Investing in Energy and Cannabis
The Dirty Secret the Pot Industry Doesn’t Want You to Know
It’s rarely discussed, yet it’s one of the greatest financial burdens the cannabis industry faces.
And no, I’m not talking about the federal prohibition on cannabis.
Truth is, prohibition has less than five years left before it’s repealed.
Thanks to the simple fact that legal cannabis is bolstering local economies while delivering hundreds of millions of dollars in tax revenue, cannabis will soon be legalized across the entire country — just like it will be in Canada on July 1, 2018.
And as you know, California, which is the sixth-largest economy in the world, is set to legalize on January 1, 2018.
More than half the country now has some form of legalization in place, and this trend is ultimately going to enable all 50 states to legalize cannabis without the threat of a federal clampdown.
Not that this is much of a threat, anyway.
As it stands, the Department of Justice can’t even use federal funds to shut down cannabis operations in states where it’s legal.
It’s actually funny, but when I speak with investors about the legal cannabis market, this is the “risk” they fear the most, when in fact what they should find concerning is something that has nothing to do with the government at all.
Burden or Opportunity?
The cannabis industry already deals with the financial burden of excessive taxation.
No industry is more heavily taxed than the cannabis industry. So when it comes to the bottom line, cannabis growers are already at a huge disadvantage. What further adds to this burden, however, is the very thing that we, as energy investors, profit from: energy.
As reported by cannabis intel firm New Frontier Group, cannabis growers use a massive amount of electricity. We’re talking enough to power 1.7 million homes. This is actually about 1% of the entire energy consumption of the United States. And it’s only going to increase as the industry continues to grow.
Most of this is due to indoor growing operations that use a lot of electricity to power ventilation systems, water pumps, and, of course, heat and lighting.
Today, legal cannabis growers spend $6 billion on electricity. And that doesn’t include illegal operations, which could add as much as another $4 billion to that total.
Think about that for a moment: The amount of electricity necessary to run indoor cannabis growing operations costs about $10 billion. That’s a huge burden... and a huge opportunity.
Two 1,000% Gains
There are two ways to profit from the legal cannabis industry’s insatiable need for electricity.
The first is the most obvious: companies that can provide cost-cutting solutions with things like energy efficiency and conservation technologies, solar installers, and lighting systems that use a fraction of the electricity it takes to power conventional lighting systems.
Another way to play this is to invest in cannabis operators that already utilize technologies that enable electricity cost reductions, as well as companies that focus on outdoor growing. The latter are more abundant in California, where artificial light and heat are unnecessary.
Interestingly, the only cannabis stocks I recommend already rely on the latest energy-efficient heating and lighting technologies.
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One of those companies is Canopy Growth Corporation (TSX: WEED), which I recommended when the stock was trading at $1.60 a share. Today, it’s trading in excess of $19.00, and we’re up more than 1,100%.
We’re also up more than 1,000% on another cannabis producer, Aphria, Inc. (TSX: APH). We got in on that one at $1.13 a share. Today, it’s trading around $13.00.
Of course, these are just two cannabis stocks that members of my Green Chip Stocks community have profited from. There are dozens more. In fact, in my 77-page e-book, “A Beginner’s Guide to Cannabis Investing,” I list more than 40 legal cannabis stocks you can buy right now.
I also go into some detail on these stocks in my “Introduction to Cannabis Investing” video tutorial, which you can watch here.
Although we’ve made a fortune in the legal cannabis space, there’s so much more to come. You just have to know where to look.
Anybody can buy some random cannabis stock, but few know how to pick the winners, or really just how to spot the right indicators that lead to the winners.
Cannabis investors who aren’t paying attention to the electricity angle are going to get burned. But those who are aware of these little but very important details will make a boatload of cash. They already have, and I have the portfolio to prove it. You can get access to that portfolio by clicking here and becoming a member today.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the founder and managing editor of Green Chip Stocks, a private investment community that capitalizes on opportunities in alternative energy, organic food markets, legal cannabis, and socially responsible investing. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.
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