Industrial Hemp: Discussing a Risky, But Potentially Lucrative Niche With Clients | ETF Trends

By Tai-Chin Tung via

As more states wade into the waters of legalized marijuana, be it on the medicinal or recreational fronts, chances are your clients are consuming an increasing amount of information about cannabis-related investments.

Usually, those investment options consist of penny stocks, some small- to mid-cap fare trading on major U.S. exchanges or exchange traded funds (ETFs), an asset class still sparsely populated, but growing in cannabis investment circles. More often than not, investors are hearing about the cannabis industry’s exponential growth prospects and the potential to rapidly grow account balances with some stocks in this space.

Other investors may have moral equivocations about cannabis but remain interested in the related investment opportunities. In this case, becoming somewhat about knowledgeable about industrial hemp could serve advisors well when discussing cannabis with more discerning clients. Hemp is a cannabis byproduct that does not offer a “high.”

Rather, hemp has myriad industrial applications, including being used in some food and beverage products, the manufacturing of furniture, paper, clothing and building materials. Rest assured that hemp is now legal at the federal level thanks to a provision contained in the 2018 Farm Bill.

Industrial Hemp Opportunity

Data confirm that industrial hemp market is booming.

“The global industrial hemp market size was estimated at $3.9 billion in 2017, expanding at a CAGR of 14.0% over the forecast period (since 2014),” according to GrandView Research. “Growing demand for hemp-based food products including cooking oil, dairy alternatives, flour, and salad dressings is expected to drive market growth. In addition, rising demand for bakery products such as bread and cookies is expected to drive the market.”

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