Context is everything in the market, and the CBD sector is no exception — if anything, context is even more important in the CBD sector in comparison to other industries, due to the quasi-legality of CBD in America
The vaping crisis put a temporary chill on the industry in Fall 2019
Consumers became very fearful of CBD products in general after the media reported that CBD vaping products were involved in the 60 deaths and 2500 lung injuries that occurred in America — that largely turned out not to be the case, as THC products caused the overwhelming majority of vaping injuries and deaths — in fact, the real culprit turned out not to be THC at all, but Vitamin E acetate found in unregulated, black market THC Oil vapes
While the vaping crisis was instilling fear of CBD products in consumers in September and October, the alarmist FDA report that followed in November 2019 only exacerbated consumers’ concerns about the safety of unregulated CBD products (all CBD products that sell outside of MJ dispensaries are unregulated)
Thankfully in 2020, as we have moved further away from the vaping crisis and the alarmist FDA Warning Letter, consumers’ fears around purchasing unregulated CBD products, that the FDA has not yet deemed safe, have subsided significantly
Furthermore, the Covid-19 crisis has created an increase in generalized stress, which is the most popular reason why Americans purchase CBD products, so CBD is experiencing a new wave of consumer interest
In addition, though restaurants and bars have suffered tremendously due to social distancing and stay-at-home orders, sales of food and beverages in supermarkets and convenience stores have increased — so unlike most of the market, the food and beverage retail sector is poised to do very well moving forward in 2020
The final piece of the puzzle for many CBD Beverage investors in 2020 is national sales, which would require a formal policy of enforcement discretion (FDA) or the federal legalization of CBD Beverages (Congress) — I think there is a very good chance that we will see both
So many are asking “Where is Mitch?” or “When is Congress going to pass HR5587?”, which would legalize Pure CBD in Beverages, Foods and Dietary Supplements
Again, context is everything and details drive the narrative
Throughout 2019, the FDA kept delaying the release of their progress report on CBD
First it was supposed to be published in late summer, then early fall, then Nov/Dec, and the year ended with no FDA report
Mitch and Congress had been understandably waiting for the FDA to speak on CBD before acting, so they have largely been handcuffed from passing any type of CBD legislation because the FDA had continued to remain silent
Finally, after all of the delays, the FDA published their progress report on CBD in March 2020, where they signaled a willingness to develop an enforcement discretion policy for CBD
So now it’s Congress’ turn to respond
Now is really the first time there has been a clear opening for Mitch and Congress to act
The Hemp Lobby has stated that they expect The SAFE Banking Act to hit the Senate Floor in the Spring — this bill would open up Hemp Banking and investment in the hemp industry, and this is the large piece of legislation to which Mitch can attach other bills, such as CBD Legalization and changes to the USDA Regs governing cultivation
But what about the Covid-19 crisis?
Isn’t that the priority of Congress right now?
Yes it is, but there are several consequences of the Coronavirus pandemic that actually work in favor of Congress passing CBD Legalization, particularly because of the unique timing of this medical and economic crisis, which is occurring during an election year
President Trump and many Republican Senators are up for re-election and running in very tight races
Mitch McConnell, the Senate Majority Leader, singlehandedly passed Federal Hemp Legalization and completely removed Hemp from the Schedule of Controlled Substances in December 2018
Before Hemp was legalized, it was a federally illegal drug, a Schedule 1 Controlled Substance like Heroin and Crystal Meth
Currently, though Hemp-derived CBD in Beverages is federally illegal, that’s only based on a technicality related to the FDCA (Food, Drug and Cosmetics Act), which governs how the FDA regulates the food supply
Hemp-derived CBD itself is not only currently federally legal, it is also no longer on the Schedule of Controlled Substances
So it was a far more difficult task for Mitch to pass Federal Hemp Legalization than it will be for him to legalize the use of CBD in Beverages
The economy is in free fall, and anything that can help to rejuvenate it is likely to be included in one of the upcoming economic recovery/infrastructure bills
Congress is currently working on their latest bill right now, and there is already talk of another bill following this one
These are must-pass pieces of legislation, and many Senators and House Representatives are seeking to attach legislation to benefit their respective states to one of these economic recovery/infrastructure bills, in order to help them win re-election in 2020
Kentucky isn’t the only state obsessed with hemp
48 states have now legalized hemp cultivation, so CBD Legalization has widespread bipartisan support in many states
It’s important to understand that Democrats are ready to federally legalize MJ right now — so of course they are fully in support of legalizing the use of CBD in Food, Beverages and Supplements
The 2020 elections are rapidly approaching, and the one man that has the power and track record to federally legalize Pure CBD products, Senate Majority Leader Mitch McConnell, is running in a dead-heat election in Kentucky right now — and the Kentucky farmers and many rural voters aren’t very pleased with Mitch at the moment, because without the demand that would arise from a national CBD economy, the price of hemp has fallen sharply — so creating a national market through CBD Legalization is a paramount issue for voters in Mitch’s state
The motivation is certainly there
The opportunity is certainly there
I bet on Mitch to federally legalize Hemp in 2018, and I’m betting on Mitch to federally legalize Hemp-derived CBD in Beverages in Spring 2020
Most investors currently in the sector aren’t looking backward at 2019
They are looking forward to 2020
So VATE is a forward looking investment, a bet on the national CBD economy being opened in 2020 through either enforcement discretion, legalization or both
We already know that CBD Beverages can become the hottest subsector within the CBD industry — that’s been proven by the 2018 CBD Beverage frenzy
Back then, VATE was just a Hemp Coffee stock — it was still a pre-CBD Beverage company
Now, VATE produces 3 different lines of CBD-infused beverages — CBD Coffee, CBD Iced Coffee and CBD Iced Tea all selling under the up and coming Elev8 Hemp brand
They also continue to sell Hemp Coffee, and per Instagram, will be launching the new packaging, which doesn’t have the cannabis leaf and looks very mass market, shortly:
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