10 Reasons to be Bullish on Marijuana Stocks in 2024
This week, I published a video interview with my colleague Brad Briggs, editorial director of our subsidiary Street Authority, in which he explained why the beleaguered cryptocurrency market is poised for a new bull run next year.
You can access my September 18 video interview with Brad Briggs by clicking here.
Brad is our inhouse expert on cryptocurrency investing and after our fascinating discussion, it occurred to me that crypto and marijuana share many characteristics.
The crypto and cannabis industries tend to attract younger people (e.g., Millennials and Gen Zers) who seek alternative investments.
Crypto and cannabis assets are inherently volatile; they’re dismissed by many older, more conservative investors as “faddish” and too risky; they’re often misunderstood by the mainstream investment world; they’ve been marred by scandal and fly-by-night penny stocks; and they’ve had a rough year so far.
But the two sectors also share extremely positive factors that are destined to overcome the temporary headwinds. Cryptocurrency and marijuana represent long-term megatrends that are revolutionizing society and Wall Street; their growth is global in scope; they’re capable of delivering massive profits of a magnitude that surpasses many conventional sectors; and they’re about to explode on the upside.
Here are 10 reasons why marijuana investments are currently laying the groundwork for a bull market in 2024:
1. Growth will continue in one direction…and that’s up. In 2021, the U.S. legal cannabis market was worth $27 billion, and in 2022 it exceeded annual sales of $32 billion. Sales are projected to reach roughly $38 billion in 2023 and surpass $42 billion in 2024 (according to research firm New Frontier Data).
2. New Frontier Data reports that 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 56 million U.S. consumers in 2024 and 69 million in 2030 (see the following chart).
3. The integration of artificial intelligence (AI) into the cannabis industry will accelerate, bringing efficiencies and new capabilities to a wide variety of marijuana-related functions, from growing to warehousing to retailing. Notably, AI is making cannabis hydroponics more efficient, by growing cannabis plants in a soil-less farming system driven by AI algorithms.
4. The U.S. Drug Enforcement Administration (DEA) next year is likely to accept the recent recommendation of the U.S. Department of Health and Human Services (HHS) to move cannabis from Schedule I to Schedule III. Schedule I drugs are considered the most dangerous; Schedule III drugs are considered relatively benign.
5. In the 2024 election year, an increasing number of lawmakers on the federal, state and local levels will feel greater political pressure from the majority of Americans who support lifting restrictions against marijuana. Even if legalization remains stalled in Congress, initiatives to legalize marijuana will appear on a slew of state ballots in November 2024.
6. We’ll witness greater legalization of recreational and medical marijuana on a global scale. Legalization will especially make inroads in Europe. Sometime next year, the Continent’s largest economy, Germany, is expected to fully legalize marijuana use, lifting marijuana companies with international exposure.
7. Marijuana companies will bear the fruits of their financial housekeeping. During the recent slump, the better managed operators focused on eliminating unnecessary expenses and shoring up balance sheets. They rationalized their businesses to focus on those elements that enhance profitability and positive free cash flow. By early next year, we’ll see many upside surprises in quarterly operational results, due to margin improvement.
8. Analysts predict that in 2024, we’ll witness robust cannabis merger and acquisition (M&A) activity. Instead of the multi-billion-dollar deals that grabbed headlines in the past, we’ll see several smaller transactions, many initiated by failing cannabis companies that seek an exit and larger well-capitalized firms that want quick entry to new markets.
9. Getting back to the topic of cryptocurrency… Every cryptocurrency is linked to a blockchain, which is a distributed computer-generated database of all transactions that have ever taken place in the currency. Because blockchains allow businesses to store encrypted data in a ledger, they’re increasingly used in finance, supply chains, and data storage. These uses are valuable for marijuana companies that are locked out of conventional financial services.
10. The share prices of undervalued marijuana stocks will catch up to their potential. Many inherently strong pot stocks are currently on the bargain shelf, and they’re poised to surge as the aforementioned trends unfold. The time to buy these assets is now, while they’re still relatively cheap.
Editor’s Note: As I’ve just explained, we’re facing a “break out” year in 2024 for marijuana stocks. However, you need to conduct due diligence.
That’s where my publication, Marijuana Profit Alert, comes in. By applying my proprietary screening methodologies, I pinpoint for subscribers the most attractive plays on the “green rush.” To learn more, click here.
John Persinos is the chief investment strategist of Marijuana Profit Alert.