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The $Billion Dollar Marijuana Secret Revealed

Wall Street has been quietly investing in this rapidly maturing industry, and minting millionaires by the minute.

Sophisticated investors, including venture capital firms, private equity firms, ultra-high net worth individuals, and, yes, even billionaires, have gotten in on the marijuana action:

  • Peter Thiel, the billionaire founder of PayPal, invested $75 million[1]
  • George Soros is buying into it too[2]
  • Bankers jostled to raise about $2-billion in new capital for medical marijuana companies in the first three months of 2018 alone![3]

What do these sharp investors know that you don’t?

 

A Generational Investment Opportunity Awaits

How could an industry that was virtually non-existent seven years ago become one of the major driving economic forces in the world today?

Just in the last couple of years, in the U.S. alone, there has been double-digit growth![4]

Estimates are bullish for this growth to continue well into the future — at an annual average rate of 25%, by some estimates.[5]

The industry is just getting started. Estimates of potential market sales run upwards of over $200 Billion worldwide:

  • $22 Billion in Canada[6]
  • $40 Billion in the U.S.[7]
  • $142 Billion in Europe and worldwide[8]


There has been nothing like this scale of growth since the dotcom boom of the 90s.

In today’s market, I’m hard pressed to find another industry with this kind of growth. And the crazy part is that it is just getting started…

 

So What’s All the Hype About?

Up until a few years ago, medical marijuana research was tightly controlled and largely discouraged by the US government.

While we don’t have time here to get into why it was made illegal, the long story short is politics. The all too familiar story of corporate greed and corruption of politicians.

But now there has been a groundswell of positive public opinion, and state laws are changing daily in response. A Gallup poll conducted in 2017 suggests that there is record-high support for U.S. legalization, with 64% of Americans saying it should be legal.

This is the highest rate of approval since Gallup began polling on this issue in 1969![9]

 

But Marijuana is a Dangerous Drug and Should Be Illegal, Right?

Whatever your beliefs are about marijuana, the fact is that medical marijuana is already helping millions of individuals deal with chronic pain, nausea, and anxiety, along with a multitude of other conditions.

In fact, patients using medical marijuana have seen a huge reduction in the use of opioid pain killers, such as OxyContin and other highly addictive and lethal big pharma drugs. [10], [11]

Growing negative opinion regarding the use of opioids for pain will continue to drive the need for alternative medicinal applications such as cannabis. The global opioids market was valued at a staggering US$34.8bn in 2015.

Recently, the U.S. declared a public health emergency regarding the opioid epidemic, as the death toll continues to rise.[12]

The recent Omnibus spending bill approved in March of 2018 allocates $4 billion to help fight the opioid epidemic. This was approved by both Republicans and Democrats.[13]

I have to admit, I had my doubts about the merits of medical marijuana. Studies to date have been merely anecdotal, with no clinical proof. And to be honest it all just seemed like a cover by “potheads” to make marijuana legal.

 

Eyes Wide Open

All that changed for me last year when my mother was diagnosed with non-Hodgkin lymphoma.

That experience opened my eyes to a world that can often be dark and scary. Medical technology remains largely in its infancy when it comes to cancer treatment. The side effects of the “cure” are often worse than the disease.

Chronic pain and nausea are two of the biggest side effects of chemotherapy. The drugs that the doctors were giving her to deal with the side effects just were not working. She couldn’t eat, had no appetite and generally felt like death might be better.

That’s when her neighbor suggested she try a medical marijuana tea. Luckily she lives in Washington State where medical marijuana is legally available. Hesitant, we went to the local “store” and purchased the tea.

After her first cup, there was no turning back. Her symptoms seemed to disappear. She became interested in food again. The horrible body pain subsided. She had more energy.

It was literally a miracle.

The story ended happily and she did beat the cancer. But it was at this point that I realized that there really was something to the worldwide medical marijuana movement. I’m convinced that medical marijuana helped in her survival. I saw it with my own eyes.

