Hemp is a truly amazing crop. It is technically the same plant species as marijuana (cannabis sativa). But hemp is a completely different strain.
It was bred to produce fiber, oil and edible protein. It does not make users feel high. You can’t smoke it. But hemp is an extremely valuable crop.
Thanks to the recently enacted 2018 Farm Bill, it’s now legal to grow hemp in the U.S. And I believe it’s going to give the American economy a real boost over the coming years.
Fortunately for us, our portfolio company Canopy Growth Corporation (NYSE: CGC) sees the potential here. Canopy initially decided to invest $150 million in growing hemp in the U.S. It’s now boosted the total to $500 million, and it plans to produce hemp in New York, Rhode Island and a few other states. From Yahoo:
“When you think hemp, you should think about the protein, you should think about the fiber, and you should think about the CBD,” [Canopy Growth CEO Bruce] Linton said. “And so when you start covering all those categories, it doesn’t take too long until you can see, ‘Wow there is a lot of potential yield on this.’ And so putting the money in means that you’re actually creating an intent to be there for long enough to do the science and get the reward.”
Canopy is best positioned of all the cannabis “majors” to take advantage of this large opportunity. Remember, last year it raised a massive $4 billion to invest in projects just like this.
I believe it’s a brilliant move. Hemp contains high levels of CBD, which has extremely promising medical applications, and sells for around $1,400 per 100 grams.
Hemp grows quickly and produces strong fibers that can be made into clothing and other materials – including “hempcrete,” a hemp-based concrete. Hemp has 30,000 industrial applications. It contains valuable oil used in cosmetics. And best of all, it grows like… a weed.
We’re just beginning to explore the potential uses of this extremely valuable crop. And I couldn’t be more excited that Canopy is jumping headfirst into this market, ahead of other big players.
Both hemp and marijuana are going to be tremendously large markets in five years. Canopy is ahead of the curve in both, and I feel the company is extremely well-positioned here.
Co-Founder, First Stage Investor