(Editor’s note — Sean Brodrick is off in the field, scouting out a tiny gold developer with enormous potential for his Red-Hot Resource Millionaire publication. But he filed this before he left.)
There are many good reasons to like legalized cannabis. Last week, I told you how legal pot can help folks with cancer and other illnesses. The profit potential is another reason.
It’s huge, and I’ll get to that in a bit. But let me give you one more reason …
Legal marijuana is ruining the business of the Mexican drug cartels.
This is despite the cartels’ best efforts. They sneak cannabis over the border in many ways. They disguise it as vegetable shipments … or lumber. They launch it over the border by catapult.
But they’re doing a lot less of it. Because it’s just not worth their while.
You might say that legalization is kicking the cartels right in the bales.
Here’s the latest data from the U.S. Border Patrol …
Agents caught roughly 1.29 million pounds of marijuana at the border. That’s down from a peak of nearly 4 million pounds in 2009. And this number should keep dropping. In fact, the amount of drugs of all types smuggled into the U.S. is projected to fall another 8.23% this year.
Why? Because wholesale marijuana prices declined in 2016 — from $2,500 to $1,000 per pound. Some dispensaries were even offering recreational ounces as low as $65.
This is according to Brian Shapiro, CEO of CannaSaver. That’s a website that helps marijuana users find the best deals. Sort of like a Pennysaver for pot.
Legal growers are rising to meet market demand. And that sends prices down.
So how do the crooks compete with that? While taking huge risks to life and liberty?
Answer: A lot fewer of them are choosing to take those risks all the time.
And it’s not just the price of cannabis that’s on the decline. It’s the quality.
In its 2015 National Drug Threat Assessment, the DEA wrote:
“The quality of marijuana produced in Mexico and the Caribbean is thought to be inferior to the marijuana produced domestically in the United States or in Canada.”
Mexican farmers are having to change their ways. The Los Angeles Times just ran a report about family-farm marijuana growers in the state of Sinaloa, one of Mexico’s biggest pot-production areas. Over just the past four years, the amount these small farmers received per kilogram fell from $100 to $30.
It’s causing many farmers in Sinaloa to hang up their pot pruners and turn to other crops.
And the more the cartels pull back, the wider the market opens for U.S. growers — and U.S. investors.
It is boom times for American pot growers. But as I said, prices went down in the past year. Prices may stabilize, or they may go lower. (They probably won’t go a lot higher.)
So if you’re an investor in this area — and there are lots of opportunities to do just that — you want to avoid investments that will be hurt by lower marijuana prices.
In fact, if a company’s profit margins widen as pot prices plummet, so much the better.
And the further you can get away from the actual plant, the less likely the feds will come along and spoil your party. Remember, no matter what the states do, pot is still illegal at the federal level. And that’s unlikely to change soon.
Still, there is a tidal wave of investment waiting to surge into marijuana as more states legalize. According to a survey by the New York Hedge Fund Roundtable, 77% of its members say marijuana is “an area they would consider investing in.”
Our job is to get there ahead of them. So stay tuned for more insight on how to do that.
All the best,
Sean Brodrick
Mona June 21, 2017
The right thing to do is to decriminalize cannibus. After all, it,s a plant for god sake!
Sean Brodrick June 21, 2017
I totally agree, Mona. It’s good for patients who need it, it’s fine for recreational users, and the investing opportunities are extraordinary.
Beth June 12, 2017
So legalizing this is good? Would you like your surgeon or police officer to use on their weekends? How about your son or daughter, the one that spends lots of time playing computer games with no plans for college or a job. That’s reality with marijuana, and just with recreational use. You don’t have a parallel with alcohol at all. Abuse of any drug devalues our nation in general; and we just sit around and scream about free choice and look how much money we can make. It’s time we try to keep our kids and ourselves drug free and work for the good of our nation. And just so the rest of you know, this is a liberal snowflake talking.
