Timer’s Digest Timer of the Year and Timer of the Decade, Mark Leibovit surprised the audience when asked what he thought was one of the top money making growth opportunity in 2014. Read Michael Campbell’s post regarding this on Facebook HERE
Marijuana: Why We Smell a Profit …
This profiles what could be perhaps the hottest – and one of the largest – markets in the world. In fact, our Institutional Reserach team is busily completing a full sector report on the marijuana industry, which should be released along with the new investor-oriented Daily Bell within the next couple of weeks.
Cannabis. Marijuana. Ganja. That’s right. Marijuana has to be one of the hottest trends going.
Let’s see what the media has to say about it.
RT reports “Recreational pot sales in Colorado surpass $5 million in first week.” The article, published early in January, profiled Colorado’s “first week with legal weed.”
Mind you, pot is not actually “legal” in Colorado – or not from the Federal government’s point of view. It’s just been decriminalized. In any event, legal distinctions aside, “people really like marijuana,” as the article notes.
Here’s more:
Owners of the 37 just-launched dispensaries across Colorado tell the Huffington Post that they’ve already generated a combined total of roughly $5 million in sales since it became legal there on January 1 for adults to purchase and use marijuana for recreational reasons.
Some of the larger dispensaries unloaded as much as 60 pounds of pot each from their shelves during that first week, HuffPo’s Matt Ferner reported on Wednesday, and combined sales on the first of the year alone totaled over $1 million.
“Every day that we’ve been in business since Jan. 1 has been better than my best day of business ever,” Andy Williams, owner of Denver’s Medicine Man dispensary, told the website.
Voters in Colorado approved a measure legalizing medicinal marijuana back in 2000, and dispensaries across the state had until just recently been barred from selling to those without a doctor’s prescription. Denver’s 3D Cannabis Center told the Colorado Springs Gazette that they averaged 25 clients a day in medical marijuana sales before the state’s new law went into effect, but on Jan. 1 they served around 450 customers and before long were forced to close down in order to restock.
If sales continue at the current rate, the state could see $260 million made by marijuana by the end of the year. Some experts, however, have already said that they think annual sales could even double that. The Gazette reported earlier this month that they think the new weed industry could generate $400 million in sales by the end of the year, and Bloomberg News suggested that statistic could climb to $578.1 million a year between wholesale and retail sales.
The confusing part of all this, as mentioned above, is that while Colorado has “legalized” weed, the US federal government has not.
The article points out this perplexing contradiction and then cites attorney Alan Dershowitz to confirm it: “They should be confused,” he’s quoted as saying. “The federal government still takes the position technically that you’re violating federal law if you’re complying with the state law.”
This conflict has been noted by Colorado as well. Members of the Denver City Council have voted for “swift federal action” to allow dispensaries to do business in payments other than cash. Right now, banks and other monetary facilities are leery about accepting “drug money” because of potential ramifications should policy switch again.
But while Colorado legislators may be irritated with the Federal stance, they cannot help but be pleased with the added revenues the state will realize. As the article observes: “Legal marijuana is both heavily regulated and taxed, and by Bloomberg’s estimate will earn Colorado nearly $70 million in excises this year alone.
Other states have noticed the possibilities, as well. Recently, CNBC posted an article on the challenges and potential of selling marijuana. The article tried to envision a mature industry and marketplace, noting that both Colorado and now Washington had “legalized” the plant.
Here’s more:
Amid this historic backdrop, a small merchant-focused pot industry is growing, alongside forerunners to national—potentially public—cannabis companies. The legal marijuana sector could unfold and function like the beer industry, with small batch varieties nabbing market share amid larger brands.
For now, mass cannabis production and scalable business models aren’t as vigorous as they could be because marijuana remains illegal under federal law. Banks and credit card companies are prohibited from processing pot business transactions, according to federal rules.
But working within state guidelines, scrappy entrepreneurs are moving forward with ambitious cannabis business strategies. They see potential for big sales and profits—especially if more mid-sized businesses can transition to large, national brands.
Wealthy individual investors already are tapping private equity firms for a bite of the potentially lucrative marijuana business. “Our investors are from the far left and the far right,” said Brendan Kennedy, chief executive of Privateer Holdings, a cannabis-focused private equity firm.
“There’s old money and new money. You put them in a room and they wouldn’t agree on anything else but this issue,” Kennedy said. Seattle-based Privateer also acquired Leafly.com, which offers online reviews of cannabis strains and dispensaries.
From the above, we can see that many are beginning to see marijuana as lucrative business. The article itself characterizes the opportunity as a “billion-dollar gold rush” led by “ganjapreneurs.”
The article goes on to report an analysis from San Francisco-based angel investor network ArcView Group that forecasts a 64 percent surge in the legal U.S. cannabis market to $2.34 billion by 2014.
Additionally, according to ArcView, the five-year national market could grow to $10.2 billion. The numbers depend to some degree on how many states legalize pot, and how big the states are. If Alaska and Canada hold successful referendums, the market could expand considerably.
What is also helping expand the market is new technology that can be adopted and elaborated on now that marijuana is decriminalized or legalized. Apparently, “marijuana concentrates” are popular, as is the oil from cannabis that can be used for a variety of medicinal purposes.