That’s when I started digging for emerging medical cannabis companies that were actively doing research or could have a positive impact on people like my Mom.

 

Wave of Acceptance, Support and Legalization

And others have also experienced first-hand the incredible healing powers of medical marijuana, and demand that the laws change.

California State legalized medical marijuana in 1996. Canada followed suit in 2001 with legalization of medical marijuana, more recently with full federal legalization. Today over 30 states in the US have legalized medical marijuana, with others organizing to follow the same path to legalization.

And finally some good news from the US Congress this year… President Donald Trump signed into law a $1.3 trillion federal spending bill that includes an extension of a statute prohibiting the Department of Justice from interfering in state MMJ programs. This marks the 11th time the Rohrabacher-Blumenauer Amendment has been approved or renewed by Congress since it first passed in 2014.[14]

The stakes are high, and Congress appears to finally be siding with the majority view of the public, at least in this rare instance.[15]

Across the globe, more and more countries have legalized or decriminalized cannabis:

UruguaySwitzerland
SpainPortugal
PolandThe Netherlands
MexicoItaly
IsraelGermany
EstoniaEcuador
Czech RepublicCosta Rica
AustraliaArgentina

And the list continues to grow. Just recently Peru announced their plans for legalization.

 

End of Prohibition…Beginning of a Generational Opportunity!

This is an opportunity that happens once in a generation. Canadians alone, could be buying as much as $10 Billion worth of marijuana products a year. That estimate comes from Avery Shenfeld, chief economist at CIBC World Markets.[16]

Michael McLellan, a financial consultant to the medical marijuana industry, thinks retail sales of cannabis products could be much bigger.

“This is a 10-year, bull-market run. You’re creating a new legitimate legal business for what is going to be a $10 Billion to $20 Billion a year market,” he said.[17]

And that’s just Canada…

The U.S. market is estimated at up to $40 billion dollars by 2021.[18]

To put that into perspective, the NFL is a $10 Billion a year business. That’s 4X what the NFL brings in!

Shark Tank’s Kevin O’ Leary points out…

All said, that’s over $200 Billion in potential sales. Let that sink in for a minute…

 

Minting Millionaires

Just look at some of the successes already from this emerging industry!

And these are just a few examples… I could literally rattle them off all day long.

 

Where the Smart Money is Going

The “insiders” already know that Canadian cannabis markets are on fire and sanctioned by the Canadian federal government.

During the first half of 2017, Canadian cannabis companies raised more than CAN$1 Billion (US$790 million), up more than 1,700% from the same period last year.[22] And in the first half of 2018 another 3 billion Canadian dollars (US$2.2 billion) – a record amount. [23]

“One of the big advantages that Canadian companies have internationally right now is that we have access to capital that companies in no other country can match,” said Cam Battley, a member of the board of Cannabis Canada, the industry association for licensed cannabis producers.[24]

“In addition to our expertise and the credibility of having operated successfully under rigorous government regulation in Canada, we have access to the level of capital required to make significant investments in equity and also in capital projects.”

The potential is significant. Analysis put forward by Toronto-based Eight Capital, a full-service investment dealer, pegs the potential international medical cannabis market at CAN$180 Billion (US$142 Billion) over the next 15 years.[25]

 

The Big Prize

The full implementation of legalizing recreational cannabis by the Canadian government has now become a reality. Beyond domestic markets, Canadian companies are going overseas to capitalize on their first mover advantage. Europe, where about a dozen countries permit sales of Medical Marijuana (MMJ), is the big prize.

Germany and Australia have been the early focus for nearly a dozen Canadian MMJ companies, tapping international markets through exports of flower and oils, licensing arrangements, distribution deals and acquisitions. Others have accumulated interests in South America.

