Canopy (CGC) has become synonymous with the cannabis industry. If someone is on the fringes and they have only heard of one company, it is most likely Canopy. Now the company is taking its first step into what is going to turn a multi-year expansion into the US hemp industry. As a result of the passing of this Farm Bill, some industry insiders predict this market will reach $22 billion in earnings over the next few decades. This is Canopy’s huge US hemp potential could be realized soon enough.
The U.S CBD drive for Canopy has begun and it won’t stop anytime soon. That means big growth is in store for the company during the upcoming several quarters. Such big growth will keep bulls in control, bears on their heels along with the stock on a winning trajectory.
As such, the prognosis for CGC inventory to keep rallying in the near to medium term is quite positive. The big picture around Canopy CGC is that this is a company that’s second-to-none concerning size, innovation, leadership, resources, manufacturing capacity and expansion in a fast growing international CBD marketplace.
Industrial hemp has long been prized as one of the simplest crops to plant, grow and process. Now, thanks to a significant investment from New York State, and to partnerships with New York’s top research institutions and universities, the crop is returning to New York fields with the potential to grow both research and economic opportunity for farmers and businesses.
In July of this year, Governor Cuomo signed legislation that redefined and clarified industrial hemp as an agricultural commodity in New York State. Up to $10 million dollars in grant funding available through two initiatives will aid farmers, researchers and processors embarking on industrial hemp cultivation. The Governor has also established a working group to advise the state and support and guide the industry as it expands.
Napkin Math On Canopy
Conservatively, if the cannabis market maxes out approximately $500 billion in a decade and Canopy just controls roughly 5% of the global market, and runs at an alcoholic beverage marketplace average of 30% operating margins Canopy’s current high valuations will make sense.
Napkin math calculations say Canopy can generate $25 billion revenue and $7.5 billion in profit in a decade. Taking out 20 percent for taxation and throwing a market-average 16x multiple online profits, it becomes clear that CGC stock be worth almost $100 billion within a short time.
That possible evaluation is 10 decades away. CGC stock has a market cap of around $10 billion now. Thus, this is a possible ten-bagger during the next ten years. Granted, ten years is a long time for short term traders, and a lot could happen between then and now. However, a New York State hemp license is a huge step in the right path toward CGC stock realizing its 100 billion potential.
A New York State hemp permit is big news, and a huge step toward this firm maintaining its leadership position in the fast growing international CBD industry. Provided that this business keeps taking steps to defend market share, CGC inventory has the capability to become a $100 billion firm one day.