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Five Marijuana Stocks to Play Prop 19

Get High Profits from these 5 Cannabis Stocks

By Luke Burgess
Friday, October 29th, 2010

Next Tuesday, California will vote on Proposition 19.

This measure legalizes various cannabis-related activities, which include permitting the cultivation, sale, consumption, and taxation of the commodity.

If legalized, the new cannabis market will present significant investment opportunities from an industry estimated to be worth over $150 billion.

The hype around Proposition 19 alone may even cause several cannabis-related stocks — that you can buy right now — to jump ahead of the vote.

And in just one minute, I'll give you the top five marijuana stocks that could soar if Prop 19 is passed.

Bur first, let me give you a better idea of just how much money investors stand to make from this legislation, and what kinds of investments are available.

Marijuana: The most profitable commodity on the planet

The production and sale of cannabis offers investors the potential to return major league gains.

Truth is, the profit margins are through the roof.

To produce one pound of hydroponically grown cannabis costs between $100 and $200 per pound.

You can sell that same pound of cannabis for anywhere from $7,000¹ to $10,000² per pound to the retail market, depending on quality.

marijuana stocksThat's a minimum 3,400% gain!

To get the same investment gain from the Dow Jones, you would have had to invest in May 1954.

Meanwhile, a typical grow time from seed to product ranges between two and three months.

That means every $5k invested in the production and sale of cannabis will yield an annual minimum gain of between $700,000 and $1.05 million.

Best case scenario, you can return an annual 60,000% total yield.

There is no other natural resource in the world that can return such an unbelievable profit.

In fact — and read this part slowly — it is possible to return more than double the investment yield in just one year of cannabis production and sale than the entire combined investment history of:

  • the Dow Jones
  • the NASDAQ
  • the S&P 500
  • the U.S. dollar
  • gold
  • silver
  • oil
  • natural gas

I had no idea how incredibly profitable the production of cannabis was until I started to do research for this article.

The returns are truly mind-numbing, and I can understand why people take such high risks to involve themselves in the marijuana trade.

Because at the end of the day (profits withstanding) there's still one little problem...

It is illegal to produce, store, transport, distribute, sell, have or otherwise possess cannabis under U.S. federal law.

However, and as I'm sure you're aware, that's all quickly changing.

New legislation on California's current statewide ballot could legalize marijuana and present investors with the opportunity of a lifetime.

California's new “emerald gold” rush

Proposition 19, also known as the Regulate, Control and Tax Cannabis Act of 2010, is a California ballot proposition which will be on the November 2nd California ballot.

The measure aims to make a few changes to California's current marijuana laws. In short, Prop 19 maintains the existing criminal and civil penalties for cannabis-related activities, excluding the following:

  • the possession of up to 1 ounce of cannabis for personal consumption

  • the use of cannabis in a non-public place such as a residence or a public establishment licensed for on-site marijuana consumption

  • the personal cultivation space of up to 25 square feet

The law also allows local government to regulate the commercial production and sale of cannabis and impose taxes and fees to raise revenue.

Why I Support Legal Marijuana
By GEORGE SOROS
Wall Street Journal
October 26, 2010

Our marijuana laws are clearly doing more harm than good. The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.

Law enforcement agencies today spend many billions of taxpayer dollars annually trying to enforce this unenforceable prohibition. The roughly 750,000 arrests they make each year for possession of small amounts of marijuana represent more than 40% of all drug arrests.

Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually. It also would reduce the crime, violence and corruption associated with drug markets, and the violations of civil liberties and human rights that occur when large numbers of otherwise law-abiding citizens are subject to arrest. Police could focus on serious crime instead.

Read More...

If passed, investors involved in California's new cannabis trade have the opportunity to take a piece of a global market worth over $150 billion.

I already mentioned the colossal gains possible from the cultivation and sale of cannabis.

However, I highly suspect that these profits will be cut down significantly if marijuana is legalized in California due to licenses, regulation, fees, taxation, and the potential drop in commodity prices as supplies may increase.

And just like during the California gold rush of 1849, I expect that the prospectors who make the most money will be those supplying the trade.

During the '49 gold rush, the legendary merchant Sam Brannan became California's richest man without mining a single nugget.

Immediately after hearing of the discovery of gold in California, Brannan cornered the market on mining supplies.

He went around to major distributors in San Francisco and bought all the available supplies the miners would need, including pick axes, shovels, and pans.

Then, after the word of the new gold discovery rapidly spread and thousands of hopeful prospectors migrated to California, Brannan sold the mining supplies for a massive markup.

For gold pans he paid $0.20 for a few months back, he could now sell for $15.00.

Brannan made the equivalent of $900,000 in the first two months.

And I expect that similar forward-thinking investors will be rewarded the most again, as California's potentially brand-new cannabis industry will need to buy supplies and services from others.

