Legalized It: Investing in Marijuana

With the 2014 midterm elections earlier this month, the stats have changed since my April blog on investing in the marijuana industry. Four states now allow recreational marijuana and 23 condone medical marijuana. Previously, those numbers stood at two and 20.

To appreciate the opportunity presented here, consider another industry that harvests in “sin”: the wine industry. In 1933, there was neither a wine industry nor a significant history of wine culture in the U.S., not even in California. All of this changed under legalization. Today, the California wine industry is estimated to have $121.8 billion in national economic impact, enjoy $23.1 billion in U.S. retail sales and bring in $1.55 billion in export revenue, according to the Wine Institute of California.

Then consider a comparison to the marijuana industry. The average price for one ton of Napa Valley Cabernet Sauvignon grapes is $4,669; the average price for one pound of premium Northern California indoor marijuana is $4,000. There are now 200 public companies whose major business is in the cannabis/marijuana/hemp industry. It has been estimated that the market for recreational marijuana is 100 times that of medical marijuana.

How to invest in the marijuana industry

A typical medical marijuana dispensary on the boardwalk of Venice Beach, California, taken in 2012.

Billion-dollar industries will be created in connection with the cultivation, manufacturing and retail distribution of the plant. New divisions of old industries are emerging in:

  • Biotechnology
  • Cosmecueticals/Nutraceuticals
  • Banking/Lending
  • Real Estate
  • Software/Hardware
  • Security
  • Vaporizers and eCigs
  • Machines and Equipment
  • Gadgets and Devices
  • Weed Resorts/Tourism
  • Venues & Events
  • Restaurants, Bars & Vape Cafes

As I did in my first article, “Highs and Lows of Investing in Pot,” I urge interested accredited investors to look into this new industry. Wait, did I say new industry?

It’s not. Take hemp, for instance. The American colonies were mandated to grow hemp. American’s first flag was printed on hemp, and the Founding Fathers wrote the Constitution on hemp paper. In the 1938 Popular Mechanics’ article titled “Billion-Dollar Crop,” the author wrote that hemp was the standard fiber of the world used in over 5,000 textile products. What happened? It is said that DuPont worked with politicians to make cannabis/hemp products illegal to protect their new synthetic textile competitor, nylon. With the passage of the Marijuana Tax Act of 1937, pot was saddled with the stigma of a dangerous controlled substance.

But the world has changed. Experts expect the federal government to alter its policies by the end of the Obama administration. When that happens, the chance to get in on the ground floor will have vanished. With risk is reward to those who take the time to examine the endless investing possibilities of this exciting industry.

Will civilization end with the nationwide legalization of the marijuana industry? Will children become drug fiends en masse?  Or will businessmen and women create a lot of new jobs and make very good money doing it?

 

 

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