Variants of the plant can be used for paper, rope and other products in ways that will take pressure off slow-growth trees. And these opportunities deal directly with the plant. There are other, ancillary businesses to arise, including insurance and e-commerce.
But the biggest action will be found growing the plant itself. According to the article, “The precursors of true national cannabis companies have emerged in the form of multistate licensors and are leveraging strong branding and scalable business models.”
Companies that develop strong brands will ” be prime candidates for acquisition or public listing, especially upon federal legalization.” Brands, of course, could include everything from strains of potent marijuana to chocolate-laced marijuana and, of course, the potent oil itself.
The country that is most viably positioned to take advantage of the new “green rush” is not the US, however, but Uruguay, which recently legalized – not decriminalized – marijuana and is welcoming commercial production.
The law allows Uruguayans over 18 to buy up to 40g (1.4oz) of the drug a month and will be implemented beginning in April. The justification is that legalization will help the government reduce the influence of drug cartels and black-market marijuana.
But as we have pointed out, there are complications with the Uruguayan measure. George Soros, for instance, was a significant supporter of marijuana legalization in Uruguay, and Soros is reportedly also a big Monsanto shareholder.
Monsanto has supposedly been developing advanced strains of marijuana in laboratories outside of the United States and such powerful variations may prove attractive for both medicinal and leisure purposes. In fact, the legalization of marijuana may provide Monsanto with a foothold in Uruguay via marijuana.
But regardless of Monsanto’s ambitions, the market that is now being created will likely accommodate a broad spectrum of entrepreneurs and products. It’s rare that the opportunity to get in on the proverbial ground floor of a new and important industry presents itself so obviously and promisingly.
Marijuana is not an untried or untested product and it comes with built-in name recognition and a vast and enthusiastic user base. Whether it is the US, Uruguay or other countries, the catchment for legal marijuana will continue to grow as will its promise and ingestion.
About the Author Anthony Wile:
Anthony Wile is an active investor, business strategist and consultant, financial markets commentator, publisher and author. Having lived and worked in several leading financial centers around the world, Wile has established an international network of asset managers, banks, family offices, financial analysts, institutional investors and securities firms. Wile is Chairman and CEO of Toronto-based High Alert Capital Partners Inc. and Chief Investment Officer of High Alert Investment Management Ltd., the general partner to High Alert Capital Partners LP.
Anthony is a pioneer of the alternative media, having founded two major websites that have presented many of the top free-market thinkers working today. Many serious commentators have adopted his insights regarding society’s Dominant Social Themes and the Internet Reformation; his personal writing and editorials have been reprinted at numerous sites and read by millions. His insights and perspectives have helped shape the conversation on the Internet when it comes to analysis of the world today and how its sociopolitical and economic trends are evolving.
Wile’s contributions continue to expand. Now chief editor of The High Alert Trends & Sector Report as well as TheDailyBell.com, Wile has recently written two new books, Freedom Investing (2013) that brings together his sociopolitical insights with economic analysis and The Best of Anthony Wile: Select Editorials and Interviews (2013), a compilation of material first published at TheDailyBell.com from 2010 – 2013. In 2003, Wile published his first book, The Liberation of Flockhead, under the pseudonym Yang. The fourth edition of Wile’s well-received book, High Alert, originally released in the summer of 2007, was published in early 2013 to a favorable reception.
Former US congressman and presidential candidate Ron Paul said, “High Alert should be read by everyone who wishes to educate themselves about the dangers fiat money poses to American liberty and prosperity. I wish I could get every member of Congress to read this book.” Wile has assisted with the completion of over a dozen additional free market-oriented books, working as a collaborative editor to several leading free-market thinkers.
As founder and chief editor of well-known, free-market oriented Internet sites such as Free-Market News Network (FMNN) and The Daily Bell, Anthony leveraged more than 20 years of financial and business experience working with growth-oriented companies in a variety of sectors. In aggregate, these free-market educational websites have reached tens of millions of viewers and helped define the cutting edge of alternative news publishing.
In 2008, Wile founded a Swiss-based publishing firm and began publishing The Daily Bell, a leading alternative news website that publishes daily news analysis, editorials and exclusive interviews conducted by Wile with leading opinion makers such as Steve Forbes, Jim Rogers, Peter Schiff and Marc Faber. While living and working in Switzerland in 2009, Wile founded the Liechtenstein-based Foundation for the Advancement of Free-Market Thinking (FAFMT), of which he served as Executive Director until March 2013.
Anthony graduated from Saint Mary’s University (SMU) with a degree in business in 1991 and worked in the Canadian investment industry with Scotia McLeod (Bank of Nova Scotia) and Nesbitt Burns (Bank of Montreal). In 1994 Anthony Wile was made a Fellow of the Canadian Securities Institute, which is a designation awarded to financial services professionals who attain advanced education and experience in the Canadian securities industry.
Anthony has visited every state in the US and every province and territory in Canada. Additionally, he has lived in a number of countries on several continents over the past three decades and has visited or done business in more than 40 countries.
