U.S. Hemp Gets an Unlikely Trade Partner
U.S. markets are enjoying a much-needed boost this week following the news that the U.S. and China plan to hold another round of trade talks soon.
It may come as a surprise but pot has a direct connection to the trade war…
You see, Chinese consumers are big smokers.
In fact, there are more smokers in China than the entire population of the U.S. And as a result, American tobacco farmers export most of their crop to China.
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Lately, with tobacco export contracts being slashed by Chinese buyers, American farmers have been turning to another crop: hemp.
As a refresher, hemp is a variant of the Cannabis plant that doesn’t get you high.
It can be used to manufacture everything from rope and fabric, to plastics and insulation.
While it contains extremely low levels of the psychoactive THC found in other cannabis strains, it can contain high levels of cannabidiols (CBD).
The passage of the 2018 farm bill officially legalized hemp at a federal level in the U.S., meaning that farmers are now able to purchase crop insurance on hemp, transport it across state lines and find a commercial market among manufacturers.
It’s not just tobacco farmers either — although they’re likely taking on hemp farming at the highest rates — grain farmers struggling with Chinese tariffs are also taking a closer look at hemp.
According to Reuters, U.S. hemp sales are expected to reach $1.9 billion by 2022… So a reliable hemp supply chain in the U.S. means that we’ll likely see more hemp-derived products hit the market soon. That could, in turn, help to drive ongoing demand for hemp.
And with pot still federally illegal, hemp-derived CBD is the only legal source of the substance today.
Weed’s a trade war winner, indirectly at least.
And the success of hemp farmers in the U.S. brings us another step closer to broader legalization.
One more thing…
“This Is the Big Long”
Last week, CNBC broadcast an hour-long special called High Risk, High Reward: Cannabis Inc.
It takes a look at the current state of the marijuana market, spending just about equal time with cannabis advocates and cannabis detractors.
One of the pot investors interviewed is Danny Moses, the head trader behind one of the hedge funds that profited from getting the 2008 crash right in The Big Short.
He calls cannabis “The Big Long.”
We’re inclined to agree, of course.
All told, the show misses quite a lot of the important research that’s come out in the last couple of years showing positive health outcomes for pot users as well as a lack of negative outcomes in jurisdictions where pot has been legalized.
Still, it’s a positive sign that cannabis investing is starting to pop on “mainstream” investors’ radar.
And that means an infusion of new cash could soon pump in shares of many recently downtrodden pot stocks.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily