3 Reasons Why U.S. Cannabis Stocks Get the Green Light

The not-so-good news is that marijuana stocks are snoozing while many other industries are heading higher.

But I don’t expect this to last for long. That’s because hot money loves to flow into marijuana stocks. It’s just that for now, the industry is consolidating. So, I’m in no hurry to buy.

Let me put that another way: I see plenty of great stocks with bright futures. But I think I might be able to buy them cheaper in another couple of weeks.

So, why am I so bullish on cannabis stocks longer term? Here are the three major reasons:

1. Pandemic, Shmandemic! Sales Are Rocketing

This year, even though the pandemic has crippled the economy and forced people to lock themselves up in their homes, U.S. cannabis sales are projected to rise over $19 billion.


 

That’s from a new report from New Frontier Data. These sales are way up from the $13.2 billion seen last year. Over the next five years, we’re looking at a compound annual growth rate of 17.7%. Many industries would give their left testicle to get that kind of growth.

2. Massachusetts and Chill

Massachusetts Gov. Charlie Baker did NOT give sellers of recreational cannabis in his state the “essential” status that other states did. Essential designation allowed cannabis dispensaries to stay open when other businesses had to shut and insulated sellers in other states against the worst effects of the pandemic-induced recession.

Baker’s order resulted in recreational cannabis sales in Massachusetts to be shuttered from March 24 through most of May. That’s better than a lot of other types of businesses, so maybe I shouldn’t gripe. But then, complaining is America’s pastime.

Well, you know what? Sales in Massachusetts went up anyway!


 

As this chart from industry tracker Headset shows, Massachusetts adult cannabis sales managed to grow 53% between January and August, from $52 million to $79.6 million.

To understand the first chart I showed you, look at this second chart. Cannabis is wildly popular. It is growing in popularity. And sales will rise, even with government roadblocks.

3. New Jersey Is Ready to Boom

Speaking of governors, New Jersey Governor Phil Murphy sees the monetary potential in cannabis, and he’s been working hard to make it legal in his state despite the efforts of state legislators who would like to keep it illegal.

Now, cannabis is on the November ballot in New Jersey. Citizens favor it by a lopsided margin of 68% to 26%. And according to recent estimates, a recreational marijuana industry in this state with a population of nearly 9 million people would reach $850 million-$950 million in sales a year by 2024.

This would probably sound the starting gun for surrounding states that are thinking about legalization — New York, Pennsylvania, Connecticut and Rhode Island. Between them, they have another 37 million residents.

You put all this together, and I think the U.S. cannabis industry could have a very good 2021. More and more multi-state operators (MSOs) are either already profitable or getting there fast.

My Marijuana Millionaire Portfolio subscribers have a bunch of them already, and I’ll be recommending more soon. If you’re doing this on your own, be careful and do your research.

All the best,

Sean

P.S. I’ll be speaking at the New Orleans Investment Conference on the morning of Oct. 14. It’s a great conference; lots of interesting speakers, and little companies with enormous potential. Now YOU can attend the conference without leaving the comfort of your own home, as the NOIC has gone virtual. You can check it out here.

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Comments 3

  1. David October 8, 2020

    Where can I go to buy stock for cannabis

    Reply

  2. Marni October 3, 2020

    For your Canadian readers, what are your thoughts on Cdn cannabis stocks? LABS, OGI, Aurora, Hexo, etc?

    Reply

  3. Bob Schubring October 3, 2020

    Cannabis suffers the same structural weakness as all cheap generic drugs. Competition drives down profits, to where none of the players can afford a lobbyist presence. Patented drugs from pharma giants make 95% of the profits and buy 95% of the political influence. This was why Pepto-Bismol shoved out cannabis extract in the 1930s as a treatment for stomach cramps…even though it was less effective! Nobody defends talcum powder, paraben sunscreen, Epsom salts for skin, why? Patented replacements can buy media and political influence. Generics makers just switch to something else, customers get abandoned. Pushback is rare. Australian researchers a decade ago showed hydrocodone (used in Swedish cough meds for COVID-19, the reason Sweden could treat COVID patients at home rather than shut down the country to conserve hospital beds!) was safer and more effective for weaning heroin addicts off heroin, than patented Suboxone. Invidior, threatened that a $1 drug made from poppies would replace their $200 drug, lobbied the DEA to reschedule hydrocodone onto S-Ii, protecting its money. US now has no cough meds for COVID and it cost us $3 Trillion of future inflation. MEANWHILE the Suboxone patent was expiring and generics makers wanted in. Invidior patented a new excipient to put in the Suboxone formula and tried to tell addiction doctors and the DEA that their old formula was dangerous and nobody should make generic copies of it. That finally brought some pushback. Medicaid has to buy all that $200 Suboxone because addicts typically are poor/unemployed, smelled a rat. Justice Dept fined Invidior $100 million for false advertising of new Suboxone formula. Cannabiz players don’t know the jungle they are in, and “consolidation” is an opportunity to figure stuff out. Colombia can grow cannabis outdoors, 4 crops/year, for 4 cents/lb. Legal imports will strangle indoor grow lamp operations and companies know it. Indoor grows must either cozy up to politicians and buy protection, or import tropical cannabis and let prices drop. State-by-state patchwork legalization is only thing locking Colombian cannabis imports out, because interstate shipment still illegal at federal level. The industry needs to decide if it becomes part of pharma problem or part of pharma solution!

    Reply