California's Cannabis Investment Boom

Last week, the DEA denied a bid to reconsider how it treats cannabis under federal law.

Currently, cannabis is considered a Schedule I drug, meaning that it offers no accepted medical use and has a high potential for abuse. Heroin and LSD are considered Schedule I drugs.

Some folks thought the DEA would re-schedule cannabis in accordance with, well, common sense and logic. But it didn’t. And boy, were people pissed off. Especially investors who are bullish on legal cannabis.

But the truth is, that DEA decision is pretty much irrelevant.

You see, over the past few years, the growth we’ve witnessed in the legal cannabis space has occurred under the watchful eye of the DEA, anyway. And for the most part, the DEA has been unable to do anything about it.

As it stands, the DEA is not authorized to use federal funds to prevent states from implementing their own state laws that authorize the use, distribution, or cultivation of medical marijuana. It’s an abused pit bull with no teeth! Meanwhile, state laws continue to replace the fed’s misguided policies.

Tipping the Scales for Cannabis

Today, medical cannabis is legal in 25 states and the District of Columbia.

By the end of this year, that number could reach 34.

So basically, in less than five months, medical cannabis could be legal in 70% of the states in the U.S.

Moreover, of the nine states that have cannabis initiatives on ballots in November, five are seeking to legalize on a recreational level. That would bump up the number of states legalizing recreational cannabis to nine, as recreational cannabis is now legal in Colorado, Oregon, Washington, and Alaska.

The five states looking to legalize on a recreational level this year are: Arizona, Nevada, Massachusetts, Maine, and California. The latter, by the way, is the most important.

Here’s why…

California Dreaming

California is the eighth-largest economy in the world.

It’s so big that, according to the state’s Department of Finance, the state could end up generating more than $1 billion a year in tax revenue from legal cannabis alone. That’s billion, with a “B.” And according to ArcView Market Research, with recreational cannabis sales in place, by 2018, the total state market for cannabis could reach $6.6 billion.

To put that in perspective, the legal market in the entire U.S. totaled $5.7 billion in 2015.

But what’s happening in California is bigger than just California.

You see, if California legalizes recreational cannabis this year, this will mean there would immediately be 53 House members representing districts that would benefit from reformed cannabis laws on the federal level.

Essentially, California could tip the scales for nationwide legalization. And if you think we’ve made a wad of cash in the cannabis space over the past couple of years in defiance of the federal government, just imagine how much we’re going to make when the Fed finally relents.

Of course, nothing’s set in stone, and there’s no guarantee the California measure will pass. Although I am bullish.

Still, if you’re looking for a little less risk in the legal cannabis space, continue to focus on Canada, where this mighty and wonderful plant will be legal, both medically and recreationally, across the entire country.

Canadian cannabis companies like Canopy Growth Corporation (TSX: CGC), OrganiGram (TSX-V: OGI), Mettrum Health (TSX-V: MT), and Aphria (TSX-V: APH) have been crushing it over the past year and will continue to benefit handsomely from legalization in Canada.

Whether or not you agree with the legalization of cannabis, there’s no denying the fact that the legal cannabis market will be one of the greatest investment opportunities of the 21st century. So I do hope you’re taking full advantage while we’re still in the earliest stages.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.