3 Hot Marijuana Stocks to Buy Before For 2020

In October 2014, I went on the Fox Business Network and pounded the table on cannabis investments. I believed that cannabis, after being banned by the government for decades, was about to enjoy a wave of legalization… which would create giant wealth-building opportunities for those bold enough to act.

I can still hear the reactions of my esteemed colleagues. The “experts” on the panel at the time dismissed the idea. They laughed and made comments like, “You’d be better off owning the makers of Frito-Lay and Doritos.”

After all, this was only a few months after Colorado voted to make recreational marijuana legal… the first U.S. state to do so.

What a difference five years can make. In May, Colorado reached its first $1 billion in tax revenues from legal cannabis sales. Now, politicians in other states are falling over themselves to get their OWN legalization bills through and start claiming their piece of the pie.

After all, legal cannabis is the fastest-growing industry in America today. It’s also one of the best job creators. As Whitney Economics found, total cannabis jobs came in at 211,000 as of 2018. But when you factor in indirect jobs (like lawyers and accountants), it’s more like 296,000 jobs. For context, that’s more than the employment in broadcasting, railroads, or even medical labs. And that’s all in just a few short years.

In 2016, sales of legal marijuana in America generated $6.7 billion. The following year, sales of legal marijuana grew by 37% to reach $9.2 billion. By 2018, we were at $10.4 billion. And in 2019, we’re expected to reach $12 billion.

Comparable products, like beer and wine, sell in the hundreds of billions of dollars worldwide. Just the eight largest beer companies did roughly $150 billion in global sales in 2018.

So if marijuana can do a quarter of those beer sales, that takes us up to $37.5 billion annually.

In fact, it’s the biggest beer companies – like Constellation Brands (STZ), Anheuser-Busch InBev (BUD), and Molson Coors Brewing (TAP) – that are investing in research and development for cannabis beverages. Profit margins there are estimated at 32%, vastly superior to beer’s 18% margins and nearly triple that for plain old soft drinks.

When you consider those numbers, three critical things jump to my investment mind. The first is that legal marijuana is a large industry; the second is that it’s also a rapidly-growing industry; and third, 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 best legal marijuana businesses are still cheap, considering their sales projections (as you’ll soon see), giving the stocks room to run 10X, 20X, even 50X higher over the coming years.

Our Opportunity – Why Now?

Canada has already legalized marijuana for both medical and recreational use. Here in the United States, recreational marijuana is also now legal in 11 states, and 33 states allow medical use.

With all this talk of legalization, 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%.

If you weren’t one of the “early adopters” of cannabis stocks, you might be wondering if you missed the boat… if it’s too late to make huge returns in cannabis.

The official answer is: NO WAY.

We are once again at a critical moment for investors bold enough to act. The cannabis industry still has a huge amount of growth ahead of it and I want you to understand why right now is a time of both great opportunity and great danger in the cannabis sector.

Most of all, I want you to understand why the past five months have given us an incredible gift as investors. We’d be wise to accept it, and I want to help you do that by pointing you to some great buys in this free report.

The action in cannabis stocks right now reminds me of Amazon (AMZN). Most people probably don’t remember now, but as recently as 2013 people loved to bash Amazon for having yet to turn a profit. Forget that sales were booming. The stock fell 30% by 2014. Then, it promptly went from $300 to more than $2,000 per share by 2018!

Now it’s cannabis stocks that are down about 50% as a group from their 2019 high. And yet the industry is set to multiply in the next few years, as we just saw.

Not only that, a perfect storm of short-term negative news is about to subside, and investors will start to remember those long-term positives that are still on the horizon:

Canada’s Legalization 2.0 happened on October 17 but really rolls out in the fourth quarter as edibles, beverages, and other cannabis extract products became legal.

The next U.S. presidential election takes place in November 2020, and cannabis legalization will be a major emphasis. The United Nations will be voting to “deschedule” cannabis in March – essentially removing it from the list of controlled substances – which could have a major ripple effect around the globe.

And in the meantime, the passage of the Secure and Fair Enforcement (SAFE) Banking Act in the House was a historic moment for cannabis and banking, and took us one step closer to full legalization.

Big Money

In the U.S., the fact that the marijuana industry remains illegal on the federal level naturally makes things difficult for marijuana entrepreneurs. It’s not possible for them to walk into the local bank and ask for a small business loan. Heck, they couldn’t even open an account to deposit money!

There are some companies that have stepped into this gap and provided much-needed funding. (In fact, you’ll hear about one of them in a moment.)

But as it stands today, few financial companies take on cannabis businesses as clients. According to federal data, at the end of the second quarter there were 715 banks and credit unions serving U.S. cannabis-related companies. There are currently more than 5,000 credit unions alone in the country, and nearly as many FDIC-insured commercial banks.

For the lucky cannabis companies that do secure an account to pay their employees or their electricity bills, maintaining that account can be equally difficult, if not more, because of all the “red tape.”

