Yes, You Can Still Get Rich From Marijuana Stocks
I won’t sugar coat it. Last year was frustrating for marijuana investors. Rising interest rates, elevated inflation, recession fears, and a glut of weed product weighed on pot stocks. But 2024 is shaping up to be an inflection point. Marijuana is on the cusp of a breakout year.
In the U.S., cannabis is legal in 38 of 50 states for medical use and 24 states for recreational use. To be sure, marijuana remains illegal in many states and at the federal level. And therein lies the promise. This already blossoming industry still has the potential to expand into wide swaths of the country.
And because this growth will meet a ready market, and because it starts from nearly ground-floor levels, the opportunities are massive.
Big Business Is Getting Into The Game
Prohibition in the U.S. will continue to ease one way or another over the next few years, either via more states making a variety of uses legal, or even at the federal level. The same trend is unfolding internationally, as more and more countries (e.g., Germany and Italy) get ready to legalize cannabis.
In other words, the sky is the limit. Research firm New Frontier Data estimates that global consumer spending on legal and illicit high-THC cannabis will grow from $415 billion in 2020 to nearly $500 billion by 2025, putting marijuana on par with the global hotel industry.
For several mega-cap companies, the strategy has been to partner up with or take a stake in an existing pot company. We’ll see an acceleration of marijuana mega-deals this year.
Here’s just a sampling of recent marijuana deals:
Swiss pharmaceutical giant Novartis (NYSE: NVS) signed a global agreement with Canada’s Tilray Brands (NYSE: TLRY) to market the latter’s medical cannabis products.
Tilray completed its acquisition of Truss Beverage from Molson Coors (NYSE: TAP). The acquisition enhances Tilray’s beverage operations in Canada.
Indianapolis-based real estate investment trust (REIT) Simon Property Group (NYSE: SPG) entered into an agreement with Ohio-based Green Growth Brands (OTC: GGBXF) to sell branded CBD-infused products in retail stores in malls owned and operated by Simon Group.
Canadian cannabis company Organigram Holdings (NSDQ: OGI) received a major cash injection from British American Tobacco (NYSE: BTI), when the global tobacco giant expanded its previous investment of C$221 million with commitments for another C$124.6 million (about $93.2 million).
Global alcoholic beverage conglomerate Constellation Brands (NYSE: STZ), based in New York, has spent billions gaining exposure to the marijuana industry, chiefly through its stake in Canada-based marijuana purveyor Canopy Growth (NSDQ: CGC).
You get the idea. The list of pot partnerships goes on and on. A large brand name company in a mainstream industry (e.g., real estate, tobacco, food, and beverages) makes sure it has created leverage to this massive trend via an existing player. And the smaller player gets access to funding, access to the larger partner’s resources, and easy access to the new markets once they open wide, as well as often-needed publicity.
How You Can Profit
Now, I’m not saying you should bet the farm on these marijuana companies. But the big boys are already testing the waters with some of these promising canna-businesses. And there’s no reason you shouldn’t opt for a similar strategy of taking small positions in a few pot-focused companies.
That’s because there’s no doubt that the tide is, indeed, turning. Spearheading that emergence is the rise of cannabis-based therapies to address a variety of maladies. Perhaps the biggest immediate opportunity lies in addressing the opioid epidemic.
The opioid crisis that tore through this country over the past 10 years has left thousands of victims in its wake. Already, several drug companies have shelled out billions of dollars to settle claims with a handful of states.
While that may help compensate victims for the suffering they endured, it does not address the underlying problem of chronic pain. We now know that opioids are not the answer, but what is the solution for patients in need of a cure?
I answer this question, and many more, in my premium trading service: Marijuana Profit Alert.
By applying my proprietary screening methodologies, I pinpoint for subscribers the most attractive plays on the “green rush.”
My publication provides specific, actionable advice on the best investments in the psychotropic revolution. In my portfolio of holdings, I strive to strike the right balance between risk and reward. To learn more, click here.
John Persinos is the chief investment strategist of Marijuana Profit Alert.