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Investing in Hemp / Marijuana Farmland

An economic boom is taking the Prairie Provinces by storm, thanks to the federal government’s recent nationwide legalization of cannabis. For the first time, industrial hemp promises to be one of Canada’s most lucrative cash crops.

Table of Contents – Investing in Hemp / Marijuana Farmland

  • Growing demand for the plant
  • How to invest in hemp farmland
  • A unique opportunity in a booming market
  • 5 Things to Know About Hemp Farming

Hemp is a close relative of marijuana but contains almost no tetrahydrocannabinol (THC)—the psychoactive ingredient that causes people to get high while smoking or consuming marijuana. Instead, hemp contains high concentrations of cannabidiol (CBD)—a non-intoxicating alkaloid with demonstrated medicinal benefits known to treat seizures, chronic anxiety and pain.

Until late last year, hemp farming in Canada was heavily regulated. Farmers licensed to grow industrial hemp needed to submit to a criminal background test and were only allowed to harvest stems and seeds. The leaves, buds and flowers—which contain CBD—were left to rot in the field.

Thanks to the government’s legalization of cannabis in 2018, it’s easier than ever before for prospective farmers to begin growing hemp. Licensees are now permitted to harvest the entirety of the hemp plant and extract CBD from the flowers, buds and leaves.

Savvy investors from across Canada are turning toward the Prairie Provinces to explore the possibility of investing in hemp farmlands. Hemp is a versatile cash crop that’s relatively easy to grow. The plant’s fibres are used in many textile and industrial purposes; the seeds, meanwhile, are a valuable source of Omega-3 fatty acids and are often pressed into cooking oil. Hemp is used to making everything from bed sheets, to seizure medications, to protein powders. Needless to say, it’s in demand.

Growing demand for the plant

Nationwide cannabis legalization has created an unprecedented demand for CBD and other cannabis-derived products across Canada.

While many people associate cannabis-infused products with THC, an increasing number of products focus on the purported health benefits of CBD, which is entirely non-intoxicating. Today, CBD is present in a wide range of products, including sparkling water, dog biscuits and even beers. High demand for CBD-infused products is even leading to nationwide shortages.

Looser rules surrounding the production and distribution of hemp and cannabis around the world are creating a significantly larger market for CBD-infused products, as well. The United States recently legalized hemp nationwide (though cannabis remains illegal at the federal level). Many countries in Asia and Europe are also beginning to allow imports of CBD products.

Hemp textiles are also on the rise. Hemp fibres are long, strong and resistant to many of the types of rot impacting other plant-based fibres. Additionally, hemp is quick and efficient to grow compared with many other textile commodity crops.

It’s worth noting, Canada’s hemp market has experienced a boom and bust cycle in the past. Following the legalization of industrial hemp in 1998, farmers dedicated increasingly large amounts of acreage to the crop after the seeds became an important health food staple, particularly in South Korea. After China began increasing its industrial hemp production, exports to South Korea largely ceased and the Canadian hemp market collapsed.

This history doesn’t seem to be deterring Canadian hemp farmers from trying their hand at large-scale production again. The amount of hemp acreage in Canada is expected to double this year, to a total of 82,000 acres.

How to invest in hemp farmland

If you’ve decided you want to invest in hemp farming as a unique, creative way to diversify your portfolio, you might be wondering what the best way to approach a hemp farmland investment might be.

It’s helpful to first take a look at some of the ways investors add farmland to their portfolios. If you’re looking for a unique real estate investment opportunity, chances are you’re not an agricultural professional. Because of this, you likely won’t want to operate your hemp farm.

Some real estate investors opt to directly purchase farmland and hire an agricultural team to manage it. You can find all types of agricultural professionals specializing in the production of specific types of crops. If you’re planning on growing hemp, you’ll also have to consider licensing requirements, as well as hemp production experience.

If you’d rather not purchase farmland outright, but still want to add farmland to your investment portfolio, you could try finding a real estate investment trust (REIT) specializing in agriculture. In addition to REITs, there are several other types of funds investors can leverage to add agriculture to their portfolios, including mutual funds and exchange-traded funds. Many Canadian cannabis companies are now operating as publicly traded stocks, as well.

For the adventurous investor looking to purchase farmland for hemp production, there are a few important points to be aware of.

  • Like many grains, hemp is only profitable when grown at high volumes. This means you should plan to grow a minimum of 50 acres of hemp.
  • Hemp is suitable for growth in a wide variety of climate types. The plants prefer hot, humid weather with well-drained soil.
  • Additionally, hemp doesn’t tolerate desert or alpine environments. This means more mountainous areas of Alberta, in particular, aren’t suitable for hemp production.

While it’s now easier to grow hemp in Canada than it was in years past, it’s still more tightly regulated than the production of wheat or barley. You’ll have to work with a certified cannabis company to process and extract CBD from your hemp buds, flowers and leaves. Due to high market demand, many CBD processors are struggling to keep up with the amount of hemp that needs processing.

A unique opportunity in a booming market

Hemp is considered a high-risk high-reward investment, due in large part to the fact it’s still a niche crop. While putting all your eggs in the CBD basket may not be wise, industrial hemp and CBD represent a potentially lucrative investment for investors looking for ways to diversify their portfolios.

While directly purchasing farmland can be prohibitively expensive and challenging to mention, it’s still possible to try your hand at investing in hemp through REITs, mutual funds and publicly traded stocks.

5 Things to Know About Hemp Farming

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An economic boom is taking the Prairie Provinces by storm, thanks to the federal government’s recent nationwide legalization of cannabis. For the first time, industrial hemp promises to be one of Canada’s most lucrative cash…

Best Hemp Stocks To Buy: Raking In The Green

Marijuana and hemp are the two main branches of the cannabis plant family, but there is an important difference.