The situation is untenable over the long term.

That’s why politicians from both sides of the aisle are looking to protect banks that work with businesses operating in states where cannabis is already legal.

In September, members of the House of Representatives voted by a more than three-to-one margin (321 vs. 103) to pass the SAFE Banking Act.

Of course, the bill’s real test will come in the Senate.

Majority leader Mitch McConnell, who is a big supporter of legalized hemp in his home state of Kentucky, has continued to disapprove of higher-THC cannabis. His opposition to such a bill may not be as solid as it would appear, though, particularly during a hotly contested election season.

There is little doubt that the public supports legalization. To date, most states, three territories, and Washington, D.C. have legalized cannabis in some form or fashion, or at least allow limited medical access. Many citizens voted directly in ballot measures to approve cannabis legalization in their home states. Some two-thirds of voters now support legalization, according to a 2018 Gallup poll.

I believe the SAFE Baking Act represents another key stepping stone on the path to full legalization and fully expect national legalization in the United States will come sooner than many people think. Meanwhile, the SAFE Banking Act could work to immediately improve existing businesses’ margins and the long-term profit potential of the best cannabis companies in the space.

All this leads to one thing for the marijuana industry – liquidity. When there is liquidity there is more opportunity to fuel growth. This removes a major barrier for industries in the early stages, especially one that is federally illegal, and it makes marijuana investing that much more appealing.

All About the Headlines

From now until Election Day in November 2020, the media will be talking about the next election. This will be the first presidential election in history in which there will be a focus on candidates’ views of marijuana and legalization.

With two-thirds of adults in the country in favor of legalization, it is becoming more politically damaging to not support legalization. When you dig into those numbers, an eye-opening 75% of Democrats support legalization, and odds are that all candidates from that party will side with the majority of their voters. Even more astounding is that for the first time, over half (53%) of Republicans now back legalization of marijuana.

Early in 2019, I attended the Benzinga Cannabis Conference in Miami. I’ve been following the huge opportunities in marijuana companies for nearly a decade, but when I left the conference my enthusiasm for the long-term wealth-building potential was at a new level.

The buzz there centered on another huge potential catalyst called the STATES Act. STATES is short for Strengthening the Tenth Amendment Through Entrusting States. The Act is a bipartisan bill put together by Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA). The legislation was introduced last June. If passed, it would amend the Controlled Substances Act.

This is big because the federal prohibition would be eliminated in states that legalize marijuana. As long as residents follow their state’s laws on marijuana, the federal government would not be able to intervene.

The odds of this bill or the SAFE Banking Act getting passed are very high. it would be the first major step to federal legalization… and that’s when the opportunity opens up all the way.

These catalysts can help boost stock prices for years into the future. That’s why I have my subscribers investing early.

We’ve already begun building our positions in this space, and as the exciting catalysts continue to play out I look forward to adding more. Of course, with above-average potential comes above-average risk, so the key is to focus our investments in industry leaders that meet our strict criteria and stay away from more speculative plays. To that end, here are three names I like right now that fit that bill.

Marijuana Pick #1: ETFMG Alternative Harvest ETF (MJ)

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If you’re looking to get invested in this area, I recommend considering ETFMG Alternative Harvest ETF (MJ) as a smart starting point. It was the United States’ first marijuana ETF, and as a result it’s in an unprecedented position to benefit from this booming trend.

The ETF is made up of stocks primarily from the United States (27%) and Canada (55%). The companies focus on the healthcare, consumer, and materials sectors within the cannabis industry, which means the top holdings are direct plays on the primary trend.

One of its largest holdings is Canadian cannabis giant Canopy Growth (CGC), which is expected to do $1.47 billion in annual revenues by 2022.

The Alternative Harvest ETF has a similarly large holding in Aurora Cannabis (ACB), another major player with projected revenues that are even slightly better, at $1.49 billion by 2022!

But, all in all, the fund has 40 holdings in various cannabis stocks. That’s the beauty of playing this trend with an ETF. It gives you exposure to some of the biggest beneficiaries while also providing a balance with niche names. That way, both sector news and individual company news can help your position.

ETFMG Alternative Harvest trades about 600,000 shares per day and the spread between the bid and ask prices is a few pennies, which is good. Plus, with over $750 million in assets under management, the ETF has solid liquidity. Expenses are also reasonable at 0.75%. That’s fairly standard for a niche fund and an acceptable level in my book.

There are so many upside factors to the overall marijuana trend, and an ETF is an exciting way to give your portfolio exposure to all of them.

Marijuana Pick #2: Innovative Industrial Properties (IIPR)

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The ability to bank like a normal business would, again, be a total game changer for the marijuana industry. For now, one of my favorite stocks, Innovative Industrial Properties (IIPR), provides a solution.

Innovative Industrial Properties happens to have one of the most creative business models in the entire marijuana industry. It is actually a marijuana real estate investment trust (REIT). It buys freestanding properties from medical marijuana growers licensed by their respective states and then leases the properties back to the growers.

