Marijuana News Today: Congress Legalizes Hemp Growing in the U.S., CBD Oil Market May Explode

Marijuana News Today
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Marijuana News Today

Coming to fruition in the marijuana news today, the Farm Bill 2018 we first began discussing a couple weeks ago has now been passed by Congress, allowing hemp to legally be grown across the country—and it may hold implications for cannabidiol (CBD) as well.

The CBD industry is already valued at about $1.0 billion in the U.S. alone. This comes despite the law being rather murky on the status of CBD. (Source: “Congress just quietly passed a law that could spark a boom for the $1 billion marijuana-linked CBD industry,” Business Insider, December 12, 2018.)

You see, CBD oil is not associated with the marijuana high. Instead, it is often credited with having several healing qualities. In fact, the first cannabis-derived federally approved drug in the U.S.—”Epidiolex”—has a very high concentration of CDB and little else from the marijuana plant.

Hemp naturally has a higher CBD concentration as opposed to tetrahydrocannabinol (THC), the substance that gets you high.

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As a result, it makes sense that the U.S. federal government would move faster to approve hemp plants over marijuana plants; the sticking point still comes down to THC.

Now, while CBD oil medical products have technically been reclassified by the Drug Enforcement Administration (DEA), the agency made very specific guidelines for what type of CBD products would be approved for medical use.

This is now also going to extend to the Farm Bill.

While hemp is legalized, there’s still a murky legal limbo surrounding CBD as the DEA has yet to fully reclassify the substance and still considers it illegal, by and large—especially for recreational consumption.

This is a classic problem that has plagued the U.S. for a long time now. Until Congress is able to approve a full-on marijuana reform bill, the DEA and other federal agencies (like the Food and Drug Administration) will have to make various recommendations for specific products and substances.

Still, this is a huge step forward for the U.S. CBD market, with many products already in production and sale in other parts of the world and the U.S.

CBD is, again, celebrated for its restorative qualities, and as such is popular in teas and pills.

This is a huge and growing market that is likely to make up a big chunk of the future of the marijuana industry. After all, the true potential in marijuana is not only weed for recreational consumption, but also the medical applications locked away within the plant.

After all, cannabis has been linked to several Big Pharma markets that it could easily dominate in the future like pain relief and sleep aids.

I say easy because, frankly, many of our current substitutes in those areas are severely lacking.

The opioid epidemic, for instance, derives from the need for a suitable pain medication. Opioids, of course, are far more addictive and overall deleterious to one’s health.

CBD could come in and sweep away competitors, not only solving major health crises, but also creating a medical empire in the process that could be worth billions, and marijuana stocks that are exploring this sector will be rewarded accordingly.

CGC Stock

The marijuana news today was enough to spark excitement among marijuana execs.

Canopy Growth Corp (NYSE:CGC) was among the first to voice its support for the bill.

The “Farm Bill is the first step to active” involvement in the U.S. by Canopy Growth, CEO Bruce Linton told CNBC Wednesday. “The world’s changing: This is the first step in the U.S. to manage cannabinoids.” (Source: “Canopy Growth CEO says Farm Bill passage is ‘first step’ toward US expansion,” CNBC, December 12, 2018.)

Opening up the U.S. market is the Holy Grail of the marijuana business. Millions of potential consumers lay untapped due to draconian federal law that is, frankly, not in keeping with the majority of the American people, as numerous polls have shown.

And it’s also worth noting that 32 states have legalized marijuana for medical use, representing well over half the country.

In any case, Linton did make note during the interview that there was still a lot of uncertainty surrounding CBD and its legal status in the U.S. He wanted to see further reform come to the country.

CGC stock, however, fell by about one percent in early-morning trading, while the company finds itself up about three percent over the past five days.

While the three-percent gain for Canopy Growth stock isn’t going to cause heads to spin, it is still a refreshing victory for the company considering how poor things have been going for many marijuana stocks over the past month or so.

The end of 2018 has not been kind to most pot stocks not named Cronos Group Inc (NASDAQ:CRON)—and even CRON stock finds itself down big about six percent in today’s trading.

CGC stock’s managing to stay level, then, is a win for the company and positions it as a stalwart of the industry. After all, despite the recent month’s pullback, it’s still up over 30% on the year and I imagine that, by and large, those gains will remain intact to close out 2018.

Long-term, the induction of the Farm Bill into law is only going to help the company expand in the U.S., as Linton mentioned, and will lead to huge gains down the road as the country opens itself up to marijuana production and consumption.

APHA Stock

In the marijuana news today, Aphria Inc (NYSE:APHA) stock continues to disappoint as it expands further into Latin American despite the recent controversy.

I’m of course referencing the accusation that Aphria purchased assets in Latin America and Central America at inflated prices to benefit the owner of said assets, who was connected to the company.

While that investigation has not reached a definitive conclusion, the stock market has taken notice and punished APHA stock accordingly.

Under the agreement announced recently, Aphria will make inroads in Paraguay by supplying Insumos Medicos S.A., a pharmaceutical manufacturing, import, and distribution company. (Source: “Aphria signs medical marijuana supply deal with Paraguay firm,” BNN Bloomberg, December 12, 2018.)

The reaction on the pot stock market was not kind.

Aphria stock plummeted 5.5% in early-morning trading. Over the past five days, the company finds itself only marginally down, but year-to-date, APHA stock has lost over 60% of its value.

I was a supporter of Aphria stock for a long, long time. And times were good at first, with the company racking up huge gains.

But now, it appears, there’s not a whole lot of potential left here. I first proposed abandoning the stock several months ago, and that appears to be the right move.

APHA stock could rally, but it seems that every day that rally becomes more and more difficult to fathom.

CGC and APHA Stock Performances

The CGC stock (black line) and APHA stock (blue line) performances from the past week are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today represents an important if not final step toward CBD legalization in the U.S.

While the laws are still murky, this segment of the marijuana industry could very well explode across the country and even the world if its restorative effects are properly leveraged.

As such, it represents a very exciting opportunity for marijuana stocks moving forward, even if we’ll still have to wait for some time before we see that full potential realized.