Vegetable grower turned cannabis cultivator Village Farms International (Village Farms International TSX:VFF) is set to grow hemp in Texas, now that US Congress has passed the 2018 Farm Bill.

The development could result in up to $100 million in CBD sales for VFF, says analyst Martin Landry of GMP Securities, who on Thursday reiterated his “Buy” rating and $9.50 target price.

Expected to be signed by the President into law next week, the 2018 Farm Bill removes hemp from the US federal Controlled Substances Act, thus allowing the cultivation and sale of hemp and hemp products, including CBD which is used to treat a number of medical issues.

Village Farms currently owns and operates 130 acres of greenhouse in the US, in addition to its greenhouse operations in Canada, and has stated its intention to “aggressively pursue” vertically integrated opportunities in the newly opened US hemp market by converting some of its operations in Texas to hemp as well as pursue opportunities for both greenhouse and outdoor cultivation in other states where hemp is expected to be legalized.

“Village Farms intends to be a leader in this nascent industry,” said Michael DeGiglio, Chief Executive Officer, Village Farms, in a press release on Thursday. “With one of the largest existing greenhouse footprints in the US and a 30-year proven track record as a large-scale, low-cost grower of high-value crops, Village Farms has a formidable platform to capitalize on the hemp and CBD opportunity.”

Landry says that with VFF’s shares trading at approximately 5x his 2020 EBITDA estimate, the company’s potential expansions in the US and Canada are not currently reflected in its share price.

“Village Farms intends to vertically integrate and develop extraction capacities which should allow the company to capture a larger share of the value chain in producing finished CBD based products,” says Landry in a client update. “We could see a scenario where the company generates up to $100 million in sales from CBD based products within three to four years. Village Farms could be in a position to realize revenues from CBD products in the US as early as 2019.”

Landry’s $9.50 target represents a projected return of 77.6 per cent at the time of publication