Vahan Ajamian, an analyst in Beacon Securities’ Toronto office, said Canadian cannabis firms are driven by opportunity overseas rather than competition at home.[26]

“There are all sorts of opportunities in foreign jurisdictions,” he said. “Germany is a hot one. Other countries in Europe are going medical. Mexico legalized medical cannabis. The world is slowly but surely going that way.”

I believe that the booming legal medical marijuana market is going to be the biggest generational opportunity of our lifetime.

I’ve been patiently waiting for the market to reach a maturity level that I am comfortable with.

I believe that time is right NOW!

And if you are a U.S. investor, many of these opportunities are quoted on the OTC exchange.

As Bloomberg reported, “The stigma surrounding the $7.2 Billion marijuana industry is evaporating as Americans grow increasingly comfortable with the concept, more states allow medical and recreational use, and pot businesses start generating healthy profits.”[27]

You just have to know how to find these companies before they explode. You need to be able to separate the blockbusters from the duds and find the “secret” marijuana stocks capable of potentially doubling or tripling in value.

Here are three stocks I am paying special attention to right now:

Canopy Growth Corp. (TSX: WEED / NYSE: CGC / FRA: 11L1) – The Amazon of Pot Stocks is a clear analyst favorite. The company has delivered on its expansion plans with their recent facility expansion. This will give Canopy Growth one of the largest growing spaces in terms of square feet. Some analysts are predicting that this will put them in position for 25% of the Canadian recreational cannabis market.[28],[29] And if all that wasn’t enough, the company closed an investment by beverage giant Constellation Brands’ of $5 Billion CAD ($4 Billion USD).[30]

Aurora Cannabis Inc. (TSX: ACB / NYSE: ACB / FRA: 21P) – The company completed the largest cannabis related transaction in sector history with their acquisition of CanniMed Therapeutics Inc. (CMED). The transaction unites Aurora, one of the world’s largest and fastest growing cannabis companies, with CanniMed, a pioneering cannabis company that has been operating in the industry longer than any other competitor, and whose brand strongly resonates with the medical community.

The combined entity, under the Aurora banner, creates a global medical cannabis leader, and will continue to pursue an aggressive strategy of rapid technological and product innovation, and international expansion. They are also another analyst favorite with a solid buy recommendation.[31],[32]

Cronos Group (TSX-V: CRON / NASDAQ: CRON) – Cronos Group, a medical marijuana company based in Toronto, became the first Canadian cannabis stock to trade on a U.S. exchange.

Like Canopy, Cronos has global medical marijuana and Canadian recreational marijuana markets in its cross-hairs. The company signed an exclusive supply agreement with Pohl-Boskamp, a pharmaceutical manufacturer and supplier that distributes products to more than 12,000 German pharmacies.

Cronos is also ramping up its production capacity to be in position to meet demand as Canada has now legalized recreational marijuana. The company is expanding its Peace Naturals facility to add 286,000 square feet of indoor production space and a 1,200-square-foot extraction lab. Cronos projects that its domestic annual production capacity will top 40,000 kilograms by 2019.[33],[34]

Thank you for taking the time to read my report.

Happy trading!

MF Williams, Contributor
for Investors News Service

P.S. To discover more opportunities in the hottest sectors in North America, sign up now to the Financial News Now newsletter to get the latest updates and investment ideas directly in your inbox!

DISCLAIMER: Investing in any securities is highly speculative. Please be sure to always do your own due diligence before making any investment decisions. Read our full disclaimer here.