Hemp is defined as cannabis that contains 0.3 percent or less of the psychoactive chemical THC, while marijuana contains a larger amount of the compound.

The recent legalization of hemp is generating excitement among investors. After decades of suppression, farmers are once again permitted to cultivate and sell this versatile plant. Companies that stand to profit from growing and distributing hemp and hemp-based products stand to realize significant profits, which may mean good news for those that invest now.

A Quick History of Hemp in the United States

When the 2018 Farm Bill was signed into law, hemp production became legal in the United States.

However, this isn’t a first for the country. Hemp arrived in North America as early as 1606, and for centuries it played a critical role in the economy.

In fact, it was so important that it became the subject of legislation in the 1700s. By law, farmers in certain colonies were required to grow hemp alongside other staple crops.

Hemp was used in the manufacture of rope, lamp fuel, clothing, and paper. In some areas, it could be exchanged in lieu of currency.

The Declaration of Independence was drafted on hemp paper by Thomas Jefferson, and Abraham Lincoln relied on hemp seed oil to fuel his household lamps.

Eventually, even Henry Ford began experimenting with hemp, designing an entire auto body from hemp fiber.

The advantages of hemp cannot be overstated.

It produces four time more paper per acre than trees, and hemp fiber is ten times stronger than steel.

According to a 1938 Popular Mechanics report, it could be used in more than 25,000 products at the time the research was published.

Today, that number is exponentially higher.

Unfortunately, when concerns about the negative effects of marijuana surfaced in the first half of the 20th century, hemp was targeted as part of the problem.

The 1937 Marijuana Tax Act discouraged cultivation of hemp by taxing it heavily.

In 1970, the Controlled Substances Act classified hemp as a Schedule I drug, making it illegal to grow and sell under most circumstances. For investors the good news is the 2018 Farm Bill changes all of that.

Hemp-Based CBD Products Taking the Marketplace by Storm

The return of industrial hemp has farmers, manufacturers, entrepreneurs, and innovators scrambling to make the most of this massive opportunity.

Many investors are weighing their options for getting in on the action.

Analysts’ estimates of market potential for hemp-based products vary widely, from a conservative $1.3 billion by 2022 to an astonishing $22 billion by 2022.

One of the biggest areas of growth is in wellness products that contain hemp-based cannabidiol (CBD).

From cosmetics and skin care creams to dietary supplements, CBD is rapidly gaining popularity among consumers.

The major players in this space are already showing significant gains in sales, which leads to a big question for investors. What are the best hemp stocks to buy that are most likely to generate substantial returns?

Should You Invest In Charlotte’s Web Holdings?

Charlotte’s Web is already leading the market when it comes to CBD wellness products.

It is ranked number one among organizations in this area of the wellness industry, offering consumers a variety of capsules, topical creams, tinctures, and gels.

Year over year, the third quarter of 2018 showed a 57 percent increase in sales, and the company generated nearly $8.7 million in earnings during the first three quarters of 2018.

Charlotte’s Web is likely to remain in its industry-leading position, because it enjoys a large head start.

With a 40,000 square foot research and manufacturing facility and a list of 2,700 retail locations already carrying Charlotte’s Web products, new entrants have a lot of ground to make up.

Charlotte’s Web already cultivates 300 acres of hemp plants, thanks to previous Farm Bill legislation that permitted pilot programs for research purposes. This puts the company far ahead of its peers.

Is Canopy Growth a Buy or Sell?

Canopy Growth [NYSE: CGC] is not yet operating in the United States, and this company hasn’t ever turned a profit.

Unlike Charlotte’s Web, it simply isn’t a major player in the CBD market at this time. However, those willing to accept a certain level of risk see great potential in Canopy Growth.

First, as soon as the US legalization of hemp was announced, the company’s CEO announced plans to enter the US market.

This could mean big competition for Charlotte’s Web, because Canopy Growth is already well-established in other parts of the world.

When measured by market cap, it is the biggest marijuana producer, and it has a hemp operation underway in Canada.

Canopy Growth [NYSE: CGC] has the technology required to extract CBD from hemp, and it recently purchased a Colorado-based hemp researcher.

Perhaps most important of all, Canopy Growth [NYSE: CGC] has an existing relationship with Constellation Brands [NYSE: STZ], which produces alcoholic beverages. This could be exceptionally valuable, as the potential market for CBD infused beverages shows great promise.

CV Sciences: Buy or Sell

Though CV Sciences hasn’t quite surpassed Charlotte’s Web in the hemp-based CBD market, it comes pretty close.

Some analysts believe it is only a matter of time before CV Sciences [OTC: CVSI] takes over the number one spot.

This company produces the top selling CBD oil brand, PlusCBD Oil, which is currently on the shelves of more than 2,000 retail locations.

Year over year, CV Sciences showed revenue growth of 143 percent in the third quarter of 2018, and earnings came in at $3.3 million.

Overall, CV Sciences stock gained 650 percent, which is one of the best results in the cannabis industry for 2018.

Best of all, CV Sciences has an exciting new product expected to come to market relatively soon.

The company is working on a smoking cessation medication that combines hemp-based CBD and nicotine to eliminate cravings for tobacco products. If it is as effective as the company indicates, a large demand for this smoking cessation solution is expected.

Choosing a path to enter the world of hemp investment is a challenge. Learn more by visiting Financhill online for information on the best investment options in every industry.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.

Best Hemp Stocks To Buy: Raking In The Green Marijuana and hemp are the two main branches of the cannabis plant family, but there is an important difference. Hemp is defined as cannabis that