During the 1849 California gold rush, miners needed shovels and pans...

During the 2011 California “emerald gold” rush, cultivators, distributors, and retail sellers will need everything from growing supplies to packaging to technology.

The opportunities to invest in public companies that may be significantly affected by the passing of Prop 19 is very limited right now to some medical marijuana dispensary service firms, one or two supply companies, and handful of pharmaceutical cannabis hopefuls.

Nevertheless, the hype behind Prop 19 has already driven up share prices of several marijuana-related stocks — including one that has increased over 20,600% since the measure qualified to be on the November 2nd statewide ballot.

And the passing of the bill will likely boost share prices further.

So with that in mind, here are 5 marijuana stocks that could see gains if Proposition 19 is passed...

Not the stuff they smoked at Woodstock...

The high-end cannabis in production today is genetically engineered to provide the consumer with a wide variety of styles and flavors that aficionados compare to the subtle appreciations for fine wines, cigars, and even caviar.

Scientists have even gone beyond providing the consumer with unique flavors. Users can now customize their cannabis experience with effects ranging from relaxed and calm... to happy and energetic... to increased focus and concentration... to elevated creativity and imagination... to enhanced bodily sensations.

Here is a short list I found on the Web of 10 popular cannabis strains on the market today, and their genetically-customized effects: http://crazycannabiscolors.blogspot.com

 

Five Marijuana Stocks to Play Prop 19

oct 2010 cbis

Cannabis Science, Inc.
(OTC BB: CBIS)
Share Price: $0.15
Market Cap: $13 million

Cannabis Science is a San Francisco-based biotech company that engages in the research and development, production, and commercialization of pharmaceutical cannabis products to target a wide array of critical illnesses.

The firm recently announced it will be implementing a pharmaceutical grade cannabis product development and quality control standards.

oct 2010 coin

Converted Organics Inc.
(NASDAQ: COIN)
Share Price: $0.49
Market Cap: $28 million

Converted Organics produces, distributes, and sells organic fertilizer made from food waste recycling.

The company uses a proven state-of-the-art technology to create a product that helps farmers and gardeners grow healthier food crops, land owners grow safe, beautiful lawns, and improves environmental quality.

In July, Converted Organics acquired TerraSphere, a company that plans to secure a license to cultivate medical marijuana in Rhode Island. If granted the license, TerraSphere will use vertical farming technology to produce pesticide and chemical-free plant products.

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oct 2010 gw

GW Pharmaceuticals Plc
(Pink OTC: GWPRF)
Share Price: $1.53
Market Cap: $201 million

GW Pharmaceuticals is aiming to become a global leader of prescription cannabinoid medicines through the rapid cost-effective development of pharmaceutical products.

The company is currently developing a portfolio of cannabinoid medicines, of which the lead product is Sativex — an oromucosal spray for the treatment of MS symptoms, cancer pain, and neuropathic pain.

oct 2010 ecid

Ecoland International Inc.
(OTC BB: ECIT)
Share Price: $0.30
Market Cap: $27 million

Ecoland International is developing a business to mine, transport, distribute, and sell Dry Bar Cave Bat Guano from deposits in Southern Africa, with special interests in Angola and Mozambique.

This special bat guano is rapidly becoming an incredible valuable commodity as a high-end fertilizer among the expansion of organic farming, and the increased demand for organically grown fruits and vegetables.

oct 2010 llux

LC Luxuries Ltd
(Pink OTC: LLUX)
Share Price: $4.15
Market Cap: $40 million

An investment company that used to sell beauty products, the company changed recently name to LC Luxuries and acquired U.S. Cannabis, Inc., which manages medical marijuana clinics.

They recently signed a letter of intent with Synergistic Resources to control marketing and advertising for ten medical marijuana clinics.

The company is also seeking to acquire Weedmaps.com, an online community where medical marijuana patients connect with others in their area to discuss and review local cannabis co-ops, dispensaries, medical doctors, and delivery services.

Conclusion

The profit margins from the production and sale of cannabis can be outrageous.

But for now, they're simply out of reach for investors like us...

If Proposition 19 is passed, I believe the new cannabis market will require significant supplies and services for the manufacturing, packaging, transportation, distribution, and sales of that special smelling commodity.

This could lead to new steady revenue stream for companies that support the industry.

As I mentioned earlier, however, the opportunities to invest in public companies that may be significantly affected by the passing of Proposition 19 is very limited right now.

The stocks that we talked about today may temporarily jump if the voters of California pass Prop 19, but I don't see any real future potential in any of them.

Good Investing,

luke_signature.gif

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits

¹$55/0.125 oz = $7,040 per pound
²$80/0.125 oz = $10,240 per pound 


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