With the passing of the 2018 Farm Bill that allowed for industrial hemp to be sold, cannabidiol or CBD oil has become all the rage. Derived from the cannabis plant, CBD oil was primarily used for the treatment of epilepsy. Today, the oil has now become a huge hit in the marketplace which makes investing in the product seem like a no-brainer.
Today, CBD oil is being used in a wide range of products and sold through retail shops, health food and convenience stores, and even some coffee shops, restaurants, and in the malls. This is because the oil does not contain the THC, the active ingredient that causes the feeling of being “high”. Therefore, the many states that either allow for recreational or medical use of marijuana are now regulating the use of CBD oil.
However, with relatively little federal regulations in place and a wide variety of state laws that apply to the use and sale of CBD oil, it can be somewhat perplexing for those interested in investing in the product. There is little doubt about its popularity with CBD-related shops popping up seemingly everywhere. But whether it makes for a good long-term investment is another matter.
The 2014 Farm Act was the bill that paved the way for the re-introduction of industrial hemp into the marketplace. For several decades, industrial hemp was banned until the bill was passed and private programs allowed for the growth or distribution of hemp in certain states.
It was not long before the hemp was being grown and imported regularly into many different states, especially Colorado and Kentucky. However, the FDA was taking some action against those selling CBD oil for making outrageous health claims. Over the next few years, the FDA issued warnings to online retailers in an attempt to limit the health claims that the companies were making about their product.
For example, some companies claimed that their product was legal in all 50 states when that was clearly not true. However, only limited action was being taken against the companies that used some form of false advertising over the product. The 2018 Farm Act legalized the sale of CBD oil from industrial hemp at the federal level, which meant that the transportation and sale between states that legally allowed the product was cleared.
CBD Oil Today
While most of the US allows for the sale of CBD oil, the question becomes given the various levels of state regulations and the rather tepid oversight of the FDA whether the product has a real future, or will it fizzle out quickly.
The main issue right now is addressing the false claim of some who promote the product as being able to treat, prevent, or even cure major illnesses such as cancer. In addition, the products that were marked as dietary substances such as supplements added to food also came under FDA scrutiny. This means that for a company producing CBD oil, keeping the advertising within FDA regulations will be paramount in avoiding trouble.
Currently, products that contain CBD oil are subject to FDA requirements as they oversee the interstate commerce. This means that CBD oil which comes from industrial hemp grown, processed, and sold within a state is covered by state regulations. Only when it is transported from one state to another does the FDA have the power to intercede. However, since online ordering is such a big part of the CBD oil business, the FDA does have a powerful role to play.
Investing in CBD Oil
Investing in CBD oil has essentially skyrocketed over the past year or two with publicly traded stocks going through the roof. While it may seem that today is the perfect time to invest, bear in mind that such hype and trends may indeed last or fall apart quickly depending on circumstances that both exist today and may not been seen until later.
Regulatory Flux: The fluctuations of state and federal regulations may impede the current progress of CBD oil over time. This means that a new law can change the fortunes quickly, which makes investment quite risky until the uncertainty has passed.
Opportunists: There are several publicly-traded companies that do not appear to be real. One of the ways to spot them is the fact that many do not file with the SEC. You should not invest in the stocks of any company that does not file with the SEC. The lack of filing means you have fake companies that may be artificially driving up the price and interest in CBD oil.
Changing Interests: Another potential red flag are existing companies that are jumping in on selling CBD oil. While some legit companies may have a genuine interest, others may not. It’s difficult to tell as it depends on factors that cannot be easily researched. This means companies that may be just stating their intentions rather than actually getting involved in the business.
The Future of CBD Oil
Today, investing in CBD oil appears to be quite good if you can find companies that file with the SEC and have shown their progress in selling the product. You will have to consider the fluctuating regulations and lack of clarity in terms of the current state and federal laws, but there are several companies who have proven themselves to be serious and quite profitable.
Keep in mind that right now the hype exceeds the reality, but that doesn’t mean the reality will not be that good. Avoiding the fly-by-night companies, a steadying of the regulations, and investing in businesses that demonstrate excellent profit potential seems the way to go. It will take research on your part, particularly in finding companies with a strong capital management, innovative products, and reasonable marketing methods that use proven research and not hype.
This means that companies who post reasonable expectations of their CBD oil is worth investing. Just as with any other product, you have to wade through the hype and promises before you can find something promising to invest.