Investing in Marijuana Stocks As a writer, I sometimes find it nearly impossible to avoid a pun when they come so fast and easy. But after reading over marijuana investing articles in the past few months, it has become completely unbearable... Marijuana Legalization Has Lit Up These Stocks Pot Shares Rally 21% to 1,700% as Speculators See Green Marijuana Stocks Show High Hopes Pot Penny Stocks Smoking on Rise of Legalization Groan... Such headlines are sillier than a stoned teenager watching Cartoon Network, so Ill spare you the terrible pot puns and get right to the point: marijuana legalization could make you very rich. Marijuana stocks are gearing up to be huge in 2014 and beyond. Some investors have already banked gains of over 2,000% on some budding marijuana stocks. And as more and more states legalize both medical and recreation weed, those profits are going to keep on growing. Heres why grass is greener than practically anything else you can invest in right now... Im not going to bother with any ethical issues here. Whether you support pot smoking or not, this industry is going to be massive. For better or worse, marijuana is immensely popular. And its popularity is increasing each and every day... A recent survey revealed that 7.3% of Americans 12 or older regularly used marijuana in 2012, up from 7% in 2011. Thats 7.6 million Americans that light up almost every single day of their lives. Countless millions of others use it occasionally... And more people use marijuana than are actually estimated (in no small part because people dont like admitting incriminating things about themselves). The real number of smokers has been estimated as high as 50 million. Most telling is that the new generation of teenagers is smoking more pot than ever. Todays teens are lighting up 80% more than they were in 2008. In fact, more teenagers smoke pot than cigarettes... and you know what a profitable business cigarettes have been — even after they were proven to give you cancer. Marijuana has no proven health effects anywhere near that serious. It stands to reason that as more and more states open up to legal weed, this new crop of Americans will be buying it up in record numbers. The demand for marijuana is insatiable, according to Bruce Perlowin, CEO of Hemp Inc. (HEMP). Its a feeding frenzy for the birth of a new industry. The trend is clearly growing in favor of marijuana growers and distributors. You can choose to turn up your nose, or you can start cashing in on the feeding frenzy while its still on the way up... A Sticky Green Market All told, the legal weed industry could be worth between $35 billion to $45 billion a year. In the first week after Colorado legalized recreational marijuana, customers shelled out $5 million to get their Rocky Mountain high. They sold a million bucks worth on the first day alone! And each of those sales comes with a 10% sales tax... Washington State imposes a 25% excise tax every step of the way: production, processing, and sales. And thats on top of the 8.75% sales tax. Colorado estimates that the booming industry will pull in around $67 million in tax revenue — each and every year. I doubt too many other states will want to pass up that kind of tax revenue, so more and more will follow suit. Twenty states have already legalized medical marijuana use: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington State. This list will also grow in the years to come... So how do you get your share of this cash crop? Bong-Rattling Profits There are a few different ways to play legal weed: You could buy producers, retailers, or auxiliary companies. But first, a word of warning... The major problem right now is that like most industries in their infancy, the bulk of these opportunities are in unproven — and possibly completely phony — penny stocks. So were looking at more proven companies that have a few years of operation and a decent market cap. That being said, this is still a very volatile market, so be careful. Medbox Inc. (OTC: MDBX) Upon first glance, this looks like a run-of-the-mill vending machine: But if you take a closer look, you can see it is filled with bags of marijuana and even edible snacks like brownies and soda that contain weed. It was invented by Bruce Bedrick, a chiropractor and occasional weed smoker. The stock has ping-ponged between $8 and $100 over the past year, so its one of the more volatile companies out there. But the idea is great. You know what marijuana smokers love more than getting high? Getting high easily, anonymously, and conveniently. Medbox takes care of all of those in one fell swoop... If you think stoners were raiding