Defending My 12 Dollar Soda

Written by Jimmy Mengel
Posted June 15, 2018 at 10:53AM

I spent 12 dollars on a soda this week... and it was worth every penny.

In full disclosure, I would never think to spend 12 bucks on a soda. In fact, I almost never drink soda to begin with. But this was no ordinary soda...

Now, it wasn't that expensive because I bought it at a price-gouging location like a movie theater, baseball game, or amusement park. It wasn't part of a fancy artisan cocktail. It was something far more interesting — and could be the next big investment trend.

You see, I was in Washington State this week to meet with fellow editor Nick Hodge. He has a beautiful new home outside of Spokane and I finally made the pilgrimage to check it out for myself.

But my other motive for visiting was to do some research on the legal marijuana market. Washington and Colorado were the first states to completely legalize cannabis for recreational use, so it's essentially ground zero for the U.S. market.

That's where the soda comes in.

I visited a dispensary in Spokane — you know, for research purposes — and bought a cannabis cola. At a buck an ounce, it was expensive, but it was delicious. And best of all, it made me feel great, it was socially acceptable, and it was far more discreet...

Perhaps most importantly, the cola didn't turn me into a stoned-out space cadet. It was a smooth, relaxing experience — like a much more interesting version of chamomile tea. I was able to effortlessly communicate with my company, and it heightened my enjoyment of the beauty of the Northwest's pine trees and waterfalls.

In essence, it was worth the 12 bucks.

This is going to be the next big trend in beverages, cannabis consumption, and marijuana investing...

There is still a stigma on smoking marijuana. While it is becoming far more mainstream, there is still that lingering discomfort when someone sparks up a big joint at a casual dinner party. Most people have no problems with pounding a few brews, draining a bottle or two of Pinot Noir, or knocking back a half dozen martinis. But if you fire up a doobie, you'll still get a few cock-eyed glances.

But if you were to show up to a party with a couple of cannabis colas, I doubt too many other guests would bat an eye. In fact, they may be more interested than you'd think.

The writing is on the wall for non-smokable cannabis. A recent study from Deloitte reveals that smokable marijuana is expected to generate around $5 billion in sales in 2019. That's pretty impressive, and may be a low-ball estimate. Edible products like brownies, candy, and beverages are slated to bring in around $12 to $22 billion in sales.

For those doing the math, edible products could sell over four times what traditional, smokable cannabis brings in.

It's already happening, albeit under the radar.

Cannabis beverage sales quietly raked in over $35 million last year. That's only including legal states like California, Colorado, Oregon, and Washington. We've seen double-digit growth over the past three years.

As more states legalize marijuana, these numbers are going to go crazy.

But perhaps the most important part for investors is that big beverage companies are already placing their bets and planning massive buyouts of small companies — which sends their stock prices flying...

The first shot fired was from alcohol giant Constellation Brands — which sells Corona beer, Svedka vodka, and other brands. It ponied up around $191 million for a 9.9% stake in Canopy Growth Corp.(WEED.TO) — the first marijuana stock I ever recommended, which is now up over 2,000% since I first recommended it.

They are going to jointly develop and market a series of cannabis-infused beverages.

More companies will follow. In fact, I just recommended a new company that plans on releasing cannabis-infused iced teas, juices, and sports drinks.

It won't be long until we see more bud-beers and weed-wines. It's only a matter of time. In fact, recent estimates show that legal marijuana sales will outpace soda sales by 2030. It's already slated to be a bigger market than beer in Canada.

This industry is going to be all about consolidation for the next few years. You'll need to be placing your bets on smaller companies that are poised for buyouts from the big guns. I've been keeping my eye on quite a few...

One company that could be targeted by beverage companies is a small California-based company that specializes in extracting oils that can be used in edibles and beverages. This company is also currently gunning for a spot on one of the major U.S. exchanges, which would make it even more attractive for a prospective buyout.

You can take a look at it right here.

Godspeed,
jimmy-mengel-signature-fixed

Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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