Sean Brodrick June 12, 2017
Strongly disagree, Beth. I think there are real parallels with alcohol, especially when it comes to the effects of prohibition. But it takes all kinds to fill a world. Sincerely, Sean
howard Roark June 9, 2017
The reduction is due to border reinforcement, not legalized pot.
ihenle June 9, 2017
I would consider investing in marijuana if you have good information on it.
I know people who take it for pain and MS and have had good results .
And there are people who use it for recreation instead of liquor or hard drugs.
It really is a personal choice .And no one I know is addicted to it or went on to hard drugs
Lets take away all the judging and let people make up their own minds.
Jack June 9, 2017
The problem with legalizing pot is drug dealers. They will not go out of business, they will sell something stronger. For example, a Mexican drug cartel sold both pot and heroin. When pot went legal, they doubled down on heroin-selling it at a cheaper price and stronger. This has contributed to the large increase in deaths from drugs.
jorge June 8, 2017
You talk about weed but don’t recommend any stocks..
Joy June 8, 2017
Portugal legalized all drugs in 2001, overdoses dropped, crime dropped, HIV dropped. Sounds like a great idea all around.
Mona June 8, 2017
Cannibus should simply be decriminalized. It’s a medicinal plant like hundreds of others, for god sake.
Robert Schubring June 7, 2017
What’s missing from this analysis is the political dimension, so allow me to fill it in.
Cannabis has been a sideline of the border state cartels for some years now. Ever since the 9-11 Attacks, the US has severely tightened border security along the Gulf Coast. The light airplanes that used to ferry shipments of Colombian and Peruvian cocaine to Florida, stopping to refuel in Nicaragua or El Salvador, absolutely ceased flying for the 4 days that US airspace was under lockdown. When the lockdown had ended, the entire cocaine supply chain had been severely disrupted. What remains of that supply chain has been diverted through Mexico.
Mexican gangsters who cut their teeth smuggling pot, then branched out into legal grey areas such as supplying ephedra root for making so-called “energy drinks”…a gateway drug toward crystal methamphetamine, that also happens to be a useful raw material for making the illegal stimulant…which, brought in for the energy drinks business, crosses the US border legally. Equally profitable has been the human trafficking. Posters circulating in US border cities describe warning signs of this crime…adults traveling in groups who seem afraid of the group’s leader, whose leader handles money and identification cards for the followers, and who appear to suffer ill effects from working around toxic chemicals…and ask concerned people who see this to report the discovery to Immigration And Customs Enforcement (ICE).
Businesses that conceal their past involvement with toxic industrial chemicals find it useful to have their illegal dumping performed by laborers who are blocked from using our law courts, in case they get injured on the job, because any litigation would create a public record of the very toxin hazards those corporations are trying to conceal. Illegal aliens are ideally suited for this revolting form of human exploitation…if they file papers in civil court they can be deported immediately. Curiously, the self-described protectors of illegal aliens, mayors and councilors of so-called Sanctuary Cities, obstruct ICE from investigating the criminal acts of corporations and gangsters who organize this illegal business, by swindling desperate people in Mexico with the promise of paying work, hauling them across the border, putting them to work concealing toxic waste, then returning them home when they get too sick to continue working. Because ICE is not able to investigate these crimes in Sanctuary Cities, gangsters operate there with impunity, and toxics hazards continue to be concealed, by pouring toxics into rivers that carry them miles away from the industrial sites where they were originally used and stored. One truly wonders how many political leaders of Sanctuary Cities can honestly be that dumb, as to allow this vicious and hateful exploitation to take place right under their noses. Do some of those political leaders accept payoffs from these gangsters, to allow the human trafficking to continue?
