Sweet Earth, new CBD products, new & exciting corporate initiatives abound

For many hemp / CBD companies facing a wide range of significant COVID-19-related difficulties, 2020 has been a terrible year. Some will never recover. However, other well-funded players have been able to advance by being in the right jurisdictions at the right time, with exciting new products & strong management teams.

Not many hemp / CBD companies are truly vertically-integrated

Sweet Earth Holdings (CSE: SE) is an award-winning, vertically-integrated “seed-to-shelf” hemp grower with a farm in Applegate, Oregon and a full line of hemp-derived CBD products for the U.S. & select global markets.

Its 25+ product portfolio combines CBD with herbal & organic ingredients selected for their beneficial properties. The Company does not sell any products with > 0.2% THC content.

According to Harvard Medical School’s Harvard Health Publishing, CBD applied to the skin could help lower pain & inflammation, which makes it an ideal ingredient for Sweet Earth’s muscle recovery products.

Some companies focus on packaging & branding CBD merchandise by utilizing third-party CBD purchased on the open market. These players have less operating flexibility, are subject to price increases, and potentially inconsistent CBD feedstock quality & availability.

Sweet Earth is one of the few hemp-derived CBD specialists able to control the entire process from propagating its own high-quality, CBD-rich seeds, to cultivation, to extraction, to R&D / product development, retail packaging & online + white label sales.  

The Company recently closed a non-brokered private placement of 13.4M units at C$0.20, raising $2.68M. Proceeds are for developing & marketing new products & product lines, working capital & general corporate purposes.

Sweet Earth is attracting a great deal of media & industry attention

Shark Discoveries, with ties to the show Shark Tank, selected Sweet Earth to be featured in its retail partner network including magazines and the As Seen On TV network. Sweet Earth was selected after an extensive review of CBD companies, where the Company’s products were deemed of superior quality.

Shark Discoveries feels the vertically integrated farm-to-shelf model is unique in the hemp-derived CBD sector, which mostly comprises growers, extractors, manufactures & distributors. Shark Discoveries will work with management to produce a series of commercials, provide marketing exposure direct to consumers & connect Sweet Earth to their extensive network of consumer outlets.

Sweet Earth’s products are considered superior for a number of important reasons. In addition to top quality organic ingredients, seed-to-sale ensures consistently positive product experiences. The packaging is world-class, and the customer service is knowledgeable, enthusiastic & extremely helpful. I should know, I ordered and quickly received, two items in August.

It’s no surprise that Hall of Fame quarterback & brand ambassador Warren Moon is introducing a growing number of NFL players to Sweet Earth’s increasing number of proprietary offerings.

U.S. football is just the beginning, soccer (football), basketball, tennis, baseball, cricket, field hockey — all sports teams will be using pure hemp-derived CBD products for (workout / game) recovery, skin hydration & reductions in pain / inflammation. {Note: cricket & field hockey rank in the top 6 sports globally}

Soon to follow professional athletes into routine, regular CBD use are tens of millions, and eventually hundreds of millions, of fans & “weekend warriors” across the globe. Millions of Americans report doing resistance training or high-impact workouts at least once a week.

Sweet Earth continues to introduce highly regarded new CBD products

Sweet Earth recently announced two new products in its muscle recovery line of CBD-infused products, adding to its award-winning CBD line. Management continues to expand in the rapidly growing market for men’s & women’s natural health products.

Although the new products are available for immediate North America distribution, the Company plans on making the CBD cooling gel & CBD hot-cold muscle rub available internationally, (if approved).

Sweet Earth already has hemp body rubs available in select international markets. Pure hemp / CBD products (with zero to trace amounts of THC), are approved in most countries.

Industry consultant group Global Market Insights forecasts the global hemp / CBD / cannabis market will reach US$ 89 billion in 2026, a CAGR of 52.7%. More than half of that amount is expected to be in hemp & CBD.

This will be a truly massive market, but there’s still tremendous room for growth well beyond 2026. Consider that globally, health & wellness represents a multi-trillion dollar market.

Sweet Earth recently updated shareholders on its European operations. Last year the company signed a long-term lease agreement in Spain. The Company strategically secured the location near its European headquarters in the province of Cadiz.

Sweet Earth an early mover in European markets

The 5-yr. lease allows Sweet Earth to secure ~22 acres with an option for lease & land expansions. In addition, the Company purchased 450 kg of high-grade Earlina 8FC seeds. Earlina 8FC is a hemp strain authorized for cultivation in the European Union.

A key characteristic is a CBD yield of 2% to 3% and a guaranteed THC content of < 0.2%. Hemp production & CBD products are legal throughout the continent, but laws differ from country to country.

Readers should note, cannabis products used for recreational purposes typically have 50x-150x the THC vs. the 0.2% upper limit that Sweet Earth adheres to.

Multiple avenues of growth, the U.S. market remains wide open

Another engine of growth can be found in U.S. Multiple-State-Operators (“MSOs“). These companies have spent billions building out national brick & mortar store (dispensary) networks.

The number of U.S. dispensaries, thought to be about 6k to 8k, is expected to increase by 2x-4x over the next five years. That’s $10’s of billions/yr. in US$ sales, yet < 10%-15% is currently coming from the sale of hemp-derived CBD products — a HUGE opportunity for companies like Sweet Earth.

Of the 400+ cannabis / hemp / CBD / cultivation / extraction & related companies listed in Canada & the U.S., roughly 1 in 8 are primarily focused on hemp / CBD, a piece of the pie that’s growing faster than the cannabis / THC segment.

Well-funded companies like Sweet Earth are ideally positioned to expand, albeit with competition, but far less competition than cannabis retailers. CBD product prices are falling, but they won’t fall as fast or as far in coming years as cannabis pricing. And, when CBD prices decline, market penetration rises. The same cannot necessarily be said of THC-focused products.

Therefore, Sweet Earth is arguably in a safer market (less regulatory hurdles, far less consumer opposition) than THC / cannabis, tobacco, alcohol…. and in a potentially more profitable (higher margin) business — that’s widely expected to grow faster. What’s not to like?

After the recent capital raise, Sweet Earth (CSE: SE) has ~94M shares outstanding, trading at C$0.16, giving it a market cap of C$15M, plus ~C$2.5M in cash. Readers interested in the explosive growth in the global health & wellness industry over the next few decades should consider taking a closer look at this company.

A wise step in one’s initial due diligence would be a quick review of Sweet Earth’s website & unique product offerings.

DisclosuresThe content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER](together, [ER]) about Sweet Earth Holdings, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Sweet Earth Holdings are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Sweet Earth Holdings was an advertiser on [ER] and Peter Epstein owned shares in the Company. 

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.