This year, we’ve seen major Canadian players fall short of expectations, and face-plant spectacularly while doing so.
Aurora Cannabis (NYSE: ACB) saw its share price tumble down as much as 86% from its 52-week highs before recently bouncing.
And it’s not the worst example. CannTrust (NYSE: CTST) dropped 92% from its highs. Sheesh!
But you know what? There are still great profits to be made in cannabis. You just have to look outside of Canada.
I’m talking south of the border — the U.S./Canadian border, that is. After all, while cannabis is federally legal in Canada, our neighbor to the north has just one-tenth the population of the United States. Why, just one U.S. state — California — has more people in it than all of Canada.
And while California is a rising cannabis market, the “Taxaholic State” wouldn’t be my pick for potential outperformer this year.
So which state would be my pick? Let me show you some charts first. See if you can follow this trail.
Let’s start with a chart of U.S. and global legal cannabis sales.
There are different ways to measure legal sales. But a popular method puts global legal cannabis sales at about $25 billion last year. And $12.5 billion of that, or half, was in the United States.
In fact, you can see U.S. cannabis sales should continue to dominate through 2023. So, if you’re investing, the U.S. is definitely where you want to put the majority of your money.
What are people using cannabis for anyway? If you think it’s “to get high,” you’re missing the point. The top four reasons to use cannabis are all medical, as this next chart shows …
Treatment of chronic pain, improvement of mental health, treatment of minor injuries and help sleeping are the top four reasons.
Hm … Who can you think of who has all these complaints more than most people? I’d say it’s older individuals.
Since I turned 60, I can say I’m at least in the fringe of this group. And you know what? Getting old sucks! Sure, it’s better than the alternative. But I’ll be danged if, when I get together with friends, we don’t spend the first 15 minutes of every conversation talking about what ails us.
Now, I’m disgustingly healthy for a man of my age. I’m reminded of that every time I go to the doctor’s office. But many older people aren’t. And guess what the senior citizens in Florida are turning to in order to heal their aches and pains?
You get one guess, and it better be “weed.”
Cannabis in Florida is medical only. That means you must have an actual medical complaint to consume cannabis legally in that state. As you might guess, old people have more complaints than most.
And in Florida, people over 60 are 23% of the population. That means Florida has more old people. And they are buying a LOT of pot.
Here’s a chart from MarijuanaBusinessDaily.com to illustrate my point …
Medical cannabis patients in Florida purchased more than 22,000 pounds of smokable, legal marijuana in less than six months.
For comparison, that’s more than three times the amount of medical marijuana sold in Ohio during that state’s first 12 months of sales.
To translate for younger investors, Granny and Gramps down in Sarasota are smokin’ a heck of a lot of weed. They are smoking more of it. And recreational sales haven’t even started yet.
So, how do we know the older crowd is the one doing the buying? Well, senior citizen use of marijuana is booming nationally. That’s according to National Survey of Drug Use and Health data.
And in Florida specifically, three of the top four counties in the state for medical marijuana use have median populations age 53 and older.
So, yeah. The older folks are puffin’ weed.
Look at those three charts again: A boom in U.S. cannabis nationally, a concentration on medical usage and surging sales in Florida.
For me, this is like a treasure map to profit potential. It means, move over California. Florida is the growth state for cannabis.
There are a couple of great companies with heavy exposure to the Florida cannabis market. Some of them are — gasp! — actually profitable!
That makes them stand out in the marijuana space, where many companies are experts at LOSING money. Just ask the Canadians about that.
We already own one of those Florida-focused cannabis stocks in Marijuana Millionaire Portfolio, and I’m considering adding another one. After all, already profitable and booming sales are ingredients for higher share prices.
If you’re doing this on your own, be careful. Bears ripped through the cannabis industry this year. I think the worst is over for the group — indeed, I think a new bull market is around the corner for various reasons. But individual stocks could still go … ahem … up in smoke.
Whether you decide to follow these treasure maps is up to you. But it’s important to know the opportunities are out there for investors who are both selective and able to weather a bumpy ride.
All the best,
Sean
