Why New Age Beverages Stock Popped Again Today

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What happened

Shares of New Age Beverages (NASDAQ: NBEV), a maker of cannabidiol (CBD) beverages, were moving higher for the third day in a row today after the Farm Bill that would legalize hemp passed the Senate, taking another step to becoming law. The bill will now go to the House, where it's expected to pass, and then to President Trump's desk to be signed into law.

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New Age released a statement on the bill, explaining how the company would benefit from hemp legalization, sending the stock up 11.6% as of 12:21 p.m. EST.

So what

New Age, which recently launched a line of CBD-infused beverages, stands to be a winner on the new Farm Bill, as it would legalize a lower-THC form of cannabis that can be used to make CBD products. That's one of the reasons that cannabis industry research firm Brightfield Group thinks the hemp-CBD market could reach $22 billion by 2022. CBD is a non-psychotropic derivative of cannabis used for a variety of medical conditions, though some believe its healing potential has been exaggerated.

In response to the Senate's passage of the bill, New Age issued a statement saying that its CBD products, which include a CBD water, a CBD tea, and a CBD shot, are Farm Bill compliant, and that it's prepared to roll out its CBD portfolio nationally now that the regulatory landscape is clearing up. The company has secured commitments from retailers and distributors at more than 125,000 distribution points, and is expecting distribution to begin as soon as January.

Now what

The Farm Bill is certainly a step in the right direction for New Age Beverages, as are the company's contracts for more than 125,000 distribution points, including national retailers. However, it remains to be seen if the beverages are embraced by consumers. New Age is the type of stock that could deliver big returns if its new CBD drinks find an audience or a corporate buyer, but the actual market for CBD is still a big question mark despite predictions like Brightfield Group's. The good news for investors is that we should learn more in just a few weeks when New Age's CBD drinks start to hit retail shelves.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.