Should you be getting into marijuana stocks?
There’s a big market here, but one big swing factor.
There are two new big-dogs in the world today and I’m talking about emerging (hype-driven) opportunities.
One of them is Bitcoin, I’m researching everything to do with that market and will be reporting back my finding within the next two weeks.
The other is marijuana. Let’s begin…
In Japan, the Emperor wears hemp.
He has done for centuries. The hemp plant – of which ‘marijuana’ (the plant you smoke to get you ‘high’) is just one strain – has had a long and fruitful connection with humanity.
Hemp oil was being used by the ancient Egyptians as a medicine.
NASA was using marijuana to help astronauts unwind from a tough day on the space station.
(No, I just made that last bit up.)
But then marijuana (and with it hemp) went out of favour. It became a prohibited substance. The hemp industry got shut down.
(Many people say it was Dupont and the cotton industry that got hemp shut down – mounting a massive scare campaign about the dangers of marijuana.)
Whatever the case, it’s been illegal for about a century.
But now, it seems, the tide has turned. In America, there are now more states where marijuana is legalised to some degree or another than there are where it isn’t.
It’s a radical social experiment, but one that is creating a billion dollar industry in the process.
And for people in the right place at the right time, a small fortune.
This chart here has some of the big success stories. If you put just $100 into some of these companies just three years ago, you could be banking some incredible returns.
One company turned $100 into $35,500 for you! Nice!
Of course, not everyone’s a winner. The alcohol industry for example. They’re not stoked about it. Alcohol and marijuana seem to be in competition with each other.
In states where marijuana is legal, pot sales are growing exponentially, while booze sales are flat or falling.
Take this chart from Washington state.
Quarterly marijuana sales have boomed from $23.6m just a few years ago to over $300m today.
Some people are saying that the marijuana industry is going to be bigger than the manufacturing industry in the US by 2020. It’s pretty huge.
And the stereotype is that marijuana is for teenage boys with their X-box and Dominos pizza.
But if you break it down and look at who is actually using legal weed shops in the US, it’s a surprisingly broad cross section of the community.
It’s only very slightly tilted towards males, and it’s tilted towards younger cohorts (25-34) but not massively.
To me, that looks like an industry that’s got legs.
Ultimately the American experiment is a case study in how governments can make or break a market.
Sometimes government regulation is a good thing. I personally prefer to live in a world where there isn’t an open market for personal nuclear weapons. I support government regulation in that industry.
However, and I know this will come as a surprise to many of my readers, the government isn’t always perfect.
It doesn’t always make great decisions. Often, it actually makes very bad decisions in order to protect the interests of the rich and powerful.
(I know! It was a shock to me too. I’m sorry. I really should have made sure you were sitting down first.)
So is all hell going to break loose if we legalise marijuana? It seems unlikely. Marijuana has been down the priority list for the police for a while. It has never been particularly expensive or difficult to get.
And we’ve got by.
And some argue that there’s a signalling effect here. That if we legalise marijuana we’re telling kids that it’s ok to get off your face.
That’s kind of the message we started sending when we legalised alcohol again if you’re using that logic. And if you’re taking moral guidance from the government you probably need to have a good long chat with your priest.
So personally, I see this having a very small impact on the fabric of society.
So if you’re ok with the moral dimensions, and I more or less am, then the question is, where is the money?
This is a tricky one. We’re really looking for the government to make a market here. There are a number of Australian companies getting ready to launch when Australia finally starts down the path towards legalisation.
But the government is sending mixed messages here. Some days it looks like their stance is softening. Other days, it looks like it could be years down the track.
As I’m sure you know, it’s cash-flow that kills most start-ups. For marijuana stocks in Australia that could mean a whole lot of stranded companies with state of the art infrastructure and nowhere to deploy it.
And the longer the Australian government drags it out, the more opportunity there is for foreign companies to fully gear up and get ready to expand.
I mean, let’s say Australia doesn’t open the door until well after 2020. By that stage, the American marijuana industry will be starting to consolidate. Large players will start to emerge. They’ll have developed all the tools they need – technology, business models, finance partners.
They’ll come into the market full guns blazing, just as our little Aussie battlers are trying to get off the ground.
