Marijuana 2.0

Written by Jimmy Mengel
Posted April 25, 2018 at 8:00PM

If you think you missed the boat on pot stocks, you are dead wrong.

In fact, it may be the single best time to start investing. Marijuana stocks have been beaten down over the last few months — mostly based on the Canadian government’s inability to decide on how to legalize and regulate it.

This is a temporary issue, and will give you a great chance to buy life-changing stocks at a massive discount.

Here’s the deal…

As long-time readers know, Canada was the first mover on the legal pot front. It's launched pretty much every major marijuana company worth its weight in green.

Canadian Prime Minister Justin Trudeau won his position as Prime Minister based on the promise that he would legalize marijuana across the country. It now seems like he didn’t anticipate how difficult it would be to set up rules and regulations. The young Prime Minister is realizing how difficult it is to run a large bureaucratic monolith.

You would think that once a law is voted upon and won, government officials would make haste to fulfill the will of the public. We all know that is a pipe dream — even in Canada.

Legislators have hemmed and hawed to place draconian requirements for packaging, labeling, and selling recreational marijuana. They are attempting to set up government-run shops, much like the ABC liquor stores here in the States.

It hasn’t been an easy transition — especially considering the sheer size of the industry and the move from illegal to legal trade.

This lack of clarity has set up a great opportunity for us investors.

This is the cheapest pot stocks have been in months — and I assure you — it won’t last for long...

If you look at the Horizons Marijuana Life Sciences ETF (HMMJ.TO), which tracks many of the biggest Canadian marijuana companies, you’ll see how far things have fallen lately:

But a 14% drop is nothing compared to the gains we saw last year, when California finally went legal. Legalization went off without much of a hitch. Now, there are still plenty of regulations to work through, but the state set a firm deadline of January 1st and nailed it with flying colors.

All of my pot stocks jumped double digits...

Considering that Canada has been the world’s leader in marijuana legalization for some time now — and has given birth to the biggest and most profitable marijuana companies in the entire world — I was rather surprised that it hasn’t been able to pull it together yet.

Just look at some of the companies that Canada has spawned...

Canopy Growth Corp (WEED.TO) (OTC: TWMJF)

If you were in at the beginning, that is an unheard of 274,300% gain. I'll be the first to say that I was certainly not in at a penny. But I was in at $1.86 - a 1,400% gain for my readers right now. That was way before marijuana became an investing fad. In fact, I was the first newsletter writer to visit their headquarters

Cronos Group (MJN.V) (NASDAQ: CRON)

These guys were the first "pure play" pot stock to be uplisted to the NASDAQ. If you got in early, you're looking a 1,520% gain to date. My readers got in at $0.40. It is now trading at $12.15. You do the math...

I recommended all of these companies and more to my newsletter readers over the years, and have made a king’s ransom along the way.

Yet Canada has sputtered out of the gate, and now it looks like full-scale legalization won’t happen until August. That is great news for anyone who hasn’t yet invested, or for current investors who want to dollar-cost average their current positions.

So if you didn’t get in on the first round, now is the time to set up for the next one…

Once Canadian legalization hits — which should finally happen in August — we’ll see a whole new world of pot profits, just like we did in California.

The funny thing is, when California legalized — all of my Canadian pot stocks went wild, which seems counterintuitive. But the thing about marijuana stocks is that they all move on news — it doesn’t seem to matter where or why.

And since Canada is still heavily regulated in terms of who can be “licensed producers” (LPs), there are still barriers to entry for who will be supplying the product once the floodgates are open. There will be a supply issue in the next year or two while Canada figures out how to relax the laws and allow more companies to compete.

That will certainly be great for first movers like Canopy Growth…

However, you won’t find too many Canadian marijuana companies that will be jumping 12,000% like Canopy has. While the Canadian stocks will also trend up once legalization hits in Canada, most of those profits are already baked in.

That’s why I have found a U.S. company that is perfectly aligned to become the major player here in the States.

This company has a far better valuation, a larger pool of customers, and a far higher ceiling than the Canadian companies. It will piggy-back on the Canadian legalization frenzy.

Don’t wait to read the news in August. Prepare yourself for the inevitable run-up with a cheap, under-the-radar stock that is spring-loaded for such an occasion.

Get in now.


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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Investing in Marijuana Without Getting Burned