That issue aside, the gangsters who control land-based smuggling through the US border, also have another nasty trick in play. As politicians like Joe Manchin and Charles Schumer attack America’s veterans, and other injured Americans who suffer chronic pain, denying us all the legal medicines needed to control severe pain, Mexico’s gangsters have jumped into the void, manufacturing counterfeit pain pills that resemble Vicodin and other prescription pain medicines. To save money on the cost of importing costly opium poppy sap, with which to make the codeine or morphine that’s in the legitimately-manufactured pain pills, these gangsters adulterate their counterfeit imitations of pain pills with a synthetic drug called Fentanyl. Fentanyl is so dangerous at causing patients to stop breathing, that no US pharmaceutical company makes it in pill form. Hospices and cancer institutes buy this drug as either a spray that the nurse administers beneath the patient’s tongue, or as a slow-release transdermal patch that’s put on the skin. Drug companies think it is so dangerous if a patient accidentally forgot taking one dose, and took another dose too soon, that they absolutely refuse to sell Fentanyl in the US, in pill form, because if it’s sold as pills, prescribers will prescribe it, patients who live at home might take it without supervision, and deaths will result.
This worry did not bother Mexico’s gangsters in the slightest. Adulterating their counterfeit imitations of pain pills, using Fentanyl, and it’s even-stronger chemical cousin, Carfentanyl, these gangsters have caused an epidemic of overdose deaths among America’s abandoned pain patients.
The political dimensions of this problem are enormous.
The one small advantage we gain, as farmers in Mexico’s border states drop out of growing marijuana crops, is that those farmers no longer owe any loyalty to the gangsters who once bought their produce for smuggling to the US. But it worries me that as those farmers become more desperate, their children will be drawn into the human trafficking rackets.
Anything that diminishes the power of those gangsters, helps Mexico to defeat them. However, we need to do more to help our neighbors to control this plague of gangsters. When 20,000 American youths were drafted, sent to Vietnam to fight, and died, protests raged in America’s streets and we demanded something be done about the problem. Mexico has suffered 100,000 confirmed dead, since 9-11, in gangster-run violence, and another 100,000 people are missing, their families believing them dead.
I can relate to Mr Trump’s characterizing certain so-called news media as The Fake News. A humanitarian crisis this immense, goes on right across our southern border and spills across into our jurisdiction, and we do nothing. The Fake News ignore the mass murders, the mass exploitation, the poisonings, and the toxic waste concealment rackets that help pay for it. Instead, The Fake News obsess about Russian competition telling Americans the news (calling it collusion) and demonize the victims of all these gangster crimes. Opposing the gangsters is “racist”, say the Fake News, because somehow Mexican gangsters deserve special protection.
Could it be that some of the corporations that need their toxic waste illegally dumped, buy a lot of advertising on The Fake News?
José Schabauer June 10, 2017
Hate is the emotion that fuels all that nasty political none sense of the suposed politically correct.
Trafficking votes is as dirty as the fake pills you write about.
Intolerance of the tolerant is a way of life these days.
Some day as they grow up they will learn
the lesson.
You and I are fed up from the convenient truth of the brain washed people that believe they are important because they have a cell phone in their pockets or because they were in a movie, having nothing to lose.
Alan Woodman June 7, 2017
Frankly I am not inclined to have my state legalize pot. I suggest if you stop trying to convince us that it’s for the good of cancer patients and fighting drug cartels and admit it’s all for the money you would at least be more honest with yourself. Perhaps you don’t live in Colorado or one of those liberal left coast cities so you don’t see up close what it’s done to them. I have. Try walking certain streets of Denver and see for yourself. Driving while impaired is a serious issue as well. as is it’s overall impact on many young people. I still think it’s a gateway drug for an unfortunate number of our youth and a tragedy for those already addicted.
Ken Lane June 7, 2017
In the previous century many were convinced that ketchup was a cure-all too. And so much for legalization shutting down the “black market” . . . there has just been a major black market tobacco bust.
