Hemp Inc (OTCMKTS: HEMP) Bottoming Out

Hemp Inc (OTCMKTS: HEMP) is still struggling to steer clear of the bears. Since late April, the stock has faced continued downside price action from short-sellers. However, there is clear potential for the company to enter a bull market.

Hemp Share Analysis

The last year has been a rollercoaster experience for Hemp Inc. The stock has been fluctuating between $0.02 and $0.06 for the longest time, and some investors might have grown weary. While this is understandable, what is clear is that the stock price seems to have hit bottom and can only go up next.

From late November to mid-December 2018, there was massive activity in terms of moving HEMP shares. There was a huge interest in the stock which was probably due to the legalization of the cultivation of Hemp in the US via the 2018 Farm Bill. The legislation came in the period where Canada had just legalized marijuana, and the demand for hemp-derived cannabidiol (CBD) was on the rise.

However, the cannabis sector is still growing and, as such, there is a lot of uncertainty, especially regarding regulations. Canada may be the first industrialized country to legalize weed, but the US remains an important market which should have a clear official position in the industry. 

After the clearance of hemp cultivation in the US, HEMP has actively engaged in various expansion activities to exploit the resulting demand. By the time the hemp legalization legislation fell into place, HEMP was one of the most ready companies. As such, the stock surged 3.32% and touched $0.0405 in the immediate aftermath of the Farm Bill.

At the time of writing, the stock has finally touched $0.0206; a value is last seen one year after the company went public in July 2009. Since 2014, the stock has stayed in sub-zero regions largely due to the uncertainly clouding the cannabis industry. Therefore, one would have expected the stock to shoot to all-time highs once the industry gained official federal clearance to operate within the US borders.

Nonetheless, it seems the market is playing a wait-and-see game where decisive action by the authorities like the lifting of all barriers to cannabis to embrace the industry fully. This implies that investors are satisfied with the efforts by HEMP toward making the company profitable to shareholders.

About Hemp Inc

Based in Las Vegas, Nevada, Hemp Inc. is among the first companies to begin production of cannabis products from industrial hemp. The company utilizes its multipurpose hemp processing facility to develop products for both recreational and medical segments of the cannabis industry. In addition to processing cannabidiol, the company owns and operates an online outlet for marijuana-related news and entertainment. Previously known as Marijuana Inc., the company rebranded in 2012, four years since its founding.

Hemp Farming Legislation

For a long time, Hemp Inc. has been a staunch advocate of a blanket clearance by all States for farming of hemp across the US. Late last year, the Farm Bill enacted paved the way for this to happen but many states are yet to legalize the cultivation. However, the last few months have seen various states sign bills which would culminate in an environment of clarity regarding the legal status of hemp farming.

On May 14, Brian Kemp, the Governor for Georgia signed into law a bill which sought to allow hemp farming in the region. Contextually, Georgia is a critical region to the production of hemp in the country. For starters, the state has large expanses of farmland and a community of farmers who want to cultivate hemp. Georgia joins Texas and other 4o states in the US which have comprehensive legal frameworks which facilitate the farming of hemp.

In light of this, Hemp Inc. is at the forefront looking for partnership opportunities which farmers from these regions.  According to Bruce Perlowin, CEO of HEMP, the signing of the bill provides an opportunity for the company to ramp up its production capability and capacity.

“The signing of this bill in Georgia also provides Hemp, Inc. the opportunity to begin the search for partnerships across the state and continuously add to our already robust list of ventures across the country,” Perlowin said.

Hemp Growing Competition

To further its pursuits in the cannabis industry, Hemp Inc. created the hemp growing competition, which will involve farmers in Arizona. Dubbed Hempathon, the competition will take up to 300 acres of designated land in Golden Valley. The primary endpoint of the activity is for the company to create joint ventures with farmers to increase its production capacity. Winners will receive a token, but they will first have to pay a $50,000 participation fee. The resulting joint ventures will be owned half by the company and half by the farmer. As such, they will split costs and revenues right in the middle.

From a strategic point of view, this is a well thought out play which will position Hemp Inc. as a premier player in the fledgling industry.

Bottom line

The cannabis industry is still taking its baby steps despite the euphoria around the industry. This is quite visible in the relationship between cannabis stocks and the market. Also, it is clear that HEMP has a clear long term strategy which should excite the market.

Once the market recognizes the potential inherent in the HEMP stock, investors should expect a massive rally which will potentially be record setting.

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Disclosure: We have no position in HEMP and have not been compensated for this article.