This gives those growers an infusion of capital to expand their operations and increase production. In return, Innovative Industrial Properties receives regular rent payments under a long-term lease.

Pretty slick, huh?

Adding to the appeal of Innovative Industrial Properties is the fact that it pays out juicy dividends. Because it is structured as a REIT, 90% of its income must get passed along to shareholders.

The company announced great news on that front in September. The company upped its quarterly dividend payout by 30% to $0.78 per share. That gives the stock a forward yield of 3.53%. The new payout is 123% higher than it was a year ago and marks the company’s fifth dividend increase since going public in December 2016.

This cannabis REIT also announced that it closed a deal on the final parcel of a four-property portfolio in southern California, consisting of about 79,000 square feet of industrial space. It already has a tenant for each property in the portfolio: Vertical Wellness, a multi-state, vertically integrated cannabis firm with operations in California, Arizona, and Ohio. The deal means that Innovative Industrial Properties now has 30 properties across the country under its purview.

This company has a great business model and is a must-own in the cannabis sector. It is already up over 100% since I first recommended it in the summer of 2018, but I continue to see plenty more upside potential.

Marijuana Pick #3: Charlotte’s Web (CWBHF)

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For the next stock I want to highlight, we turn to another cannabis-related industry that has achieved enormous mainstream appeal – and the potential to create enormous wealth.

I’m talking about CBD, short for cannabidiol, which is what’s called a non-psychoactive compound found in both the cannabis and hemp plants. That’s a fancy way of saying CBD will not get you “high.”

I could write an entire book on the benefits of CBD (I’m a fan of it myself), but I’ll keep it simple: CBD can help with everything from anxiety and depression to chronic pain and inflammation to childhood epilepsy. Best of all, it does so without the nasty side effects of many drugs. So, it’s become an incredibly popular alternative to traditional pharmaceuticals.

I’ve closely followed all of the publicly traded CBD stocks over the last 12+ months, and one name continually stands out for its ability to be the leader in the booming industry: Charlotte’s Web (CWBHF).

The company shot to prominence when the family of a young girl named Charlotte Figi came to them in desperate need for a remedy to Charlotte’s debilitating seizures. Their product was so successful for her that it was featured in a CNN documentary, and Charlotte’s Web became a market leader in the production and distribution of hemp-CBD products.

Today, Charlotte’s Web’s products are sold in 8,000 retail locations across the U.S., including CVS Health (CVS) and Kroger (KR). Plus, it continues to bump up its product portfolio – hemp extract-infused CBD gummies are now offered in three flavors.

On September 24, the company announced that The Vitamin Shoppe (VSI), a specialty retailer of nutritional products, has commenced selling the new line of CBD gummies in 738 stores across 45 states.

To keep up with the rising demand for CBD, Charlotte’s Web increased its total acres planted by 187% to 862 this year. In late April, the company brought in the former president of the U.S. snacks division at Kellogg (K) as CEO. And it recently picked up new top executives in key CIO, CFO, and sales leads slots, setting up a strong management team for future success.

From an investment standpoint, Charlotte’s Web is one of the first cannabis companies to turn a profit. The company is expected to earn $0.19 per share in 2019, followed by $0.69 in 2020 and $1.07 by 2021.

Yet the stock is undervalued based on both earnings and revenue forecasts. Using the 2021 numbers, CWBHF trades with a P/E ratio of 12.1.

Stocks in high-growth sectors like this one should (and typically do) trade at valuations more like 40-50. So, you can see why this is such a great buying opportunity right now. As the mass adoption of CBD grows, it will lead to increased demand from the market leaders, and Charlotte’s Web is foremost among them.

It’s time to start living your dreams with the Investment Opportunities strategy

If you know anything about the stock market, you know the power of being “first.”

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Tesla Chart

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Why Millions Tuned in to Hear My Ideas

Seventeen years ago, I was a high-powered broker for financial giant Charles Schwab.

But even though I quickly gained wealth, authority, and influence…

It didn’t feel right to me. I wanted to be someone who helps people make money for themselves… not someone who makes money from investors… which I find disgusting.

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I’ve made over 1,000 television appearances, on networks like CNBC, Fox News, and Bloomberg TV… eventually becoming a nightly co-host on Fox Business.

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You may have seen my articles in The Wall Street Journal, Business Week, and Investor’s Business Daily, to name a few.

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I’m not saying any of this to brag… only to show you that I know what I’m doing.

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611% Gains In the Future of Energy

You’ve probably heard how the technology of “fracking” has allowed oil producers to tap vast amounts of new oil and gas in America.

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LNGLY Chart

Making 324% Gains on the Bitcoin Boom

The recent cryptocurrency boom is one of the biggest wealth-creation events in modern history.

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Bitcoin chart

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As you read this, the world is in the midst of a “drone boom.”

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As of early 2018, we’d more than tripled our money.

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