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Timing seems to be everything for HempFusion, the mature cannabis-based products distributor which has just listed on the Toronto Stock Exchange.

HempFusion popped up on our radar in November, and looked immediately like what we’d describe as a ‘second wave’ cannabis play.

Cannabis stocks were very hot a few years ago, but since then the industry has had a chance to mature and find its feet. HempFusion is one of those companies that is navigating its way into the mainstream market, with a range of CBD brands that are already available for sale in all 50 US states. HempFusion’s listing, which saw the company offer 7m common shares at US$1 per share, comes at a very interesting time as the US awaits a new administration in Washington DC and the prospect of more liberalisation of the CBD / medical cannabis market in the US.

HempFusion is also offering 10m units of the company for an additional $10m, giving it a war chest of $17m in total. According to its CEO Jason Mitchell, “The additional $17m in capital adds to our healthy treasury, providing us with a solid foundation to build from and execute our strategic plans for 2021 and beyond. Our goals include increased investment into research and development, expanding our sales and distribution networks, and firmly establishing HempFusion as a leader in the dynamic global CBD industry.”

A cannabis stock with no debt and established distribution

HempFusion is a rare cannabis sector company with no debt. It also has regulatory approvals signed off in the US and a very impressive distribution network in place. It already has FDA-listed OTC medical products for sale in US pharmacies. It takes 18-24 months to get these approved.

We were frankly surprised and impressed with HempFusion’s penetration of the US market. It sells through natural/specialist stores, but also mainstream outlets. Among the chains featuring its products are Vitamin Shoppe and Professional Supplement Center. It also sells through Walmart, Publix, Kroger’s, Albertson, Amazon, the list goes on. Altogether its products are available through 4000 US retail locations. It demonstrates what a mature cannabis play is meant to look like.

HempFusion is involved with the ongoing discussions around the regulation of CBD/cannabis products in the US. It is investing heavily in its compliance standards and is a member of the US Hemp Roundtable Executive Board, USDA Organic, NOAEL and is applying for EU Novel Food Ingredient approval. Strategic plans include international distribution in Europe and the UK.

Regulatory winds are blowing the right way

We are at a stage where we think the cannabis wellness products industry is going to become a lot more established. The US House of Representatives has passed the MORE Act in December which will remove cannabis from the Controlled Substances Act. We await the results of the Georgia Senate race with baited breath as this will influence the passage of this important bill in 2021.

In the EU the Commission has recommenced the frozen CBD Novel Food marketing authorisation applications. EU member states are expected to follow a recent European Court of Justice decision and regulate CBD as a legitimate product within the relevant industries. The UN has also just voted to reclassify cannabis as a less dangerous drug. We think 2021 is going to be a very exciting year for the cannabis industry.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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