Quadruple-Digit Returns From the "War on Drugs"

Written by Jimmy Mengel
Posted August 16, 2016

Today, I want to talk about drugs...

Specifically illegal drugs and the role they play in our society, for better or worse.

Let me outline two distinct situations, and you tell me if you can determine which drug is more dangerous. Keep in mind, both of these situations are completely true and documented by law enforcement.

Exhibit one...

DRUG: Synthetic Cathinones, aka 'Bath Salts'

DEFINITION: Synthetic cathinones are marketed as cheap substitutes for other stimulants such as methamphetamine and cocaine


CASE STUDY: A word of warning, these aren't those nice scented bath salts you buy from Bath and Body Works. These bath salts are chemically engineered drugs that mimic the high of some of the strongest stimulants out there — at a much cheaper price.

Here is perhaps one of the more disturbing tales of a 'bath salt' user...

In Charlestown, West Virginia police found a man named Mark Thompson dressed in a bra and panties in the same room as a dead pygmy goat.

Police discovered that — while Thompson was high on bath salts — he slaughtered his neighbor's pet goat and dragged it into his home, where he proceeded to perform unspeakable acts on the animal.

I'd say behavior like that justifies the DEA's Schedule 1 classification of bath salts: substances, or chemicals defined as drugs with no currently accepted medical use and a high potential for abuse.

Let's move on to another Schedule 1 drug...

DRUG: Marijuana


CASE STUDY: Situation two... after a long day at work, a mid-40s man comes home and smokes a joint with his wife. They proceed to put a Pink Floyd record on the turntable and make a sumptuous feast — which they devour with undue excitement.

They spend the remainder of the evening laughing at each other and turn in for the night. They sleep like babies.

Which one of these sounds more like a threat to the public?

The answer should be simple, yet the DEA has again classified marijuana as a "Schedule 1 drug", on the same level as not only bath salts, but heroin, LSD, mescaline, and ecstasy.

It doesn't take a PhD to notice the insane differences in these drugs...

Unfortunately, the DEA seems to disagree... and it could be a huge opportunity for investors.

Last week the Drug Enforcement Agency reaffirmed its Schedule I distinction for marijuana, confirming that the agency still considers it a risk to Americans.

Again, here is how it's defined: “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.” That means that states that allow marijuana for medical use or legalize recreational use remain in defiance of federal law.

Now, as we have outlined before, marijuana, or cannabis, has many proven medical uses, as evidenced by the 23 states that currently have legalized cannabis for, get this, MEDICAL PURPOSES!

Cannabis has been medically proven to help:

  • Cancer pain

  • Neuropathy

  • Multiple sclerosis

  • Fibromyalgia

  • Back pain

  • Type 2 diabetes

  • Schizophrenia

  • Post-traumatic stress disorder (PTSD)

  • Epilepsy

All of these are very serious illnesses that Big Pharma has made a fortune on — with far more dangerous drugs. If you don't believe me, just take a look at the Schedule II drug list. You may be rather surprised...

  • Cocaine
  • Methamphetamine
  • Oxycontin
  • Fentanyl
  • Vicodin

I'm sure I don't need to lecture anyone on the dangers of cocaine. Fentanyl, however, hasn't really entered the public lexicon. For those who haven't heard of it, fentanyl is a synthetic opioid about 50 times stronger than heroin. According to the DEA itself, fentanyl-related overdoses killed over 700 people from late 2013 to early 2015. Here in Maryland, 25% of the overdoses involve fentanyl.

Somehow it still ranks below marijuana in terms of the danger to the public.

Legal prescription pain medications like Oxycontin and Vicodin are even worse. A new study from the American Society of Addiction Medicine has shown that prescription pain-killer abuse is reaching epidemic levels:

  • Of the 21.5 million Americans 12 or older who had a substance use disorder in 2014, 1.9 million had a substance use disorder involving prescription pain relievers.

  • Drug overdose is the leading cause of accidental death in the U.S., with 47,055 lethal drug overdoses in 2014. Opioid addiction is driving this epidemic, with 18,893 overdose deaths related to prescription pain relievers.

  • 259 million prescriptions were written for opioids, which is more than enough to give every American adult their own bottle of pills.

I dare anyone in the DEA to arrange a line-up of marijuana users next to meth, cocaine, or Oxycontin users and ask the general public which looks more dangerous. If for any reason you don't realize how dangerous these drugs are, allow me to give some visual examples.

This is the face of crystal meth:

metho face

And this is the face of a marijuana user:

obama potobama president

Now, while you may love Obama or hate him, it doesn't take a PhD to determine which of these drugs is more dangerous. One leads to violent behavior, psychosis, tooth loss, and almost certain death. The other — at worst — leads to increased appetite, drowsiness, and a misplaced love for the Grateful Dead.

I won't even dig into Schedule III drugs like ketamine and anabolic steroids. The short answer: ketamine is a party drug that can result in the infamous “K-Hole', where the user is reduced to a infantile state, leaving them shaking and crying in a corner, while anabolic steroids can lead users to hyper-violent acts combined with superhuman strength — think 'The Hulk' with a bad attitude.

Now, I'm not writing this as a pro-pot screed. I'm not writing it as a public health warning. I'm writing this as an investment column. And this recent boneheaded ruling has opened up yet another opportunity to invest in legal cannabis companies at a historic discount...

Marijuana will be legal all across the world. There is no doubt about it...

And the DEA's recent classification simply serves as a great entry point for investors. Once they ease the classification — which they soon will — pot stocks will go through the roof.

Medicinal cannabis is already legal in 24 states. Recreational marijuana is legal in four states, plus the District of Columbia. Five additional states will be voting on it this November — including California, which is not only the largest economy in the U.S., but also has the eighth-largest annual GDP on the planet.

All told, legal marijuana sales hit an estimated $5.4 billion in 2015, and are expected to grow at an average of 30% per year through 2020. I dare you to find another industry growing at such a clip. As more and more states in the U.S. open their doors to this groundbreaking industry, more companies will crop up to meet the huge demand. Just look at these projections from the Marijuana Business Factbook:

marijuana sales estimates

So while plenty of money will be made in both recreational and medical marijuana stocks, I firmly believe that safer, bullet-proof profits will be coming from the medical sector.

Legal marijuana is the most lucrative opportunity I've seen in all of my time as an investment analyst. All-new millionaires are being minted every day... with many more to come.

When you consider the tide of public opinion...

The growing number of states lining up for legalization...

And the massive profits about to be unleashed as a result...

It's a no-brainer investment, regardless of your position on marijuana. I think you can agree legal marijuana is inevitable, as are the profits at stake.

I've put together an entire report for you to take advantage of this trend.

I've toured the shops... the factories... and the fields...

I've weeded out the fly-by-night penny stocks.

And I've come up with three companies that will allow you to invest in the most lucrative opportunity you've ever seen. You can read all about them right here.


Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of several personal finance advisories, The Crow's Nest, and The Adventure Capitalist For more on Jimmy, check out his editor's page.

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