Two Essays on Industrial Hemp Firms in the United States

After a long absence from American fields, industrial hemp was reintroduced to growing fields starting with state pilot programs in 2014 and received the green light for commercial cultivation in the US through the 2018 Farm Bill. Being an industry in its resurgence, investment is crucial for growth and the stock market and over-the-counter markets help US hemp firms get these much-needed funds for growth and expansion. This thesis consists of two essays on US hemp firms.The first essay uses descriptive statistics, correlation analysis, and the Kruskal-Wallis Test to investigate how US hemp stocks compare to mid-cap and large-cap stocks, over four years. The results show that US hemp stock returns are less volatile when compared to mid-cap and large-cap stocks. The results also a significant difference between the distributions of the price movement of US hemp stocks and mid-cap and large-cap stocks in this study, indicating that US hemp stocks and other mid-cap and large-cap stocks are not chosen from the same populations of stocks and would likely yield different returns in investment portfolios.The second essay uses the Nonlinear Autoregressive Distributed Lag Model to estimate the short and long-term effects of four selected macroeconomic factors on the stock prices of US hemp firms, over a four-year period. The results show that asymmetrical relationships exist in both the short run and long run between US hemp stock prices and the selected macroeconomic indicators. They also suggest that positive movements in these macroeconomic indicators have larger impacts on the stock prices of US hemp firms than negative movements, suggesting that the stock prices of US hemp firms respond more to positive movements in macroeconomic indicators than they do to negative movements in macroeconomic indicators.Using these results, stakeholders in the US hemp industry can strive to adjust their budgets and better allocate their resources to adapt to the prevailing conditions in the stock market and the US economy at large.