Longtime readers will remember the first time I put cannabis investing on your radar.
That was over two years ago.
At the time, there were only a couple dozen publicly traded cannabis companies. Today, there are over 300.
New ones seem to be popping up each week. Others are merely adding “cannabis” or cannabis-related words to their company names to tap into the green gold rush.
It’s reminiscent of previous manias in crypto, uranium, and junior gold miners.
The truth is, most publicly traded cannabis companies are junk with abysmal financials.
It brings to mind Doug Casey’s saying: “When the wind blows, even a turkey can fly.”
Just about anyone can grow a marijuana plant on his back porch, from a practical standpoint. The barrier to entry to producing dried cannabis is low.
It is called “weed” for a reason after all.
Gone are the days when you could invest in companies that only cultivated the plant – or otherwise didn’t have a competitive advantage – and make easy profits.
The legal cannabis trend is no longer in its infancy.
Legal Cannabis – Where Are We Today?
I view the situation as a speculator, one who takes advantage of distortions – often politically caused – in the market.
And when you consider the effects of the near 80-year cannabis prohibition, it’s clear there are enormous distortions in the market. They are only just beginning to unwind.
Imagine what all the various industries that cannabis touches would look like had they developed in a free market – absent a long-term prohibition – and then think about where we are today.
For example, prohibition has needlessly stunted the research and study of cannabis’ obvious medicinal properties. I have little doubt research will unlock those in the months and years ahead.
But it’s not just medical.
According to a study the US Congress commissioned, there are around 25,000 hemp-based products – clothing, food and beverages, cosmetics, paper, fibers, and so forth. Remember, as large as the market for these 25,000 products is, hemp itself is just one aspect of the cannabis market (remember, hemp and marijuana are from the same plant species).
And the US federal government legalized hemp not even nine months ago.
Big Alcohol, Big Tobacco, and soft drink companies are just starting to get involved with cannabis and are developing entirely new categories of products.
It’s hard to wrap your mind around just how significant the total market potential of legal cannabis is.
It’s unprecedented.
I’ve compared it before to the repeal of alcohol prohibition in 1933. But let me remind you, alcohol use was primarily just a recreational market.
Legal cannabis will disrupt the alcohol, tobacco, and pharmaceutical industries, among others.
Together, we’re talking about a multiyear megatrend that could disrupt $5 trillion in global markets:
However, we are no longer in the earliest days of this exciting trend. The wind is blowing, and there are some turkeys flying.
But there are still big profits to be made with the right companies in the right niches.
And right now, that’s oils and extracts.
Thousands of Possibilities
There are over 113 chemical compounds in the cannabis plant. We only know a little bit about two of these, and just those two (THC and CBD) show enormous medical potential. That says nothing about the other therapeutic, recreational, and additional commercial value they may have.
THC (tetrahydrocannabinol) is the psychoactive component that gets users high and has medicinal properties. CBD (cannabidiol) has medicinal and therapeutic properties and no intoxicating effects.
Today, we are just scratching the surface of the incredible medicinal properties of THC and CBD.
Each of the 113 cannabinoids – and each combination – interacts with the human body in a different way to produce a different effect.
Selecting specific cannabinoids – and combinations of them – is crucial to studying how they can be used to treat diseases or have therapeutic, recreational, or other commercial value.
That’s why cannabis extracts are so crucial. They’re what allow us to isolate and study each of these 113 chemical compounds, and the thousands of combinations of them.
Below is a chart of the medicinal potential and applications of some of the more common cannabinoids:
I have no doubt there will be significant breakthroughs in the months and years ahead as THC, CBD, and especially the other 111 cannabinoids are thoroughly researched.
Just think of how big the cannabis boom has been so far, and that’s only with our minimal knowledge of just THC and CBD. The true potential of all 113 cannabinoids – and the thousands of combinations of them – is truly mind-boggling.
That’s the opportunity today. It’s the cutting edge of the cannabis industry and the key to the next wave of profits.
In sum, it will be years before the massive distortions that 80 years of prohibition has caused will be worked out, and the various markets mature to their full potential.
And readers of my Crisis Investing advisory have already had the chance to book gains of 220%… 248%… and 533%…
But there are still big profits to be made in this space… if you know where to look.
Editor’s Note: Legal cannabis is one of the few issues politicians on both sides of the aisle can agree on in this highly-charged environment.
With the 2020 election season is kicking into gear, Trump has a crucial card to play. A move towards legalization could swing the election in his favor.
That’s precisely why, Doug Casey’s colleagues just released a timely video. It shows how Trump could legalize cannabis to win the election and how to position yourself for big profits. Click here to watch it now.
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I can tell you from first-hand (hee hee) experience, the oils are amazing for their therapeutic value for many ailments. In fact, I’ve discovered that even homegrown immature plants make some powerful massage oil.
Hopefully, the average consumer will not be prudish, like my husband.
My daughter gave some CBD oil to my wife for neck pain. It didn’t work because I’m still here. 🙂
But seriously, it didn’t work. Is there a CBD oil you can recommend? I assume there are different oils for different uses?