They’ll probably get slaughtered.
And right now, it seems that the government is going the wrong way for people interested in backing Aussie companies. I know a hemp farmer up in Northern NSW. They’d been gearing up production of low-THC (the stuff that gets you high), high-CBD (the stuff that has medicinal properties) crops.
The government had been moving towards making CBDs legal.
But then the Therapeutic Goods Association surprised everyone and said, actually, no, CBDs will remain illegal. You have until October to wrap things up.
It looks like they’re stuffed.
So this is the danger here. If you’re investing strategy relies on the stroke of some bureaucrat’s pen, your strategy is built on an institution that has been corrupted time and time again.
So there’s a substantial amount of risk there.
And that’s one of the reasons why the returns are so high. Can you predict what the government’s going to do in two or three years? Sometimes it’s a coin toss.
So look, yes, there are potentially some huge returns to be made out of the marijuana industry. I’m looking at some options myself.
But be aware of the risks. The government was happy to hang a whole bunch of hemp growers out to dry. They’re not going to give a toss about your investments.
That’s not to say it’s not worth it. But marijuana stocks belong in the risky tail of your portfolio, I reckon.
Have you made money from the marijuana hype? Are you sold on it, or are you staying well clear?
Do you think it’s a bubble about to burst, similar to techwreck2000?
Fletchman says
Marijuana is a blight – it removes motivation and destroys capability. Anyone who makes money out of it is making money out of degrading other people. It is not in the same league as alcohol as alcohol is not an entry point to other more potent drugs as pot is. The motivations around legalisation are purely profit and political in further dumming down an already dummed-down society. Check out http://www.drugfreeworld.org if you really want to get the facts on how harmful marijuana really is. You won’t get this data from any of the vested interests pushing for legalisation.
peter says
Totally agree soooo damn true!
NoelA says
The whole drug scene is best looked at after reading a book Chasing The Scream by Johann Hari (can be got on Audible as well) which shows how the war on drugs has not only been lost even before it started but also shows that there are societies in the world who have changed their methods of dealing with drugs/users etc with outstanding results.
I am not a recreational drug user and never have been however I do use the legal drug called alcohol which causes way more damage in our society! We could save multiple lives, endless amounts of money on law enforcement and harm on the community by stopping doing the same things that have not worked for decades.
Diane Kirch says
I’m with Fletchman http://www.drugfreeworld.org provides so much information about the REAL effects of Marijuana. You only have to look into our Mental Health stats which are full of people with Marijuana induced paranoid schizophrenia. My 19 yr old nephew committed suicide because he was hearing voices in his head. He was a perfectly normal young NRL footy player wanting to make a career in league but once he got on to the weed, that was it for him. I went to a Nutrimetics party where unknowingly I was eating a Marijuana Cookie with my cuppa tea. The effect it had on my mind as I drove home was dangerous, frightening but also enlightening because I realised how incredibly mind changing this drug is – even in a diluted form such as a ‘cookie’. My husband gave the ‘host’ a good hammering because these ‘cookies’ were left out where the little children could eat them too. How incredibly irresponsbile and plain dumb! However if it could be guarenteed that production of NO -THC (the stuff that gets you high) & high-CBD (the stuff that has medicinal properties) was introduced, then, and only then would I even consider changing my mind. NSW is taking all its codein based products off chemist shelves because of the adverse long term side effects; I only hope common sense will prevail with the production and distribution of this potentially, next generation destroying, society, if it’s not! But, if it ‘could’ be grown and controlled under the strict guides as the opium poppy plantations, and it was TRULY for the chronically, or terminally sick, then I might be persuaded otherwise – but it would take some convincing!
peter says
Hi give me a call interested to know more
This stuff causes damage whether you are aware of it or not
I will be doing drug presentations to the nrl in the future
0411099617
Cheers
Peter
David Hancock says
Cannot agree with the fear based arguments below. Used marijuana moderately for years and years like many others though do no smoking of any sort these days but there are some people who should never touch it all. Those people will have a rough time anyway whatever drug is available. But the key to smoking marijuana is to know the strength of it. The lady who took the cookie had no idea. I feel sorry for her but she should not let that cloud her experience. I’m not an advocate for marijuana and I don’t care what happens personally but the “cat is out of the bag” we have to deal with the consequences.
