Although not a pure cannabis play, New Age Beverages (NASDAQ:NBEV) has had to deal with the same volatility. Since January’s opening price, NBEV stock has dropped a staggering 37%. However, the downfall isn’t due to a lack of trying.
Early this year, NBEV announced an addition to its Marley-branded beverages called Marley+CBD. Infused with cannabidiol or CBD, the cannabis compound brought a therapeutic element to the artisanal beverage series. Plus, the positive notoriety associated with CBD gave New Age Beverages stock a nice lift following the announcement.
This past summer, New Age CEO Brent Willis showcased the company’s Nhanced CBD line of oils, creams and lotions. Launched in Hong Kong, NBEV intends to expand into Japan and China next.
Unfortunately, NBEV stock peaked in early February. From then on, save for some smatterings of good news, it’s been all downhill for shares.
That said, New Age Beverages stock appears to have found a bottom around the psychologically significant $3 level. Granted, most conservative investors should ignore this technical phenomenon. But for the speculators among you, NBEV might be an interesting play.
In a strange way, I say this because of the current vaping crisis. Federal health agencies are investigating a recent spike of acute lung illnesses which they believe are associated with vaping. However, evidence suggests that illicitly sourced THC-infused vaping liquids are the real culprit.
In the context of companies like Cronos Group (NASDAQ:CRON), the vaping crisis is a distraction. For the time being, it’s probably kept NBEV stock in check, too. But in the long run, this issue may benefit New Age Beverages. Here’s why:
A Platform Crisis Will Give Way to Curiosity
One of the challenges of cannabis-based companies is overcoming the stigma associated with the plant. Typically, the term “cannabis” conjures up images of stoners smoking, or in this case vaping a joint.
As my InvestorPlace colleague Will Ashworth noted, vaping or smoking products will always be a tough sell, irrespective of alleged health benefits. But products like beverages, oils and creams? That is a much more palatable situation, one that clearly favors New Age Beverages stock.
Recently, I had a chance to sit down with corporate representatives John Weston and Paul Dibrito of cbdMD (NYSEAMERICAN:YCBD). During our conversation, we discussed the wide-ranging product diversity of the CBD and hemp space. For instance, cbdMD features ample ways to enjoy hemp-based therapies beyond vaping. They also have a pet product division called Paw CBD.
What does this have to do with NBEV stock and the vaping crisis? No matter what’s going on right now, an increasing number of people are interested in CBD for therapeutic use. Sure, the vaping platform might take a hit (no pun intended) from the present crisis. But the core substance itself has substantial support.
Therefore, it’s much easier to evangelize the benefits of hemp-based products to your family and friends when using socially appropriate platforms. You might not be able to roll a fatty for grandma, no matter how much she complains of pain. But a capsule or a refreshing beverage? That’s much easier to swallow (pun intended).
Plus, not everyone is healthy enough to smoke or vape. For instance, more than 25 million Americans have asthma. Vaping might not be the best choice for them. But a CBD-infused beverage, as far as I’m aware, is consumable by nearly everyone.
NBEV Stock and Long-Term Ambitions
But Willis’ push to drive into Asia strikes me as extremely ambitious. When he mentioned Japan, I rolled my eyes. This is the country that arrested and deported former Beatle Paul McCartney.
Moreover, when Canada legalized recreational marijuana, the Japanese government issued a stern warning to its citizens living abroad: don’t touch the stuff or risk severe penalties.
In my opinion, this was an empty threat. However, it does demonstrate Japanese society’s highly conservative viewpoint toward the cannabis plant.
Naturally, this is an uphill battle for New Age Beverages and NBEV stock. At the same time, if you’re going to break into Asia, doing so with CBD-infused beverages probably gives you the best chance of success.
But as I said earlier, that sentiment should apply to almost anyone. New Age Beverages stock is incredibly risky. Due to its palatable platform, though, it might have an outside chance of delivering the goods.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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