Very good. Very expensive.
https://bluebirdbotanicals.com/
I make my own and I cook it down enough for the balms and tinctures to degrade the THC. My husband swears he still gets buzzed from it. The pure CBD oils are good for topical application for aches and pains. My husband is paranoid already and so imagines he’s buzzed.
I’ve snuck some on him (if you know what I mean) and it didn’t seem to make him buzzed.
It did work, though.
I won’t be sending any through the U.S. Mail or anywhere.
They should take pot off being a class1 drug and let adults decide for themselves about its use.
WARNING: Anyone who signs up for one of these legal weed dispensaries or gets an official medical weed card will probably have their firearms seized at some point. Weed is still a Federal Government disqualifier for buying firearms. The prog fuques love the idea of zombifying the masses and having a clear indisputable federal gun disqualifier thrown in. Millions will likely unknowingly hoist the Red Flags up their own flag poles. Here I am. Come take my guns because I am in violation of Federal statute.
The Cannabis industry is the 10th Amendment in action. Cannabis is still an illegal drug, according to the federal government, but many states have now “legalized” it. I was in OK this past weekend and was amazed at how many dispensaries had popped up. At dinner with some old college buddies, I mentioned how many I had seen in the short drive through OKC and they laughed and told me I had not even seen the surface.
My niece opened a dispensary and has found it difficult to make money. Between the competition, state required paperwork, city and county fees, inspections and state taxes she is not making any money and thinking about shutting down. One of my friends is extremely smart and told me getting a dispensary was a sucker move as there was too much competition. The real money in in refining the oil and that is where he is putting his money.
We were 1st here in CO, the bottom has fallen out, price has collapsed, financial wreckage litters the landscape. The same thing is happening with CBD, just faster. Investors beware, especially investing in anything but the biggest who will/are consolidating the market.
Muh free market. Capitalism is real.
No, monopoly/crony capitalism is real, no free market there. Other side of the communist coin.
If you want to feel better, you must eat better. Get those capillaries opened up with a plant based diet.
Will A Plant Based Diet Ruin Fitness? Weak Vegan Athletes? Dr Neal Barnard
https://www.youtube.com/watch?v=ptxCFN6JDWI
I eat plants all the time, it’s just that they are concentrated into rib-eyes, bacon and the like.
We went foraging for wild edible plants yesterday…
ha ha ha …you so funny. Do you write your own material ?
I know one thing – the pot stocks have been taken out to the woodshed and beaten. Anyone who bought in on the hype needs some weed to salve their burning, gaping asshole after that reaming. Keeping a close eye for the upturn to go long, but it’s not happening yet.
I can almost guarantee this legal weed mania is going to wind up just like the cigarette business and opioid pill business. Lawsuits and “fines” as far as the eye can see. The data is out there but no one wants to be bothered with facts. When the trial lawyers and Attorneys General get going a couple of years down the road they will be able to say “everybody had access to the information…” as shareholders are wiped out.
There is too much unknowns for the investor, at this point it is a cash business, which means it is ripe for fraud and/or money laundering.
anyone who knows, realizes that oil is not the end product, it is what is known as a waste stream, that has been converted into a cash cow. usually it is just supposed to be just the clippings of the small leaves. these are still covered in the crystals that make up the cannabinoids.
and that is where the problems lie: If a grower spends $10k to set up a green house, only to find out just before harvest, that there are: bugs, mold, disease that will impact the yield of the final product (the buds to smoke) they will instead, turn the entire failed crop into oil.
There are actually advertisements in the trade journals that promote this type of behavior.
“did your crop fail due to unknown environmental issues? buy our super duper extraction machine”
now think about this: do you really want to vape a product that has failed in it’s primary goal, and now is a byproduct?
the extraction methods, either via cryogenic co2 (the best) or ethyl alcohol extraction (middle) or butane extraction (the worst) will extract along with the thc/cbd, the rest of any organic substance that dissolves during extraction , like mold,aphids, flies, or any other bug infestation.
Plus, the oil is unstable without adding additional oils, that is why they add the vitamin E oil. if they didn’t add something to it, it would degrade and become unusable in a few months.
imo, the whole oil side of the business is giving the original product a bad name, and thus the resulting crash in all the major players stock values.
the black market oils are usually made via butane, and this is also a huge health issue, especially if they have not removed all the residual butane, by another ethyl alcohol evap method.
I have lived in this market place, there will be a lot of consolidations going forwards, and probably the major tobacco and alcohol players will wind up as the primaries, as this industry matures.
They sell CBD everywhere around here and I know that medical marijuana is also legal but we still cannot grow hemp. I want to put some in for the feed aspect- I saw some hemp fields in NY state last month that looked amazing in terms of pound per acre, but I guess we’ll have to wait for these jackasses that run things to learn a book.
Don’t worry . Government is on it.
South Dakota’s Department of Social Services has spent nearly half a million dollars on an anti-meth ad campaign with the tagline “Meth. We’re On It.”
No, this is not The Onion.
https://summit.news/2019/11/18/south-dakota-spends-nearly-500000-on-anti-meth-ad-campaign-with-tagline-meth-were-on-it/
It will be great when they figure out how to carve out the profits to favored people. Then it will be no holds barred.
There will be people who get rich doing this but it won’t be stockholders.