One of the most significant growth trends in the world today is in CBD products. This was also one of the most significant market booms of the past half-decade. But no one seems to remember it. That should be a clue.
When a market theme gets too popular, it’s time for the late money and the weak-handed money to get burnt. But, if the fundamental trend remains in place, then the theme will resurface once the over-eager speculators have been cleared out.
According to recent research from ResearchAndMarkets.com, the global cannabidiol market is expected to reach $13.4 billion by 2028, growing at a CAGR of 21.2% from 2021 to 2028.
It’s time to start watching for the re-emergence of this theme.
This is especially true given the evolution of the companies involved and the overall dynamics that define the space. With that in mind, we take a look at a handful of interesting prospects in the space here, including: Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF), Medical Marijuana Inc (OTCMKTS:MJNA), Real Brands Inc (OTCMKTS:RLBD), and Cronos Group Inc (NASDAQ:CRON).
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.
Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers. Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.
CWBHF recently reported financial results for the first quarter ended March 31, 2021, including highlights such as the fact that consolidated revenue increased 9.1% to $23.4 million vs. $21.5 million in Q1-2020, DTC eCommerce sales increased 14.5% year-over-year and contributed 68.9% of Q1 revenue, and B2B net revenue decreased 1.4% year-over-year.
“Despite reduced retail activity due to the pandemic, our directly comparable B2B retail sales showed year-over-year growth. Our B2B retail sales and velocities further strengthened in March and April as US vaccination programs support reopening of the economy, and our DTC sales continued to grow demonstrating long-term secular strength for our products in the e-commerce channel,” said Deanie Elsner, CEO of Charlotte’s Web. “We continued to expand our leading market position with quarterly market share gains across all of our channels. Internationally we have made our first moves into Israel and Canada with initial product sales planned for early 2022. We are pleased with our progress and believe that Charlotte’s Web is well positioned to drive continued growth in the US and new growth in key international markets as we expand outside of the US.”
The stock has suffered a bit of late, with shares of CWBHF taking a hit in recent action, down about -14% over the past week.
Charlotte’s Web Holdings managed to rope in revenues totaling $35.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 16.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($67.3M against $36.9M).
Medical Marijuana Inc (OTCMKTS:MJNA) bills itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries.
The company licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry.
MJNA recently announced that its subsidiary HempMeds® Brasil had its best revenue month ever in Company history in April 2021. “Our HempMeds Brasil operations have seen a consistent increase over the years. We aim to reach as many consumers in need as possible and last month’s achievements prove that we are continuing to expand our reach to our target audiences,” said Medical Marijuana, Inc. CEO Dr. Stuart Titus.
“I am incredibly proud of the success our HempMeds Brasil team has been able to achieve. As we celebrate our best revenue month in company history, we are scaling our operations in the country, refreshing our consumer-facing website and increasing the size of our facilities in Brazil to meet the needs of our expanding team,” said HempMeds® CEO Raul Elizalde.
If you’re long this stock, then you’re liking how it has responded to the announcement. MJNA shares have been moving higher over the past week overall, pushing about 5% to the upside on above average trading volume. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -15%.
Medical Marijuana Inc pulled in sales of $10.4M in its last reported quarterly financials, representing top line growth of -38.7%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.3M against $8.8M, respectively).
Real Brands Inc (OTCMKTS:RLBD) has put together a model designed to differentiate itself from other names in the CBD space on multiple levels, including with proprietary technology, branding expertise, credibility driven by affiliation with established research institutions, a team that deeply understands the market, alignment with deep-pocketed funding sources, and a major partnership in place with a billion dollar listed player.
RLBD has its roots in a reverse merger that took Canadian American Standard Hemp Inc., or “CASH”, onto the public markets last fall. That installed a new leadership team including a new CEO and Chairman, Thomas Kidrin, who was formerly with MariMed Inc (OTCMKTS:MRMD), a publicly traded cannabis company.
In a recent interview, Kidrin notes that RLBD is in the business of proprietary specialized extraction and chromatography to produce 99% pure cannabinoids.
RLBD is over 23% owned by Turning Point Brands, Inc. (NYSE:TPB), a billion dollar NYSE-listed company that is also a customer of RLBD now for bulk CBD oils and isolates used in Turning Point products. Turning Point has more than 250,000 points of distribution with leading brands such as Zig-Zag®, Stoker’s®, and Beech Nut®.
RLBD also recently brought in the Chief Science Officer of iconic skin care brand, Elizabeth Grant Skin Care, Dr. Adel Rammal, PhD. Rammel will be instrumental in helping to formulate leading edge branded CBD topicals to be marketed through the company’s Wa Brands segment.
The company is also working on expanding its product lines and has the proprietary technology to produce higher margin cannabinoid-based products at scale efficiently, which grants RLBD another edge over the competition in establishing itself as a CBD Boom 2.0 winner.
RLBD is also working on an international expansion that will include marketing through international sports celebrities and sports leagues and include a sports wellness product line that Kidrin says is nearing launch.
The company is also working on a line of CBD Beverages and other fresh concepts, which will launch in the next 60-90 days.
Real Brands Inc (OTCMKTS:RLBD) wants to move these new products internationally as well, and will seek to market through authentic influencer relationships. The company is in the process of filing Form 10, which should be completed this month, and believes it will be able to uplist shortly after.
RLBD also has deep-pocketed support given that it is almost a quarter owned by TPB, which is a third owned by a multi-billion dollar hedge fund with a vested interest in helping TPB and its major interests secure necessary financing on strong investor-friendly terms.
That may be helping the stock, which has already started to take off to the upside this week, rallying as much as 75% higher on Monday after holding key support at the stock’s 200-day MA last week.
Cronos Group Inc (NASDAQ:CRON) casts itself as an investment firm in the biopharmaceutical space, with a strong emphasis on medical marijuana and cannabis-related research and products. In short, the company seeks to invest in other companies, either licensed or actively seeking a license, to produce medical marijuana pursuant to Canada’s Marijuana for Medical Purposes Regulations (MMPR).
The firm typically invests in companies based in Canada. The firm is primarily an equity investor, may also advance debt as appropriate. It seeks to make minority investments with appropriate governance and shareholder rights. The firm seeks board representation consistent with the size of the investment but does not need control.
CRON recently released a Marketing Code designed to responsibly move the emerging cannabis industry forward. Cronos Group believes that those below the legal age of consumption should not be targeted in an adult-use cannabis market. Cronos Group recognizes there is a clear need for standards. That’s why the Company proactively created its own and is sharing its principles publicly as a resource for the industry and policymakers.
“This Marketing Code is an important step toward elevating industry practices. We hope that others within the industry will embrace similar commitments,” said Kurt Schmidt, President and Chief Executive Officer, Cronos Group. “As policymakers consider how to best regulate a federally legal U.S. cannabis market, we believe these principles reflect the sort of policies necessary to support a trustworthy industry.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
Cronos Group Inc pulled in sales of $22.2M in its last reported quarterly financials, representing top line growth of 130.3%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.6B against $263.5M).
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