Originally Published June 2018
Updated November 2018

Sources:

[1] http://fortune.com/2015/01/08/founders-fund-privateer-holdings/

[2] http://katehon.com/837-george-soros-and-big-agriculture-move-the-marijuana-movement.html

[3] https://www.theglobeandmail.com/business/streetwise/article-cannabis-deals-make-a-2-billion-bright-spot-in-volatile-markets/

[4] https://www.bloomberg.com/news/articles/2017-03-23/u-s-cannabis-industry-expected-to-maintain-growth-despite-trump

[5] http://www.ibtimes.com/how-much-money-does-weed-make-every-year-north-american-marijuana-sales-hit-67b-2016-2468721

[6] http://www.macleans.ca/news/canada/how-big-is-canadas-marijuana-market-really/

[7] https://www.moneyandmarkets.com/reports/SMR/streamlined-millionaires/?ccode=&em=&sc=ENCP&ec=7636108&campid

[8] https://mjbizdaily.com/canadian-medical-marijuana-companies-tap-insane-growth-overseas/

[9] http://news.gallup.com/poll/221018/record-high-support-legalizing-marijuana.aspx

[10] https://www.marijuana.com/news/2017/06/97-of-medical-marijuana-patients-use-fewer-opioids-thanks-to-cannabis/

[11] https://www.drugabuse.gov/news-events/nida-notes/2016/05/study-links-medical-marijuana-dispensaries-to-reduced-mortality-opioid-overdose

[12] http://www.latimes.com/politics/la-na-pol-trump-opioids-20171026-story.html

[13] https://www.usnews.com/news/health-care-news/articles/2018-03-22/health-care-programs-to-receive-major-boost-from-omnibus-spending-bill

[14] https://mjbizdaily.com/trump-signs-spending-bill-includes-medical-marijuana-protections/

[15] https://ca.finance.yahoo.com/news/sorry-jeff-sessions-congress-aims-154100150.html

[16] http://nationalpost.com/features/o-cannabis-retail-therapy

[17] http://nationalpost.com/features/o-cannabis-retail-therapy

[18] https://www.moneyandmarkets.com/reports/SMR/streamlined-millionaires/

[20] https://www.moneyandmarkets.com/reports/SMR/streamlined-millionaires/

[21] THC.CN: June 1, 2107 $0.40 > Jan 1, 2018 $1.87 = 367.5%, APH.TO, APHQF: Dec 1, 2016 $3.76 > Dec 1, 2017 $14.75 = 292%, CARA: July 11, 2016 $4.94 > June 19, 2017 $22.65 = 358.5%

[22] https://mjbizdaily.com/canadian-medical-marijuana-companies-tap-insane-growth-overseas/

[22] https://mjbizdaily.com/canadian-medical-marijuana-companies-tap-insane-growth-overseas/

[23] https://mjbizdaily.com/canadian-cannabis-companies-raise-record-cash-legalization/

[24] https://mjbizdaily.com/canadian-medical-marijuana-companies-tap-insane-growth-overseas/

[25] https://mjbizdaily.com/canadian-medical-marijuana-companies-tap-insane-growth-overseas/

[26] https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aMDM-2517604&symbol=MDM&region=C

[27] https://www.bloomberg.com/news/articles/2016-07-07/silicon-valley-investors-are-finally-getting-marijuana-religion

[28] https://marketrealist.com/2018/03/why-gmp-securities-is-bullish-on-canopy-growth

[29] https://marketrealist.com/2018/02/analyst-ratings-price-target-major-cannabis-stocks

[30] https://www.canopygrowth.com/wp-content/uploads/2018/11/Canopy-Close-Release-Final.pdf

[31] https://marketrealist.com/2018/02/aurora-cannabis-price-target-analyst-ratings

[32] https://www.newcannabisventures.com/aurora-cannabis-finalizes-cannimed-acquisition/

[33] https://www.fool.com/investing/2018/03/25/better-marijuana-stock-canopy-growth-corporation-v.aspx

[34] https://www.fool.com/investing/2018/03/04/now-you-can-buy-this-hot-marijuana-stock-on-the-na.aspx

MF Williams

MF Williams graduated from the University of California at Davis, and became involved in banking and finance working for BNP Paribas North America. He soon realized his true passion lies in small and microcap sector stocks, with their dramatic potential for upside growth. With over 18 years of experience analyzing and researching emerging small cap public companies, his insight and skill set are unmatched.