Cannabis’ popularity is rising as more Americans accept its legalization. In addition to presidential candidates discussing the issue, celebrities are becoming linked to cannabis, taking it mainstream.
Canada expects to experience its second wave of cannabis legalization next month, including edibles, cannabis-infused beverages, extracts, and other products. Martha Stewart recently announced the launch of CBD-infused products.
Martha Stewart and Canopy Growth team up
In February, Canopy Growth teamed up with lifestyle guru Martha Stewart to produce hemp-based CBD products. I believe the company intends to drive consumer interest in CBD products. Although they are legal on a state-by-state basis, CBD products still face scrutiny from the FDA.
Jim Cramer, the host of CNBC’s Mad Money, also favors the idea of the partnership. He said, “When you have a Martha Stewart get behind [CBD], that matters. In the same way that it matters that Rob Sands and Bill Newlands, who was a great teacher we had, backed Canopy. This is very important.”
Stewart told CNBC, “I am delighted to establish this partnership with Canopy Growth and share with them the knowledge I have gained after years of experience in the subject of living.” It looks like Canopy Growth wants to benefit from her expansive knowledge of consumer products.
Cannabis players’ expansion into edibles business
Canopy Growth (CGC) (WEED) suffered in its first quarter of fiscal 2020, as it reported huge losses. Its revenues also missed analysts’ estimates. We expect the company to benefit from the CBD business. A February 28 CNBC report noted that Canopy Growth is already conducting several clinical trials to study the effects of CBD on human and animal health.
Peer company Aurora Cannabis (ACB) plans to expand its market after Canada’s expected legalization of edibles next month. The company plans to develop new, high-quality cannabis edible products, including the expansion of its cannabis market to vapes, concentrates, and edibles.
Aurora Cannabis plans to report its fourth-quarter results on September 12. We’ll have additional updates on its edibles business strategy after the earnings call.
In April, Aphria (APHA) announced the launch of CannRelief, a CBD-based nutraceutical and cosmetics product line that’s intended for the German market. Plus, Aphria plans to launch a wider range of CBD products in Germany this year.
Canopy Growth’s results have impacted its stock badly. In August, Canopy Growth and Aurora Cannabis stock fell 27.7% and 12.0%, respectively, while Aphria stock gained 16.3% in the month. At 12:45 PM EDT on Wednesday, Aphria rose 1.2%, Canopy Growth fell 2.4%, and ACB dipped 2.0%.
CBD-infused products in the US
After the launch of the 2018 Farm Bill, CBD-infused products became legal in the US, gaining popularity. Although cannabis products don’t need much marketing, I believe that with some celebrity fame attached to them, it should be easier to market these products to a wider audience. Canopy Growth plans to expand its market in the US.
However, there could be a threat on the horizon. On September 3, I discussed the FDA’s hesitance regarding CBD products. The FDA issued warning letters to several cannabis companies after detecting the chemical content of CBD in their products.
If these companies launch these CBD-infused products in the US, will the FDA regulations pose a threat? We don’t know that now. However, if the FDA relaxes the regulations slightly, Canopy Growth can successfully launch these products in the US and boost its revenues.
Do celebrity endorsements of cannabis help?
In 2016, Snoop Dogg entered into a partnership with Canopy Growth. Last month, I noted that other celebrities are also endorsing marijuana. I feel that some celebrity involvement in this industry can destigmatize cannabis use. A higher profile can also boost funding for marijuana research, and we expect cannabis companies to benefit from legalization.
Yesterday, we noted that the Trump administration wants more research on marijuana use before it reaches federal legalization. Stay tuned with us for more insights on the growing cannabis industry.