According to a recent report from ResearchAndMarkets.com, the global CBD market is expected to expand to $13.4 billion by 2028, reflecting a CAGR of over 21% from 2021 to 2028, making it one of the most explosive fast-growing markets in the developed-world economy.
“Increasing awareness about the health benefits of cannabidiol (CBD), changing consumer opinion, and attitude toward CBD products are some of the key factors driving the demand for these products. Furthermore, increasing demand for cannabidiol from various end-user industries such as food and beverage, personal care and cosmetics, and pharmaceuticals is expected to trigger market growth.”
However, the distribution model for CBD is also likely to play a big part in driving that growth curve as it evolves and as we move toward increasing mainstream consumer participation. This could even shift the distribution model endemic to the space, bringing in major new endpoints like convenience stores, big retailers, and mainstream grocers as standard participants at the retail level.
With that in mind, we take a look at some of the most interesting stories in the CBD space, including Neptune Wellness Solutions Inc (NASDAQ: NEPT), Real Brands Inc (OTC US: RLBD), Cronos Group Inc (NASDAQ: CRON), and cbdMD Inc (NYSEAMERICAN: YCBD).
Neptune Wellness Solutions Inc (NASDAQ: NEPT) frames itself as a company that operates as a health and wellness products company. The company operates through two segments, Nutraceutical and Cannabis. The Nutraceutical segment offers turnkey solutions, such as raw material sourcing, formulation, quality control, and quality assurance for omega-3 and hemp-derived ingredients under different delivery forms, including softgels, capsules, and liquids.
The Cannabis segment provides extraction and purification services from cannabis and hemp biomass. The company also offers formulation and manufacturing solutions for value-added product forms, such as tinctures, sprays, topicals, vapor products, edibles, and beverages.
Neptune Wellness Solutions Inc (NASDAQ: NEPT) announced it has launched three new Mood Ring branded cannabis products, including the first branded flower product, in the province of British Columbia.
“I am pleased to announce these exciting new products under the Mood Ring brand in British Columbia, including our first branded flower product,” said Michael Cammarata, Chief Executive Officer and President of Neptune. “In less than a year, we have transformed our cannabis business from a slow-growth, low margin extraction business to a high growth, higher-margin branded CPG business with two exciting new cannabis brands, Mood Ring and PanHash. Both brands are already well represented in more than 80% of the legal Canadian cannabis market.”
The stock has suffered a bit of late, with shares of NEPT taking a hit in recent action, down about -8% over the past week. Shares of the stock have powered higher over the past month, rallying roughly 8% in that time on strong overall action.
Neptune Wellness Solutions Inc (NASDAQ: NEPT) generated sales of $3.3M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -88.4% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($32.2M against $19.1M).
Real Brands Inc (OTCMKTS: RLBD) is almost a quarter owned by Turning Point Brands, Inc. (NYSE: TPB), which is a third owned by a multi-billion dollar hedge fund with a vested interest in helping TPB, and its major interests and partners, secure necessary financing on strong investor-friendly terms. That’s a big advantage.
It should also be noted that TPB has been moving increasingly toward a model that links up with the breakout potential existing in the link between CBD and convenience stores – which is uncharted but extremely attractive territory.
Real Brands Inc (OTCMKTS: RLBD) is a bulk supplier to TPB, which is a billion-dollar NYSE-listed company. RLBD supplies TPB with CBD oils and isolates in volume, which are then used in TPB products. Turning Point has more than 250,000 points of distribution with leading brands such as Zig-Zag®, Stoker’s®, and Beech Nut®.
As TPB’s model potentially turns increasingly aggressively toward c-store distribution, that potentially positions RLBD in a leadership role as the cannabis and CBD market inevitably mature toward increasingly mainstream distribution models – ie, as these products move from exclusively head shops and dispensaries and out into the primary consumer distribution system that defines the developed world economy.
In Turning Point’s recent earnings conference call, Graham Purdy, Chief Operating Officer, said, “We continue to lead the growth and penetration of product in convenience stores and are expanding our presence in the non-measured alternative channel, including head shops and dispensaries, where most of that market currently exists and where Zig-Zag is still underrepresented.”
TPB also said it is in 210,000 stores at this time.
The big point is this: TPB is positioning itself for the cannabis and CBD distribution model that may exist around the next corner, and it has taken clear steps to solidify a leadership role in that marketplace, which may be dominated by c-store endpoints.
Real Brands Inc (OTCMKTS: RLBD) is already lined up as a bulk upstream supplier into that market positioning, which could position RLBD as a leadership play for CBD products in a world where those products suddenly find their end-market consumer in convenience stores across the country.
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.
Cronos Group Inc (NASDAQ: CRON) most recently announced, along with PharmaCann Inc, that the two companies have entered into an agreement under which a wholly-owned subsidiary of Cronos Group has purchased an option to acquire an approximately 10.5% ownership stake in PharmaCann on a fully-diluted basis. The Option exercise will be based upon various factors, including the status of U.S. federal cannabis legalization, as well as regulatory approvals, including in the states where PharmaCann operates that may be required upon exercise.
“Our U.S. growth strategy focuses on delivering long term shareholder value by assembling a best-in-class brand and intellectual property portfolio and positioning to deploy our products in the U.S. market through investments and opportunities with U.S. leaders who share our vision and commitment to responsibly distributing disruptive cannabinoid products that improve people’s lives,” said Kurt Schmidt, President and Chief Executive Officer of Cronos Group. “We were attracted to PharmaCann as an investment because of their disciplined capital allocation, strong track-record and compelling licensed manufacturing and retail footprint. Further, we are excited to partner with PharmaCann because of our shared commitment to elevating product quality and consistency through science and best in class operations and manufacturing.”
The stock has suffered a bit of late, with shares of CRON taking a hit in recent action, down about -5% over the past week.
Cronos Group Inc (NASDAQ: CRON) managed to rope in revenues totaling $16M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 40.8%, 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 ($1.6B against $380.4M).
cbdMD Inc (NYSEAMERICAN: YCBD) promulgates itself as a company that produces and distributes various cannabidiol (CBD) products. It owns and operates the consumer hemp-based CBD brand, cbdMD. The company’s product categories include CBD tinctures, capsules, gummies, bath bombs, topical creams, and animal treats and oils. It also offers pet-related CBD products under the Paw CBD brand name.
The company distributes its products through an e-commerce Website, wholesalers, and various brick and mortar retailers in the United States.
cbdMD Inc (NYSEAMERICAN: YCBD) most recently announced that its recently formed subsidiary, cbdMD Therapeutics, has begun a collaboration with researchers at the Colorado State University (CSU) veterinary program, to explore the effects of the Company’s patent-pending, proprietary cbdMD branded cannabinoid blend on dogs that suffer from osteoarthritis.
“It has been estimated that one in five dogs are diagnosed with osteoarthritis in their lifetime. With almost 1 billion dogs globally and over 75 million in the US, osteoarthritis effects millions of our loved ones. Paw CBD is committed to providing products that can improve our pet’s quality of life and provide relief for joint discomfort for the millions of pets who suffer from this disease. Our partnership with CSU will serve as the foundation for future work where we will explore the clinical impact of our proprietary broad-spectrum cannabinoid blend on pain and mobility in our pets,” said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action YCBD shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -5% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action.
cbdMD Inc (NYSEAMERICAN: YCBD) managed to rope in revenues totaling $11.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top-line growth of 25.5%, 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 ($24.7M against $6.9M).
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