Forget Aurora Cannabis (TSX:ACB): This Company Is a Better CBD Play

Charlotte’s Web Holdings Inc (TSX:CWEB) is one of the leaders in the U.S. CBD market; here is why it’s a buy.

| More on:
edit Powder of Cannabis (Drugs), Analysis of Cannabis in laboratory.

Image source: Getty Images

The Canadian cannabis market is still in its infancy. Despite the exponential increases in sales we have seen over the past two years, the sector will likely continue to reach new highs. Derivative cannabis products, such as vapes and cannabis-infused foods and beverages, are set to become legal by the end of this year. This new opportunity will allow pot firms to continue experiencing astronomical sales growth.

However, investors should remember the CBD market south of the border. With hemp becoming legal late last year, CBD-based products are becoming increasingly popular in the U.S. Aurora Cannabis (TSX:ACB)(NYSE:ACB) is currently trying to position itself in this market. 

Aurora’s partnership with UFC

Aurora recently entered a partnership with UFC to conduct clinical research on CBD. The research will focus on the effects of hemp-derived CBD on treatment for MMA athletes. Hemp only contains negligible amounts (typically around 0.3%) of tetrahydrocannabinol, the chemical responsible for the psychoactive effects of weed. Hemp has been hailed for its health benefits, and there is much left to discover as it pertains to the potential applications of hemp to the medical field. That is why this partnership between Aurora and one of the most popular MMA companies in the world is a big deal. 

The results of this research could be important for Aurora. After all, there is always a need for innovative medical products. Further, this could provide Aurora with even more high-margin opportunities to pursue. The Canadian dried cannabis market risks suffering from a supply glut somewhere down the line. While the Edmonton-based firm has focused primarily on medical cannabis, it still garners respectable sales from the recreational market. In case margins start being dragged down in the recreational segment, Aurora will be ready to adapt accordingly. 

This company is a better CBD play

While Aurora has made some steps to enter the CBD market, Charlotte’s Web Holdings (TSX:CWEB) is a much better option to profit from this high-flying market. CWEB is arguably the leader in the U.S. CBD sector. The firm possesses over 6,000 retail locations across various states in the U.S. and offers a variegated portfolio of products, including oils, capsules, gummies, and even some products for dogs.

CWEB has also increased its production capacity exponentially over the past few years. In 2018, Charlotte’s Web planted 300 acres of hemp, a more than 420% increase from 2017. The firm plans to plant at least 600 acres of hemp this year. This increase in its production capacity has helped spur its sales and revenue growth. 

The bottom line

While Aurora is one of the most prominent cannabis companies in Canada, the firm has yet to make a splash in the U.S. CBD market. CWEB, however, is one of the leading companies in this market. Investors looking to cash in on the increased interest in CBD should consider purchasing shares of Charlotte’s Web Holdings. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Prosper Bakiny owns shares of Aurora Cannabis. The Motley Fool owns shares of Charlotte's Web Holdings.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Are Cannabis Stocks Still a Thing in 2023?

The whole question of whether cannabis stocks are still relevant in 2023 is an interesting one. Here's my take on…

Read more »

A cannabis plant grows.
Cannabis Stocks

Why Canopy Growth Stock Fell 72% Last Year

Canopy Growth stock is a beaten-up cannabis giant that is trading at a discount compared to historical multiples. But is…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is SNDL Stock a Buy in January 2023?

SNDL is among the worst-performing cannabis stocks in the last three years. But is SNDL stock a buy right now?

Read more »

a person watches a downward arrow crash through the floor
Cannabis Stocks

Why Tilray Stock Fell Almost 60% in 2022

Tilray is a Canadian cannabis stock that is down 93% from all-time highs. Let's see if TLRY stock is a…

Read more »