Marijuana's Most Shocking Numbers
From the very start, people have taken for granted that the cannabis trend in North America today was exactly that: a trend.
So when the correction began, and stocks began to droop, and the North American Marijuana index lost close to 50% in the space of a year, many on that side of the argument felt vindicated.
What these naysayers may not know, or at least be willing to admit, is that the cannabis market is anything but a trend in North America.
Irrational investor exuberance notwithstanding, the strength of cannabis demand has been ramping up for years and will continue to do so.
Here are just a few pieces of evidence:
The state of Nevada earned more than $100 million in revenue from the cannabis industry during the 2018/19 financial year for a year-on-year increase of 33%. Licensing fees brought in an additional $10 million.
Across the U.S., legal marijuana is expected to cross the $75 billion mark within five years, making it 80% larger than the music industry and 50% larger than the movie industry.
A decade ago, this figure would have been less than $3 billion.
A regulated dispensary costs an average of just under $800,000 to set up but averages more than $3 million in revenue.
18% of Americans aged 18–29 consume cannabis.
Marijuana-related jobs are projected to increase 22% annually through at least the year 2020, with median salaries outpacing that of the average American worker by 10%.
In 2018, the biggest and oldest state market for recreational cannabis was California, with $2.75 billion in sales.
The most recent addition to the recreational weed club, Massachusetts, pulled in $106 million in 2018, its first full year of total prohibition reform.
As of 2017, there were more than 9,300 active dispensaries in the U.S., which is starting to approach the number of McDonald's restaurants, which stood at 14,000.
Despite the ballooning number of cannabis-related businesses and the billions they generate, any one of them can still be raided by the DEA for violations of federal drug laws.
The eye-catching imbalance represented in that final statistic is what should be of most interest to those looking to predict the next stages of the market.
All of the patterns weigh against prohibition continuing, including the most telling one of all: two-thirds of American adults support ending prohibition on a federal level altogether.
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A Buzzkill for Investors
Despite this, the marijuana index is down, and down big.
Is too much investor excitement to blame? Certainly. Will the market eventually catch up with expectations and grow, naturally and sustainably, to justify and even exceed previous highs?
Without a doubt.
And that makes right now the most important time for cannabis investors.
Because after the bloodletting that some of the biggest stocks have given shareholders over the past 12 months, you can bet that the weak hands are out of the market and the bottom has been struck.
The smart investor will likely put his money back into Canopy, or Tilray, or one of the other mainstream, big-exchange stocks.
It was these companies, after all, that took some of the biggest hits.
Looking to the Future
But the smart and courageous investor will dare to go smaller, into a corner of the market where only venture capitalists and angel investors dare to set foot.
Because it's these as-of-yet unknowns that will build the foundation of tomorrow's cannabis market and grow as the true golden age of legal marijuana takes hold in a post-federal prohibition United States.
And I think it could ride the next cannabis wave straight into mainstream brand recognition.
Fortune favors the bold,
Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.
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