September 13, 2020

Beginners guide to investing in CBD

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With the sharp rise in popularity of cannabidiol or CBD products such as CBD edibles, oil, topical creams or gels, and the like, investing in CBD has become a major opportunity. With the market growing exponentially for the foreseeable future, many people have decided to invest in the growing process, production, or both. While CBD seems to be a sure-fire investment opportunity, as with all industries it will depend on who, where, and how much you commit. It pays to know the basics of CBD before you take the next step.

How CBD is Produced?

There are different methods of producing CBD, both naturally and synthetically. In fact, many pharmaceuticals are based on CBD that has been produced synthetically. While producing CBD naturally is still less expensive, that may change over time as new synthetic methods are being developed.

In addition, CBD can be produced naturally from either cannabis or industrial hemp. Both methods have their benefits and issues. Cannabis includes a high amount of THC, which is the psychotropic element that causes the “high” effect. Many states still have strict limitations on the amount of THC that can be included in CBD products. Industrial hemp has a low amount of THC, most often under the legal limit. This means that CBD products derived from industrial hemp are more accepted across the country, but you will have to produce a considerable amount of hemp to garner plenty of CBD.

For those who want to invest in the creation of CBD, industrial hemp is really taking off. In fact, big tobacco has seen the potential and many tobacco-related companies are making the investment. In fact, many farmers who are growing tobacco today may add or even switch to industrial hemp depending on the future of the tobacco market.

Guidelines for CBD Investing

If you want to invest in a CBD-related company, then there are four things to consider before you make a commitment.

Filed with SEC?
Know the Source & Methods of CBD Production
Revenue Generation
Independent Evaluation

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In other words, is the company properly licensed? Do they use proven sources and methods of production? How much revenue do they create from the sale of their products? And is there an independent evaluation available for you to study?

If a company does not file with the SEC, then chances are they are not transparent in their business approach. Knowing if they are generating revenue at a significant level is important in any business investment. But understanding the source of their CBD and the methods of production used is crucial to ensure that it follows legal guidelines and can be sustained for the foreseeable future.

Finally, an independent evaluation of the company provides you with a non-biased view of what they are actually doing. By using all four guidelines, you can make the best-informed decision about whether to invest. If you are thinking of investing in CBD, then you should understand the basics before you commit any money. While the opportunities in the CBD industry are considerable, particularly for products such as CBD edibles, you will still need to do your homework before taking the next step.

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