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Farm Bill Hot Takes

Updated: Mar 13, 2019



The Farm Bill passes and the market...yawns? It's a bit surprising that a plant that has been illegal for 85 years becomes legal and this barely nudges the cannabis stock ecosystem. Eventually, the needle should move for cannabis companies in a big way.


Why?


5 reasons:


1. It leads the way for our government to legalize hemp's cousin, cannabis, by providing an analog. As social creatures, with advanced methods of communication (i.e. speech) homo sapiens love to follow existing patterns of behavior/thought. Following on the heels of Canadian adult-use launching and now the legalization of hemp, the runway lights are clearly lit for legislators in the U.S. to land the plane on legalization.


2. More hemp means more cultivation, leading to more agtech innovation which in turn leads to more efficient operations (and more ancillary spending-yes a shameless plug for Merida's thesis but hey, our dime, our dance floor). You can expect a fair amount of hemp cultivation to light up, bringing more professional growers into the hemp cultivation space. That will give cannabis growers even more information/data/feedback from which to derive their own value.


3. CBD is going to be huge...as a standalone product for patients, as a nutriceutical for health and wellness, and as an additive to cannabis to balance ratios. Expect ubiquitous CBD to provide more product choices for patients, and more formulations for MSOs and sophisticated cannabis companies. It will also be a huge boon in limited license states that limit products in some manner, like NY/MN/PA with extract-only limitations.


4. Sophisticated cannabis extractors/companies understand CBD better than most and will find ways to exploit its qualities. As legalization normalizes CBD, expect those with resources and scientific knowledge to push the productization of CBD since legality will allow for more formal resources to help existing operators. Think analytical chemists, formulators and pharmaceutical experts.


5. Did someone say research? Yes please. Time to prove CBD's virtues (which have in fact already been proven in many ways) in a manner that doctors, insurance companies and general society et al. understand and trust. Start shorting the opioid producers, the sleep medication companies and anxiety drug makers (among others) because it is going to be on once research on CBD becomes prevalent. And by being on, I mean game over for the status quo.


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