Why Marijuana Will Continue to Mint New Millionaires
Last night, I was blasting on the stereo one of my favorite albums, Pink Floyd’s The Dark Side of the Moon (1973), when these lyrics from the song Time made me think of marijuana…not as a drug to get high, but as an investment to make money:
And then one day you find ten years have got behind you,
No one told you when to run, you missed the starting gun.
I can’t think of a better expression of the Fear of Missing Out (FOMO). Over the course of any given week, I converse with a lot of marijuana business leaders, investors and analysts, and lately I’ve noticed a common theme: an undercurrent of defeatism about the cannabis sector. There’s a sense that they missed the starting gun.
If that’s what you think as an investor, I urge you to think again. There’s still plenty of money to be made in the marijuana industry. Several U.S. states are on the cusp of legalizing marijuana, and it’s only a matter of time when the federal ban is lifted.
Countries overseas, notably in Europe and Latin America, are moving to legalize weed nationally. Legalization equals new customers, new sales, and new investment profits.
So far this spring, I’m seeing shoots of growth in the marijuana business. Over the past month, better-than-expected earnings results from major marijuana companies have sent their share prices spiking higher.
Adding to the momentum was the reintroduction last month of banking reform legislation in both chambers of the U.S. Congress.
The marijuana benchmark exchange-traded fund Amplify Growth Opportunities ETF (CNBS) over the past month has gained nearly 6%, compared to roughly flat performances for the S&P 500 and the Dow Jones Industrial Average. The latter two indices have been range bound.
To be sure, CNBS’ performance isn’t gangbusters and it’s only for the past month (as of market close May 10), but it shows recent momentum at a time when many investors have voiced despair about pot stocks. What’s more, the gains of certain individual marijuana stocks in recent days have been exponential, reaching high double-digits.
Investors looking to get rich off marijuana growth stocks might think that they have missed the boat. But rest assured, the emergence of new opportunities never ceases. The world hasn’t stopped creating new millionaires, and the newest ones will be spawned by the rapid mainstreaming of cannabis.
According to a recent report released by the research firm New Frontier Data, an estimated 54 million U.S. adults will consume cannabis in some form at least once in 2023 throughout both legal and unregulated markets. That level of consumer activity is expected to grow by about 4% annually over the next eight years, reaching an estimated 69 million U.S. consumers by 2030.
Based on New Frontier Data’s latest analysis of state legalization efforts, the likelihood for several new cannabis markets to legalize by 2030 will drive combined U.S. legal sales past $72 billion in that year (see chart).
In 2021, the U.S. legal cannabis market was worth an estimated $26.5 billion, and in 2022 it exceeded annual sales of $32 billion. Sales are projected to reach roughly $38 billion in 2023. Do these numbers suggest a moribund market? Not by a long shot.
When Canada legalized pot on the national level in 2018, marijuana stocks around the world hit the stratosphere. Investors were giddy amid the so-called green rush. However, the cannabis sector is volatile and over the next few years, it went through the inevitable ups and downs.
Canada underwent a pot boom, then a bust due to a market glut of weed, and now it’s seeing the nascent stages of another boom.
The 2020-2021 pandemic added impetus to global pot sales and profits. During COVID lockdowns, marijuana was deemed “essential” by many government officials. Despite the economic downturn, pot sales thrived. Then the overall bear market started in June 2022, and it’s been particularly unkind to marijuana stocks.
The marijuana slump of 2022 means that a lot of inherently strong pot stocks are now on the bargain shelf. But you need to be selective. That’s why I’ve launched an investment service called Marijuana Profit Alert.
My publication Marijuana Profit Alert provides specific, actionable advice on the best investments in the psychotropic revolution.
Remember, no one fires a starting gun to announce a new bull market. Don’t waste time; get aboard the marijuana megatrend ahead of the next big leg up. For details about the highest-quality pot stocks to buy for 2023 and beyond, click here now.
John Persinos is the chief investment strategist of Marijuana Profit Alert.