The 2018 Farm Bill, which passed Congress is now headed to the desk of President Trump and if he signs it, hemp farms all throughout the United States will be able to start producing and selling the product. The market for hemp in the U.S. is estimated to be worth $22 billion.
Hemp is a plant that can be turned into clothes, paper, fuel and most importantly for Canadian company Tilray (TLRY), CBD oil. Today, the company, which calls itself a global leader in cannabis research and production announced the signing of a letter of intent (LOI) to purchase hemp-derived CBD isolate from LiveWell Canada, which is being sourced from the U.S. and Canada. The first supply is supposed to commence in February of 2019, thanks to the (wishful) executive signing of the bill.
Current Canadian regulations allow for the use of hemp as a source of CBD, so long as the product fits the bill (so to speak). Two Canadian companies – Tilray Canada and High Park Farms must comply and make products that increase the supply of CBD for medical and wellness purposes within Canada.
Tilray CEO commented, “Today’s announcement puts Tilray in a strong position to expand the availability of our products in existing and new potential markets […] We’re pleased about the opportunity to increase our capacity to supply high-demand CBD products in Canada.”
CBD oil is extracted from hemp, which is the cousin of marijuana. The oil contains components that are not psychoactive and helps patients feel relief from inflammation, pain, seizures and a host of other feelings people can experience. It is thought that research has belittled the benefits of the plant oil due to its relation to marijuana, which has had a negative connotation associated to it since people can smoke it to get high.
Tilray management notes the company plans to supply a product that adheres to strict quality standards and adhere to production regulations as required by law.
Overall, analysts are feeling the excitement about this cannabis stock. TipRanks analytics shows out of three analysts who have reviewed the stock in the last three months, two are bullish and one sidelined. The consensus price target of $140, shows a potential upside of around 93%. (See TLRY’s price targets and analyst ratings on TipRanks)