The farm bill passed by the U.S. Congress yesterday federally legalized a huge portion of the cannabinoid market – the portion that most interests a broad cross-section of consumer products companies. Hemp-derived CBD-based products are now legal nationwide. Still illegal at the federal level are marijuana products containing the psychoactive THC.

Much of the commercial focus of the new cannabis industry is CBD-based, with many large companies from the food, beverage, cosmetics, and healthcare industries waiting to enter this market. This is a very positive development for all the cannabis companies that have been recommended here – CWBHF, CURLF, ACRGF, MMNFF, & ORHOF. Charlotte’s Web CWBHF is the leader in this field with a 12% market share. Already, it sells a broad array of its CBD-based products to over 3000 retail outlets. The new law will allow it and others to go nationwide. The other four companies have not been particularly strong players in this segment of the cannabis industry but will benefit from the larger market and from federally legal operations as they build their product offerings – as some have done recently through acquisitions.

As long as these very volatile and speculative issues are being discussed, I will inject a new name which is indeed speculative – like a newly emerging biotech that has barely entered the clinical stage. Foresight Autonomous Holdings FRSX – an Israeli company – has developed a vision system for autonomous driving that the company claims solves all the problems encountered by current systems in low-visibility environments [wet weather, darkness, glare, fog, etc.]. If its claims are borne out in current OEM tests that are just beginning, then there is much upside to this company that is currently valued at little more than $25 million. Coming out of the typical confluence of Israeli technology and defense, it may be worthwhile to give this technology the benefit-of-the-doubt for a tiny position, but there is no fall-back position should OEMs find the system lacking.

Finally, it should be noted that the group that has been performing so well through this downdraft in the market – big-data/cloud stocks – again led the market yesterday on a strong up-day. They are at the beginning of a huge structural change in the economy that will keep their growth at extraordinary levels for quite some time.

Though it had an excellent stock price advance yesterday, Autodesk ADSK stock has had less stellar performance for some time as it transitions its business to cloud-based subscription. It is worth noting, however, that ADSK is positioned to benefit from big-data as much as any company. Their software for engineering/architectural visualization is becoming essential in dealing with new complexities in those fields. The emerging importance of origami design/engineering, especially in space and other transport and in biotechnology, adds to the vital importance of its capabilities. Then, the emergence of CRISPR and zinc finger technologies in biotech increasingly require building visual models of the massive data to help scientists understand what they are trying to do. This company has many winds at its back.

John Stewart
Chief Investment Strategist

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