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Investor's Guide to the Booming Marijuana Industry

Whether or not you've ever “lit up” or smoked pot in your life, you must be aware that many people do. The 2016 World Drug Report reported that about 182.5 million people, or about 3.8% of the world, used cannabis regularly. 22.2 million of those were Americans.

As medical and recreational use is legalized in the states, this number will grow. Recreationally, marijuana could be as popular and profitable as cigarettes, and possibly more so.

In fact, medical marijuana alone is expected to be a $40 billion industry by 2025, and $100 billion by 2050 if all 50 states legalize. And this doesn't count the growing number of states with legal recreational use.

This chart shows an estimation of cannabis sales through 2020 according to ArcView Market Research:

Mari Sales Growth ArcView

But let's not get too crazy here.

First, let's talk about some companies that are already taking a piece out of this burgeoning market.

Recreation

Okay, forget what I said. Let's get a little crazy.

Rocky Mountain High Brands Inc (OTC PINK: RMHB), previously known as Totally Hemp Crazy, is a company that makes Rocky Mountain High, a hemp-infused drink that sells alongside Red Bull and Monster energy drinks wherever it can be sold.

In 2016, it formed a subsidiary, Rocky Mountain High Water Company, LLC and launched its main product, Eagle Spring Spirit Water. Soon after this, the company announced an agreement with Water Event Pure Water Solutions, an independent water gathering, purification, bottling, and marketing company. RMHB will now be able to bottle and sell both its water and its Rocky Mountain High drinks using Water Event's distribution chain. 

Earlier deals had given the company access to customers in Louisianna, Mississippi, and Northern California.

Soon after that, RMHB announced that it had gained exclusive distribution rights in China, known to be one of the world's biggest markets for, well, pretty much everything. 

Though only seven states and Washington D.C. have legalized recreational use, this small company is looking to make big bucks when the trend spreads. RMHB is also actively working on becoming a fully-reporting stock to get itself off of the OTC markets and onto a major exchange.

And for those who don't want to drink their high?

Privateer Holdings is a Seattle-based company that supports two major recreational cannabis companies: Marley Natural, which is meant to be the the world's first major marketed cannabis brand; and Leafly, the world's largest cannabis information resource. 

Notice both of those mention the whole world being involved.

This is a big market now, but it will only get bigger.

It already has some pretty hefty investors. Peter Thiel, co-founder of PayPal for instance, invested $75 million. And if his previous investments have anything to say about him — Facebook, anyone? — he knows what he's getting into.

But getting a buzz isn't the only use this popular plant has.

Medicinal

Cannabis has been used as a pain-killer and seizure-controlling substance for years, and 28 states (plus D.C.) have already legalized such medicinal uses.

Cannabidiol, or CBD is a strain of marijuana largely ignored by many marijuana enthusiasts because it has little or no psychotic effects (so you don’t get high when using it). Lately it has gained more interest in the public eye due to its ability to help with various diseases.

There has been evidence (although most anecdotal) about CBD greatly helping people with epilepsy, MS, anxiety, schizophrenia, Parkinson’s disease, and chronic pain.

CBD still has to be studied further, and it has not been approved by the FDA, but over 15 states in the U.S. have legalized CBD. CBD is already available by prescription in many countries, including the U.K., Australia, and Canada.

There are over 800 CBD products available on the market, and Forbes reported that the CBD market could grow over 700% if it follows The Hemp Business Journal’s estimate that by 2020 the CBD industry will be worth over $2.1 billion dollars.

It can be difficult to find a legitimate CBD company, but INSYS Therapeutics (NASDAQ GM: INSY) is one of those. INSY is a specialty pharmaceutical company that is working on using CBD in many of their products, with their main focus on creating a CBD oral medication to help children with severe epilepsy. They already have a very profitable medicine on the market that greatly relieves pain in cancer sufferers (not CBD based) and therefore they have money on hand to put into researching CBD products.

GW Pharmaceuticals (NASDAQ: GWPH) is a British company that has been studying and creating more, and safer, uses for cannabis for over a decade.

This company's stock grew by more than 50% in 2016, making it worth about $3.3 billion now.

More investors are throwing their lots in with medical marijuana, in both research and cultivation of the drug.

Remember Privateer Holdings? It runs Tilray, a grower and distributor for Canadian medicinal marijuana.

And here's just one more name drop...

Tom Bollich, creator of Zynga (best known for the now-famous FarmVille and Words With Friends games) co-founded Surna (OTC: SRNA),a company focused on creating cultivation technology for high-quality and efficiently grown cannabis.

To be sure, there are huge gains to be made for the smart investor interested in helping medical marijuana advance on its road to maturity.

Indirect Investments

And for those of you who are still wary of putting money towards a market that isn't entirely legal — yet... it's a fair thing to worry about.

So how can you invest without infringing upon the law?

You can always go the way of Surna (OTC: SRNA): biotech research can focus on making better, more useful cannabis without going anywhere near the distribution and sale laws that are still fluctuating in many states.

There is also the market of real estate. Since the legalization of cannabis in Colorado in 2012, reports have shown that largely unused plots of land have sold and leased for much more than they were originally worth.

Why?

All that legal pot has got to grow somewhere.

For the tech-savvy investor, there is an app for this. MassRoots is a semi-anonymous Instagram-like app that can be found in the Apple store. It can only be used in states where marijuana has been legalized.

It was once banned by Apple but reinstated when its parent company, MassRoots, Inc. (OTC: MSRT) argued against its removal. Since then, it has gained over 900,000 users and even more amateur pictures of cannabis products and accessories.

And for the medically inclined, there is always GW Pharmaceuticals. As the medicinal uses for marijuana expand, so will this company's output.

It's already legal in 25 states to use these new and improved medicines, and more approvals are on the way.

The marijuana business is blooming! Take advantage now while the plant is on the rise.

Good investing,

Keith Kohl

Energy and Capital


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