Undervalued CBD/Cannabis Play Is November’s Stock to Watch After UTAH’s Recent Legalization Approval
Last week’s vote in the state of UTAH was monumental for many reasons. Medical cannabis, on the ballot as “Proposition 2”, was a proposal that had been a difficult sell to Mormon church leaders who were concerned about the possibility that it could expand to broader use, but passed getting 54% of the Utahn population to vote YES.
Besides the struggle to win over the Mormon Church, and a population viewed as being quite conservative, Utah residents collected about 200,000 signatures by mid-April, which was well over the 113,143 required for ballot inclusion. Enthusiastic residents are excited about the medicinal properties that marijuana and CBD, short for cannabidiol, brings while state economists welcome the measure which will include a sales tax increase expected to generate $90 million in tax revenue that will combine with an additional $800 million in federal money to fund the expansion.
Hemp based CBD, whose market nationally could reach $22B by the year 2022 according to the Brightfield Group in a recent Rolling Stone magazine report, was made legal in Utah in 2014, after businesses began extracting it from cannabis plants and using the extract to make pills, oils and other products that people say helps with an array of conditions.
The approval may create a barrier for entrepreneurs and new businesses that wish to establish new CBD related business in UTAH as there has been discussion of going to a county dispensary type system. Grandfathered or established businesses such as Enviro Technologies International Inc. (OTC: ETII), a holdings company based in Utah, already has 2 CBD related businesses in CBD Health Co. (www.cbdhealthco.com) and Phytolife Fitness. Both companies were acquired earlier this year. CBD Health Co. markets and sells high quality and proprietary hemp-based, natural CBD health products, while their sister fitness site and media company will market fitness hemp-based products and health films. Hemp products are now used in sports medicine to control pain, decrease inflammation and reduce stress; hemp-based products have also been found to aid in bone, nerve and tissue regeneration, which are particularly relevant and needed remedies in the amateur and professional sports arenas.
ETII is one of the few, if not only public CBD related company in the state of UTAH as investors are taking notice. The company has traded at $1 or more on 3 separate occasions this year, which ironically coincided with their CBD-related news announcements. Their stock price is climbing once again as investors scramble to find undervalued public companies that will be affected by the recent positive legalization news in the state of Utah. On Friday, ETII closed at $0.375 +0.14 (+59.57%) on 469,890 shares traded. The company, which hasn’t released official news since it’s press releases on entering the CBD market for Pets in March and its sister CBD website in April of this year, is moving on clear speculation they’ll be able to emerge as a CBD leader in UTAH. As much as investors wish to focus on UTAH alone, according to the company’s website, it states that their products are distributed in all 50 states, USA-made, and produced with CBD derived from the industrial hemp plant. This means they have the ability to generate sales nationwide via web sales, but potentially can exploit the legalization with in-state “brick and mortar” retail/wholesale business locations.
Cannabis stocks have been one of the most Bullish sectors performance wise in 2018. While investors are always seeking the next “hot company”, some of the well known cannabis stocks such as Tilray Inc. (NASDAQ: TLRY) ran from $23 to $300, Canopy Group (NYSE: CGC) has climbed from $12.60 to 52 Week Highs of $59.25 and Cronos Group (NASDAQ: CRON) was as low as $3 last year at this time and hit a 52W High of $15.30, have all grossly out performed both the DOW ($DJI) and the S&P 500 ($SPX).
Most cannabis stocks added to their gains recently, after reports that U.S. Attorney General Jeff Sessions was fired. Sessions, an opponent of marijuana’s legalization, had given prosecutors a green light to aggressively enforce federal laws against the drug in states where it had been decriminalized. Whether Sessions had a direct impact or not, the passage of state initiatives and last week’s general voter sentiment indicate growing momentum for the cannabis industry.
Even beverage companies like Coca-Cola and Pepsi are attempting to position themselves with cbd/hemp drinks in this booming sector. Soft drink companies are not alone, as alcoholic beverage companies are following suit because of declining sales as the market shifts towards using cannabis for recreational purposes. Yes that means, CBD/THC wines and beers or non alcoholic beverages that will enhance one’s mood is where these companies are diving to be ahead of the trend.
The hemp-cbd beverage sector has also produced some very rewarding stock returns in the microcap space. American Premium Water Corp. (OTC:HIPH) who manufactures LALPINA Hydro CBD water, was only $0.015 in mid-September and surged to high of $0.12 last month. Kona Gold (OTC:KGKG), whose hemp energy drinks had a 225% increase in sales for the month of October, was only $0.013 the beginning of October and is currently above .07 and climbing. Puration Inc. (OTC:PURA), whose cannabis infused beverage business has grown 600% in the last year alone, was just $0.035 the beginning of October and peaked at $0.25 mid-month. This sector continues to bring huge profits to penny stock investors and Enviro Technologies (OTC: ETII) is our stock to watch for November.
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