Sean Brodrick June 7, 2017
Really don’t know where you’re going with this, Ken. Thanks for writing in. Best wishes, Sean
James June 7, 2017
Is there gonna be a gold tranche? A return to the gold bullion standard, are we in for the dollarization of the world economy? Is the dollar gonna appreciate against the euro and the yen? Howsbthis gonna effect GDP at factor costs and GDP at market prices? Are we in for a massive boom, are we in for the dollarization of the world economy. I think we could be in for one of the biggest booms the world economy has ever seen? Even a massive growth in GDP at factor costs, and a massive growth in GDP at market prices, Americas the place to be at the moment. That’s where all the economic growth is going on at the moment. Trump is the top human being over there at the moment. But its difficult to see where at the moment we are in the economic growth cycle of boom, recession, depression, recovery and growth cycle at the moment. We could possibly be in for a boom that was even bigger than happened 10 years ago. These are much better times to live in than a couple of years ago. That’s thanks to a lot of hard work by Americans and by other citizens of the world. Americas the number 1 country in the world at the moment. Thomas Pikettys book chronicles of our times is the number one book at the moment!!!!! Its one of the best books of our time!!!!!
David Ecklein June 7, 2017
Naive. It’s like arguing that liberal sexual behavior has caused prostitution to decline. This may be true, but all consequences must be fully considered. Same with marijuana. Also, its medical use (still somewhat controversial) should be no argument for its widespread promotion without prescription – many drugs useful in treating disease have bad consequences due to unchecked usage. Of course, the marijuana industry might be profitable, that is why it is discussed here, isn’t it?
Sean Brodrick June 7, 2017
Alcohol has worse consequences than marijuana. Perhaps you’d like to prohibit that? We saw how that went. Thanks for writing in. Best wishes, Sean.
Nicolas Bauer June 7, 2017
Thanks Mike for your work.
But……why not give a few prospective recommendations (with actual stock symbols),
and let us (your subscribers) take the risk and venture in, lets call it ‘prematurely’.
I would like that!
Thanks again Mike.
N. B.
Sean Brodrick June 7, 2017
Mike didn’t write this. I did. thanks for reading it, anyway. Best wishes, Sean
Stephen Ettinger June 7, 2017
Sean,
there are so many companies in the Marijuana business. Why can’t yor firm put a few names out there that you believe will offer long term growth as the business takes root (no pun intended), and matures as a business. I find it sometimes quite annoying when people who way pay for information talk about an industry but choose not to discuss specifics. Just like Trump – His big tax cut, which has no specifics and no one can tell us how it is going to be paid for. How about sharing some quality companies for all of us readers to do the research on. Better to get 10 firms from a research service like yours and help us get a head stasrt . Saves us hundreds of hours reading, and sifting. Is’nt that what it is all about?
Sean Brodrick June 7, 2017
We will name some companies at the appropriate time. Thanks for writing in. Best wishes, Sean
Alan Woodman June 7, 2017
Sorry you haven’t heard Trump demonstrate that just cutting some of the corruption and incredible overspending can offset the specific plans he has for competitive infrastructure projects. I realize the major media won’t report what he’s already saved but then again, as Obama said, “I guess those shovel ready jobs weren’t so shovel ready after all” after he squandered hundreds of billions on his crooked TARP debacle. btw: what happened to the $6 billion that Hillary couldn’t seem to account for?
sat599 June 9, 2017
Obamas TARP program was necessary because of the financial debacle caused by the Republicans otherwise we would have had an enormous Financial Crisis. Re: your $ billion remark about Hillary who was Sec of State is complete nonsense. FAKE NEWS as TRUMP likes to say.
hawk June 10, 2017
how many names do u use eagle495
Derrick June 7, 2017
You will have to subscribe to his newsletter to see the actual stocks to buy.
Jim Stevens June 12, 2017
USMJ, MOCA, MJNA, GDLFF, HEMP, UBQU. Ok now go to a website called cannainvestor, and your out of the starting gate.
papajim
Steve Jones June 7, 2017
Why not legalize cocaine as well! Then we will really take care of the drug cartels!