Marijuana Stocks: Three Reasons It's Not a Bubble
Written By: Nick Hodge
Posted: Apr 12, 2017
As you likely know by now, Canada is set to announce the full legalization of marijuana tomorrow, April 13th.
Ahead of this, cannabis stocks are going crazy.
And rightly so.
Legal weed is estimated to be a $22.6 billion industry, according to Deloitte.
By most estimates, the production of marijuana in Canada will need to double to meet demand. Some are saying there will be a shortage.
Market forces are at work, and of course growers are popping up at a frantic pace. But as an investor, you’ll need to keep an eye on who actually has a license to grow and distribute… and who doesn’t.
Not only is there seemingly insatiable demand for weed itself… there is also a very high demand currently for cannabis equities.
A few points on this…
First, some are already screaming “bubble.”
To them I say: How can that be when it’s not even fully legal yet. We’ve only had a tiny taste of what’s to come.
While the Canadian government will announce recreational legalization this week… the law won’t be implemented until mid-2018.
It’s not even legal in all U.S. states.
How can there be a bubble when most of the market hasn’t even opened up yet?
What’s more, institutional demand hasn’t come in yet. Funds and indexes for the sector are only now being created.
I believe coming further legalization and societal acceptance, coupled with an influx of institutional investment dollars, means we are only in the early stages of the bull cycle for cannabis.
Second, where there is a rush of new investment dollars there will be scams. It’s a fact of life. You will see stocks in this sector come and go. They will be selling pot breath mints and hemp bracelets and anything else to associate themselves with the sector simply to attract naive investment dollars from the public.
Diligence is warranted.
(That’s why we created The Marijuana Manifesto. And while our presentation on Canadian legalization has been taken down because the deadline has passed, you can still order by clicking here or calling customer support at 844-310-4115.)
Finally, the framework is only now being set up in Canada for recreational legalization. It is a world leader in this respect.
As such, many countries will look to it as a leader… not just on the legislative front, but on the business front as well.
What that means is that the stocks you can invest in today have a real shot at becoming the dominating multinationals of this industry.
The Exxons and Wal-Marts of weed are out there right now.
You are in a unique position to own them very early.
Only three stocks in the marijuana space so far have reached a $1 billion valuation — the so-called unicorns.
More will follow.
Some of these stocks, like Organigram (TSX-V: OGI)(OTC: ORGMF), are rising by 75% a month.
One company in The Marijuana Manifesto portfolio is up 221% since mid-March.
The time to get in on this market is now.
The Marijuana Manifesto is open for membership.
Call it like you see it,
Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.