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Shares in HempFusion (TSX:CBD.U /US:CBDHF) have been on a run in the last 10 days, really since the start of February, as the market has started to pick up on the increasing possibilities for the whole CBD sector this year. And this is not just a US, post-Trump liberalisation gig, this is much more international in scope, and HempFusion as a company seems very well placed to benefit from this.

News just out today – HempFusion is launching new improved sleep and stress products with twice the amount of CBD per serving into the US market. The timing for these hemp-based products (HempFusion stresses their hemp rather than cannabis origins) could not be better as the pandemic and associated lockdowns have been ramping up stress levels around the world.

“Global consumers are becoming increasingly familiar with CBD and its potential benefits to their daily routine,” commented Jason Mitchell N.D., HempFusion’s co-founder and chief executive officer. “After conducting months of extensive consumer research, it was clear that the majority of our customers and consumers in the market are seeking products with increased CBD percentages.”

Mitchell and his team have a good grasp of the US medical market and its regulatory requirements. We have an upcoming podcast interview with him in which we discuss this area of CBD distribution, and his deep knowledge of the state of play in US OTC pharmaceuticals comes across in that. We will alert newsletter subscribers to that when it escapes from the editing suite.

Mitchell says that it has always been HempFusion’s goal to provide new and innovative products that consumers are looking for.

An impressive distribution network is key

For investors who are wondering about the international angle to HempFusion, and another reason why we like the stock, the company has invested a lot of effort in ensuring the organic criteria of the hemp farms it sources crops from meets the highest EU standards. This is because there is an international distribution strategy under way in the background. We know, for example, that Ireland is high up on the list of international targets.

We started tracking HempFusion initially when we heard about the upcoming IPO last year. HempFusion had an interesting proposition, we thought. It had an extremely mature and wide-ranging distribution network, which encompassed not only OTC pharmaceutical retailers, but also more general distribution through health and wellness chains in the US.

The company has also been working hard on the roll out of a digital distribution strategy which makes sense as bricks and mortar have become less reliable during the pandemic. This has included ramping up distribution efforts on Amazon.

While we were examining HempFusion, we were considering the likely wave of new interest in a Cannabis 2.0 phenomenon. This, we felt, was not going to look like the original wave of investor enthusiasm we saw in 2017-18 in cannabis stocks.

We anticipated wide-ranging liberalisation of the market in the US in the event of a Biden election victory, reinforced now by Democrat control of Congress. This will be a second wave that will see those mature wellness stocks that have not only survived from 2017, but have prospered and invested in their business models, leading the way. HempFusion is one of these stocks.

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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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