By Matt McCallJun 26, 2018
An investment that returns $50 for every $1 you put in.
Invest $10,000 or $20,000, walk away with $500,000 or $1 million.
It’s not as crazy as it sounds. Seasoned investors know the opportunity to pocket life changing 50-bagger gains comes around once every decade or so.
In the 1990s, many Internet stocks climbed more than 50 fold. From 2002 to 2007, many uranium mining stocks climbed more than 50 fold. In 2008, bets against the housing market returned more than 50 fold. In 2017, many cryptocurrencies returned more than 50 fold.
Again, 50-baggers are rare, but not unheard of in the financial markets. And that’s why I believe it’s very important that you read my work over the coming weeks.
In today’s essay – and those that will follow – I’m going to explain to you in detail why, right now, one of those rare, once-a-decade opportunities to turn $10,000 into $500,000 is in front of us. If you miss out on it, you could regret it for the rest of your life.
Outlawed for 79 Years, Now Legal
By now, you’ve surely heard the big picture case for investing in marijuana. In 1937, the federal government made the sale and consumption of marijuana essentially illegal. But in recent years, “weed” is now being decriminalized across the U.S. and Canada.
Businesses and consumers are responding…
Two years ago, sales of legal marijuana in America generated $6.7 billion in sales.
Last year, sales of legal marijuana grew by 37% to reach $9.2 billion.
When you consider that sales of coffee in America last year were $48 billion, three critical things jump to my investment mind…
One, legal marijuana is a large industry.
Two, legal marijuana is a rapidly growing industry.
And three, it has room to grow much, much larger.
In fact, the legal marijuana business is set to grow so much over the next 10 years, I believe it will turn out to be one of the three biggest investment opportunities of your entire life, no matter when you were born. The opportunity in legal weed is much like the opportunity Internet stocks offered in 1994… or that Bitcoin offered in 2015.
The legal marijuana business is set to grow many multiples of its current size – larger than the coffee business even. This incredible growth will send the value of the best legal marijuana business up 10X, 20X, even 50X over the coming years.
If you missed the opportunity to make 50 times your money in Internet stocks… or if you missed out on the opportunity to make 50 times your money in Bitcoin, hear me out. The information I’m about to share could mean the difference between you retiring with $25,000 in the bank and barely getting by in your old age… or retiring with $2,000,000 and doing whatever the heck you like.
Why Marijuana Right Now
The year 2016 was a watershed for weed. Initiatives to either create or expand legal cannabis programs were on the ballot in nine states, and all but one was passed.
Adult usage of marijuana was legalized in California, Nevada, Massachusetts and Maine, and medical marijuana programs were either created or expanded upon in Florida, North Dakota, Montana and Arkansas. This year, recreational marijuana was just legalized across Canada.
You’ve probably heard the comparison between the weed industry and the alcohol industry of the 1920s. Prohibition suppressed a great deal of drinking in the United States. When the law was repealed, pent up demand was released, sales skyrocketed and booze sellers grew rich.
This isn’t just empty marketing hype. These forces have already driven marijuana stocks to large gains. In 2016, the North American Cannabis stock index was up 204%. In 2017, the index was up 90%.
Given gains like that, some might be wondering if the best times are in the past for marijuana stocks. As I’ll show you, they are not. A very strong tailwind will blow at this sector’s back for well over a decade. Here are the numbers…
The estimates of where the marijuana industry will be in the coming years vary dramatically because there are a lot of unknowns. What states will move to legalize medical marijuana? Will the states that already have medical move to legalize it recreationally? How will it be accepted? And will it move to overtake cigarettes and alcohol?
Most people hate uncertainty, but when it comes to investing it creates opportunity. The lack of certainty forces stocks to trade below their true valuations, and the marijuana sector is one such example.
In 2017, North American legal marijuana sales came in around $10 billion – a 33% increase over 2016. With more states and Canada legalizing recreational marijuana, sales are expected to grow by another 150% by 2021. Medical marijuana sales will continue to grow at an annual compound rate of 21% up until 2022. Recreational sales will climb to $24.1 billion by 2025.
Let’s put the numbers into perspective. McDonald’s had sales of $8 billion in the U.S. in 2017. Based on the current numbers, it appears there will be more sales of legal marijuana than of Big Macs and Chicken Nuggets. That shows the scale of where the industry has gotten to and how big it can get when the federal government finally sees the light and legalizes marijuana from coast to coast.
The industry offers a bigger impact than just money for the companies that grow and sell marijuana and related items. There are currently 125,000 to 160,000 people employed in the industry. That number is expected to grow to 340,000 in the next four years. The economic impact of the marijuana industry will be in the ballpark of $28 to $34 billion in 2018 and above $100 billion by 2022.
I believe marijuana could grab a lot of market share from cigarettes and alcohol. There is nobody debating the negative effects of smoking cigarettes, and the U.S. has a major issue with binge drinking among the younger generation. Both vices are on the downslope, which creates the perfect opportunity for marijuana to steal significant market share.
If the marijuana industry can reach the $75 billion level that research firm Cowen has predicted by 2030, it will be just below the current sales of cigarettes ($77 billion) and encroaching on the $110 billion of beer sales.
Let’s look at Canada specifically because that country just legalized recreational marijuana on June 20, 2018. In 2017, it was estimated that the country generated sales of $5.7 billion in marijuana. The caveat is that over 90% of it was on the black market.
The big accounting firm Deloitte projected that once recreational marijuana was legalized in Canada, sales could boom to $8.7 billion per year. To put this into context, that is about the same amount Canadians spend annually on wine.
What most investors forget is that the marijuana business is not just about how much revenue is generated selling the plant. There are ancillary businesses, the “picks and shovels” as I call it. Deloitte believes that when the entire marijuana business is grouped together, the upside potential is for annual sales of $22.6 billion. Nearly three times the size of the amount spent on wine!
To show you that cannabis use in Canada is not a fad, here is a stat that will blow your mind. Cannabis consumption in Canada increased by 730 tonnes, or 1,678%, between 1961 and 2017. And that was when marijuana was illegal!
These are incredible numbers. But don’t think the demand outlook for legal marijuana is limited to just North America. In tomorrow’s essay, I’ll explain how it’s much, much bigger than that.
Note: This is Part 1 of a series on the opportunity in legal marijuana. Click here to read Part 2 now.
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