the vending machines before, wait until they get a load of this... Right now, the boxes are only allowed in state-licensed dispensaries. But when legal marijuana becomes more widespread, Ill bet youll be seeing Medboxes crop up all over the place. By then, the stocks volatility should have chilled out, man. Medical Marijuana Inc. (OTC: MJNA) This is a pure marijuana play. Medical Marijuana Inc. produces patented cannabinoid products for the pharmaceutical, nutraceutical, and cosmeceutical industries. It is the first publicly held company vested in the medical marijuana and industrial hemp markets. Some of its products include cannabinoid gum, organic hemp oils, and other products used for treatment of ailments like pain and nausea. Whats more, the stock trades around an average of 3 million shares per day, which makes it one of the most heavily-traded marijuana stocks. It has a market cap of $143 million. While it is currently focused on the medical marijuana industry, full-scale legalization will simply expand the market for its products. GW Pharmaceuticals (NASDAQ: GWPH) GW Pharmaceuticals is a UK-based company that has the fundamentals to prosper as medical marijuana becomes more and more accepted. It specializes in the research, development, and commercialization of a range of cannabinoid prescription medicines. Its main product is Sativex, a spray that helps treat Multiple Scleroses symptoms, cancer pain, and neuropathic pain. Upcoming products will target epilepsy, schizophrenia, and diabetes. Its epilepsy drug Epidiolex could be a huge seller if approved. Epilepsy affects over 50 million people globally and current drug therapies are not effective in 30% of epilepsy patients. Marijuana-derived medications for epilepsy got some media attention recently when Paula Joana confronted Governor Chris Christie at a town hall meeting. Sabina, her 15-month-old daughter, died from an epileptic seizure caused by her Dravet syndrome. She chided Christie for holding up medical marijuana in New Jersey, shouting that her daughter would still be alive if the marijuana-derived medicines had been legal. Epidiolex targets Dravet syndrome... The company itself got some high profile media coverage when CNNs Dr. Sanjay Gupta visited its labs for his popular broadcast Weed. Management gave him an exclusive look at their operations. You can watch the video here. And, unlike some of the fly-by-night pot stocks, these guys actually make money... Their most recent financial report shows revenues of $15.02 million They currently have around $95 million in cash This helps explain GW Pharmaceuticals billion dollar market cap while the bulk of the other marijuana stocks are relegated to the OTC markets. Most telling is that it has partnered with pharmaceutical giants Novartis and Bayer to help tap into the U.S. market as marijuana policies become more relaxed. When the U.S. market opens its doors for marijuana-derived medications, GW Pharmaceuticals will be primed for a healthy payday. Now, this isnt to say that GW Pharmaceuticals is a low-risk play: it spots a 52 week range of 8.46 — 86.45, so were not exactly talking about a solid blue chip here. It currently has plans to gain FDA approval to sell its marijuana-derived medications in the U.S. and much of its success hinges on that approval. Smoke and Mirrors? There is no denying it: Marijuana will continue to get more popular, and there is little left to stop its progress. Public opinion on the legalization of weed continues to skyrocket. Now, 55% of Americans support full-scale legalization. Thats up from 16% in 1987, 26% in 1996, 34% in 2002, and 43% two years ago. While it is indeed a volatile sector, with risk comes reward. Just take a look: 1910% on CannaVest, who had a 52-week low of $10 and a 52-week high of $201 a share. Next Gen Metals’ stock rocketed from five cents to more than 70 cents after they announced plans to invest in marijuana companies. Thats an insane 1,300% gain. Hemp Inc. went from a penny to 34 cents a share, a 3300% gain. But if you are scared to try your hand at these thinly-traded over-the-counter markets, you could always invest in larger complementary markets. Like Frito-Lay, owned by Pepsi (NYSE: PEP), for instance... I cannot help but imagine well see sales of Doritos skyrocket when legal weed is available all over the country. Or maybe those profits are already baked in... In the meantime, well be bringing you all of the upcoming marijuana stocks as we march towards full scale legalization. -The Outsider Club Research Team
Posted on: Fri, 19 Dec 2014 17:51:08 +0000
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