Roger says
I have to make a comment here to counter balance the ill informed opinions. I am 63 years old, I have smoked cannabis since I was 16. They said it lowered your sperm count, but I have to beautiful children. They said it would lower motivation, but I have been self employed for the last 38 years, starting up and running 15 different companies employing hundreds of staff. They say it destroys capability, but I have increased my list of qualifications both academically and physically. They say it is a gateway drug that will lead to harder drugs, but I have never been tempted to explore any other drug, except alcohol. And I know which of the two has had the most detrimental affect on my life and my family and it is definitely and it is not marijuana. So as a consequence I was not slow to embrace the investment opportunities offered by the legalisation of medical cannabis and have made some good gains, but I believe there are even better gains to be had in the future.
One does not need to be a user of the product to see the investment opportunities here. After all I own Nickel stocks too. These are traditionally good stocks to have in the event of military expansion. I do not however support war ( War what is it good for? Nickel stocks apparently)
Over the years I have witnessed many examples of people blaming their bad deeds on marijuana for all sorts of things, including acts of violence, theft and all sorts of anti social behaviour, even speeding for goodness sake. Those that have used the drug will recognize how ridiculous these claims are. Ask any barman who he would rather serve a drunk person or someone who is stoned and the answer is “Give me the smoker any day!”
peter says
You have accomplished a lot! Well done..
How much better could you have done without it.
See if you can stop smoking totally
For a year and see if it doesn’t affect you in any way.
Bet you will have a tough time as it is a very addictive drug!
And if you are able to do that, I bet you will actually feel a whole lot better
Then if you get it all flushed out of your system
You will feel a whole whole lot better like I did.
peter says
Like to ask you a question Rodger and take a look if that’s ok.
how would you feel if your beautiful children were given this light drug over , say a year period when they were 10,or 12 or 13.
Do you really feel it would be benificial to them and have no harming effescts whatsoever?
Regards
Peter
Rick Eason says
See above
Rick Eason says
In his book “Sensual Drugs”, the world’s leading medical statistician, Tim Harden-Jones
shows that alcohol taken to excess for 30 years causes a measurable
deterioration in brain function. Marijuana used every day for only
three years causes the same measurable deterioration in brain function.
Moreover, the link between various forms of serial mental illness and
marijuana is now well established.
Mass media are now being used to
subject our communities to the same brainwashing techniques used by
Hitler and Stalin. It works by inversion, perversion and conversion.
Inversion – means tipping people’s values upside down
Perversion – means getting them to act on those corrupted values and
Conversion – means that when we are utterly debased, a strong man will emerge to take control of us.
Rick Eason says
In his book “Sensual Drugs”, the world’s leading medical statistician, Tim Harden-Jones shows that alcohol taken to excess for 30 years causes a measurable deterioration in brain function. Marijuana used every day for only three years causes the same measurable deterioration in brain function.
Moreover, the statistical link between various forms of serious mental illness and marijuana is now well established.
Mass media are now being used to subject our communities to the same brainwashing techniques used by Hitler and Stalin. Brainwashing has three steps: inversion, perversion and conversion.
Inversion – means tipping people’s values upside down
Perversion – means getting them to act on those corrupted values and
Conversion – means that when we are utterly debased, a strong man will emerge to take control of us.
Brainwashing us into using marijuana has been in progress since 1960s when Prof Timothy Leary of Berkley saw drugs as “the sacraments of a new religion.”
edd says
Thank you very much for this important post. Hemp is a healing plant and it has been used thousands of years and because of its beneficial use it has been made illegal by pharmaceutical industries. Hemp fiber is the stronger fiber as far as I am aware. It could be used in pulp industries and construction industries to save our precious forests.
Please check the following for its medical benefits:
Ben says
Wow, shame to see the old Reefer Madness crazies still spouting myths which science has repeatedly disproven for decades. C’mon people, you can do better than parrot what they taught you in primary school, just to scare you away from drugs… mmmkay. Just do a small amount of reading at least.
Good on ya Jon. Let me know if you want to collaborate.