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Is there a bigger opportunity than marijuana in the cannabis industry? Martin Sumichrast, CEO of Level Brands breaks down what to expect from the CBD industry. What is the bigger opportunity here for CBD?
- Well, I think when you look at the two markets, I believe CBD is the bigger market. In other words, when we consider the amount of users that will potentially use THC or marijuana compared to the CBD market, we think it's a much broader base of users. I use it myself. I don't think if THC was legal here now, I would be using it. So, I think I'm a good representative of that. I think a lot of people I speak to are the same, a lot of, you can use it and go to work, you can use it and not get drug tested. That's the other thing, obviously, which is a major thing. So, we think the CBD market is really, really large.
- So, I wanna rewind for a second. Can you explain to me what CBD is and what it does?
- Sure. CBD is cannabidiol. It comes out of the hemp plant, and it helps, the FDA's come out and said it has medical benefits. You have to be very careful what you can say about CBD, and we're very careful when we market our products, but CBD has shown, I'm a good example, of helping me with some of my shoulder problems, and people talk about it helping in a lot of different areas, whether it's stress, or sleep, or different things like that. So, I think it's a very wide ranging product, that depending on the person, depending on your body type and all the different things, reacts differently to people, but I think we're just scratching the surface of how beneficial CBD can be to everybody. And also for pets, what's amazing is we have a pet line, and CBD for pets is incredible. I know Kramer said he uses it for his pets. I use it for my pets, it's fantastic. So, I think it's a really amazing product.
- So, you said we're just scratching the surface. Where do you see CBD in five years?
- Studies show that the CBD market was probably less than a billion dollars in 2018. And a lot of that has to do with, first of all, it was new. Second of all, it was still considered a Schedule I under the federal law. So, now with the passage of the farm bill which had the hemp rider, which descheduled CBD, now it's opened up. And if you look at different studies, we like to quote the Brightfield Group study, we're talking about a market going at over $20 billion in the next five years, and some studies suggest that's doubling five years after that. So, you look at the growth potential of the market is very large over the next decade.
- Level Brands just acquired cbdMD, and I'm wondering why. What sparked this acquisition?
- Well, first of all, we got involved in the CBD market. My partner, I'm very fortunate to have a partner, Kathy Ireland. And Kathy and I, we got Level Brands involved in the licensing side of the CBD market beginning of last year. We learned a lot last year, and then we saw the farm bill coming, we saw the potential, and I ran into actually a great friend of mine in Charlotte, North Carolina where we're from, and Scott Coffman, he's built an incredible company cbdMD. We saw the opportunity, we saw one plus one equals five. I know it's a cliche, but I'm telling you in this particular situation it's a huge plus for us. And we merged the companies. We closed the acquisition, actually the day Trump signed the farm bill. So, the NYC let us go, we're excited about that, and so it's gonna be the major part of the company going forward.
- And how do you see cbdMD impacting Level Brands in the long run?
- So, we're gonna really focus on the growth of cbdMD. You're gonna see some initiatives corporately for us, possibly a name change coming soon, and a ticker change, and all that to come. And we'd love to break that when we announce it here, but we're very excited about the potential of cbdMD. The growth of the business is enormous. We have a good base business, but cbdMD's growth is just gonna be, I think, really big for Level Brands. So, we're excited about it being the real focal point of the company.
- So, I'm wondering will the CBD market be positively or negatively impacted by federal legalization now that the farm bill's passed?
- Yeah, I think it's sorta opened the doors. I mean, 90 plus percent of our business has been online because retailers are very skittish to carry a product that's a Schedule I narcotic the way it was. Now it's opened up, so we're getting inbound calls where before we were having to make calls to retailers. And we're still in 700 locations, but that's gonna grow tremendously now with the passage of the farm bill, retailers opening up. I think we're gonna see an enormous amount of growth in CBD.
- Should we expect the same kinda volatility that we're seeing in the marijuana stocks, such as Canopy Growth and Tilray in the CBD sector going forward?
- Well, I think volatility in a new industry is kinda something that we're used to seeing, and I don't doubt that we'll see volatility in the sector as competition comes in, you mentioned before regulation. We're a big proponent of regulation. We wanna make sure that there's a solid foundation for this industry. We don't wanna see bad actors in our neighborhood, so kudos to the FDA and Scott Coffman, or Scott Gottlieb for saying, hey, there's gonna be regulation, so we're excited about it. So, yeah, I think we're gonna do very well.
- Marty, thank you so much for joining me.
- Thank you so much for having us.

No, you can't get high off of CBD. 

CBD, or cannabidiol, is a compound found on marijuana and hemp plants. However, unlike THC, it doesn't have psychoactive properties so you won't be getting high off of it. 

What it does have in common with THC, though, is that because they are both cannabinoids they impact our bodies and minds using cannabinoid receptors, wrote TheStreet's Steve Fiorillo These are a part of the endocannabinoid system inside the human body, which affects a number of different physiological processes. These receptors, to date found primarily in the nervous and immune systems, are what the CBD interacts with to give you the effects.

Martin Sumichrast, CEO of Level Brands LEVB, broke down why Level Brands is making the push into CBD with its recent acquisition of cbdMD.

"My partner, I'm very fortunate to have a partner, Kathy Ireland. And Kathy and I, we got Level Brands involved in the licensing side of the CBD market beginning of last year. We learned a lot last year, and then we saw the farm bill coming, we saw the potential, and I ran into actually a great friend of mine in Charlotte, North Carolina where we're from, and Scott Coffman, he's built an incredible company cbdMD We saw the opportunity, we saw one plus one equals five," Sumichrast told TheStreet. "I know it's a cliche, but I'm telling you in this particular situation it's a huge plus for us. And we merged the companies. We closed the acquisition, actually the day Trump signed the farm bill. So, the NYC let us go, we're excited about that, and so it's gonna be the major part of the company going forward."