Can B Corp. (OTCMKTS: CANB) is a diversified vertically integrated seed-to-sale hemp company whose valuation has been completely masked by the pandemic. During the pandemic year over year sales did decline, but only slightly. It needs to be emphasized that this was against a backdrop where CBD isolate prices in its core commodity plummeted from $7500 to $300 per kilo. The slight drop in sales is actually a testament to the core strength of their business. This deflationary spiral in CBD assets created a situation where one man’s trash is another man’s treasure. Can B Corp was able to pick up a number of CBD assets for dimes on the dollar including one million pounds of hemp biomass when processed with the Delta 8 isomer could be worth over $10 million. The current quarter may not reflect revenues of their recent acquisitions, but they could show up in a big way in the next quarter. This undervalued gem could be one of the best ways to participate in the growth of industrial CBD, in the coming years.
Investment Highlights
- New Delta 8 product levels playing field with cannabis producers
- Hemp division projecting strong revenue growth
- Misunderstood DuraMed business with huge potential
- Strong underlying asset base represents bargain valuation
The Great Hemp Comeback
The pandemic negatively affected many industries and hemp was not immune. Despite the temporary setback, the global cannabidiol market is valued at $2.8 billion and expected to grow annually at 21.2%. The primary growth drivers are health and wellness. The flood of players into hemp increased the competitive pressures to the point that it broke many of the startups. The mass exodus during the pandemic has hardened the existing hemp operators to find their niche products and reduce their costs. One of the largest left standing is Charlotte’s Web Holdings (OTCMKTS: CWBHF) and it is down over 70% from its high in February when the democrats unveiled their ambitious plans for the legalization of cannabis. They are the undisputed leader in hemp in the categories of market share, direct to consumer sales, brand loyalty, household penetration, and awareness. One of their interesting new initiatives is the Delta 8 isomer which allows hemp players to effectively compete with legalized marijuana. This is changing the paradigm in cannabis.
Unlocking Delta 8
Those not in the cannabis business might not be familiar with the term Delta 8 and what it means. Taking a step back, the general public can’t really tell the difference between a cannabis plant and a hemp plant. The leaves look the same, but what legally classifies the two plants is their THC content. Tetrahydrocannabinol (THC) is the psychoactive substance that makes people feel high. Hemp is classified as a plant that does not exceed .3% THC and marijuana has more than .3% THC. What the hemp producers are effectively doing is adding acid and heat to create the Delta 8 THC isomer.