Are We Looking at the Marijuana Sector the Wrong Way?

Written by Adam English
Posted December 12, 2017

What is better — getting your foot in the door of a $7 billion market, or a $635 billion market?

I've been thinking about how we think about the marijuana sector.

The industry news is heavily focused on California. It just started accepting applications from businesses that want to operate in the state’s legal marijuana industry on January 1st.

Retailers, distributors, and testing labs are all piling in, trying to get a first-mover advantage.

And that advantage will be huge.

Just look at California itself. It accounts for 12% of the U.S. population, and over 13% of the U.S. economy.

Break it out as its own country and it’d be the sixth largest by GDP, tucked right between the United Kingdom and France.

With that kind of size, it is expected to create a $7 billion legal industry overnight.

Business owners and investors will be handsomely rewarded. Millionaires will be minted, and tax revenues will flood state coffers. Lives will be changed for the better, and forever.

But I'm convinced the time has come for a change. How we've been thinking about the marijuana sector is increasingly antiquated.

And it all comes down to this question: What is better — getting your foot in the door of a $7 billion market, or a $635 billion market?

Changing How We Look At The Market

The focus in recent years has been the state-by-state progression of ballot measures and legislative regulation.

This makes a lot of sense. Before the 2000 election, there were only five states that allowed medical use.

Now there are 29, if you include Washington, D.C. along with another eight with recreational laws.

It won’t be long before even more follow suit, based off of the numerous polls and surveys that show a profound shift towards support for medical use.

But we’re already past a tipping point. Just over 62% of the U.S. population now has access to medical marijuana for a range of qualifying conditions and diseases.

Of the 10 largest states by population, only Texas, Georgia, and North Carolina don’t allow medical marijuana for a range of diseases and conditions, though both Texas and Georgia allow some use.

In other words, the biggest gains from adding more states to the list to increase the legal market size have already been realized.

And the number of patients utilizing medical marijuana for conditions and diseases that are approved for its use is low across the board.

It is time to start looking at the growth of market penetration, and not just the growth of the potential market.

Breaking Into A $635 Billion Market

In essence, it is time to start viewing medical marijuana companies like pharmaceutical companies.

A condition or disease exists, and they have to research, patent, and bring to market a better option than what currently exists.

Nothing is more vulnerable to this kind of disruptive market expansion for medical marijuana than the pain industry.

$635 billion is spent on medicine for pain each year. And that doesn’t include the cost of the fallout from it — addiction, overdoses, and deaths.

A reckoning is coming that is long overdue, with federal agencies and state governments increasingly looking to go after the source of the problem, and not the users themselves.

And right now, pioneering companies working with medical marijuana products are positioning themselves to challenge the status quo in the pain industry and break the monopoly of opioids.

Our in-house expert, Jimmy Mengel, just released a research report on one of these companies.

It is sitting on 2,051 patents, it's rolling out an innovative education program for both patients and doctors, and it is getting unprecedented results.

Patient acquisition has skyrocketed 4,256% since last November.

Meanwhile, its shares are sitting below $3. Check out Jimmy’s research now, because that won’t last for long.

Take care,

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Adam English

follow basic @AdamEnglishOC on Twitter

Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page

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