cannabis Commodities, CBD, Hemp and Medical Products

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Hemp as a commodity

Earlier in November, Senate Majority Leader Mitch McConnell indicated a provision for hemp legalization in the latest version of the farm bill. The provision will include making hemp a legal agricultural commodity in the United States. Hemp can be used to make CBD derivative products that don’t have exposure like other marijuana products including THC, a psychoactive ingredient, that makes it a controlled substance.

Hemp-based products

Canopy Growth (WEED) thinks that the main challenge with CBD-based cannabis products derived from hemp will lie in making an effective scientifically demonstrable product that will have a positive impact on users. The company is testing CBD-based products to lower anxiety in dogs. If established, Canopy Growth hopes to produce products that can lower human anxiety as well. The proposed amendment in the farm bill will likely pave the way for more research for companies including Aurora Cannabis (ACB), Tilray (TLRY), and HEXO (HEXO).

Our view

In this series, we discussed how cannabis continues to remain a vibrant industry. There are several paths for companies (HMMJ) to attain profitability. For the cannabis industry, the near-term trajectory is still in line with the previous expectations. However, the timing seems to have impacted the recent earnings results. Cannabis companies continue to invest and innovate in the cannabis space, which is a positive indicator for investors.

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Hemp products

In addition to recreational and medicinal cannabis-based products, cannabis companies are also likely to focus on hemp-based products that usually don’t have psychoactive properties. In the chart below, you can see a sample of hemp-based products under the umbrella of Hempco, a subsidiary of Aurora Cannabis (ACB) (ACBFF). Canopy Growth’s hemp-based products will include construction material, clothing, health foods, biofuels, and body care products.

Medical market

While the recreational cannabis market is at the forefront of all things cannabis at the moment, the long-established medicinal cannabis market will continue to evolve.

When it comes to the medical cannabis market, Canopy Growth (CGC) (WEED) is not leaving any stone unturned to innovate and explore new uses for cannabis. For example, it plans to enrich cannabis-based medicinal products with other pharmaceutical ingredients that the company believes will offer a cure for unaddressed diseases. It already produces cannabis for human medical applications but has also established a subsidiary to develop medical products for pets.

In its MD&A (management discussion and analysis), Canopy Growth stated, “As in the human market, there is a great unmet medical need in the veterinary market to provide effective therapeutics with acceptable safety profiles.” In this regard, the company has already received approval from Health Canada’s Veterinary Drugs Directorate to conduct research in treating animals with anxiety using cannabidiol.

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