 |
In my most recent Money and Markets articles, I’ve put you on the inside track about a rapidly growing, yet mostly still under-the-radar, industry. One that the world’s super-rich are quietly funding with their own money, in pursuit of potentially eye-popping investment returns.
I then told you that industry was the legal cannabis business.
What’s more, I reported that, according to reputable market research, the legal marijuana industry in the U.S. was a $3.4 billion business in 2015. In 2016, this market doubled to $7.1 billion.
Now, two major studies show that legal marijuana sales will top $40 billion in the U.S. over the next five years. That number could surge to $50 billion over the next decade … or sooner.
Marijuana is legal in more than half of the states in the U.S., for medicinal and even recreational use. With marijuana going mainstream, some of corporate America’s most-profitable and high-profile industries are recognizing the threat marijuana poses to their profits.
And they are starting to fight back in a big way …
Last week, you learned that the marijuana industry’s biggest enemy is not the Trump administration or U.S. Attorney General Jeff Sessions.
Rather, it’s the Big Pharma companies like Teva Pharmaceuticals (TEVA), Pfizer (PFE), Johnson & Johnson (JNJ) and Allergan (AGN). Companies with big stakes in the pain-treatment game.
But the legal-pot business faces another formidable foe.
Just like Big Pharma, the booze business is scrambling to protect billions of dollars of its own revenue.
Yes, ironically, that’s the very same industry that made Joe Kennedy Sr. rich. If you’ll remember from my May 26 article, alcohol sales funded the Kennedy family fortune when Prohibition was repealed in the U.S. in the 1930s.
And now, the big players in the alcohol business are beginning to push back on the marijuana legalization initiative.
Here’s why …
If the estimated yearly demand for marijuana is in the right ballpark, then more Americans crave cannabis than cabernet or candy bars.
This puts the potential market for recreational marijuana in the Big Three of America’s vices … trailing only cigarettes and beer, as shown below.
The booze business’s paranoia seems to be justified, according to data from well-regarded Wall Street investment research firm Cowen & Co.
That’s because the number of drinkers who also smoke cannabis has increased over the past decade. At the same time, the number of cannabis smokers who drink has declined.
Indeed, Cowen analyst Vivien Azer said the alcohol industry is the group that could lose the most if marijuana is legalized at the federal level.
All told, Cowen estimates that the recreational pot industry will reach $50 billion in sales by 2026.
“There is real risk to alcohol consumption,” Azer said. “If consumers are going to dual use, I would expect that they would moderate their alcohol consumption to accommodate the addition of a second social lubricant.”
“We believe alcohol could be under pressure for the next decade, based on our data analysis covering 80 years of alcohol and 35 years of cannabis incidence in the U.S.,” Azer wrote in a note to clients. “Since 1980, we have seen three distinct substitution cycles between alcohol and cannabis; we are entering another cycle.”
Following on, she noted that during the three most recent cycles of alcohol consumption, there was a “notable inverse correlation with cannabis use.”
Moreover, alcohol consumption in the 18- to 25-year-old demographic has declined for five straight years (through 2015). Meanwhile, marijuana usage has increased.
Here’s a chart that Azer used to make her point …
Armed with this information, Cowen recently lowered its rating on Molson Coors (TAP) from “Outperform” to “Market Perform.” It also reduced its TAP price target to $105 from $120, saying the beer company’s sales will suffer due to increasing marijuana use in Canada.
But there’s even more bad news for the booze industry …
Some 27% of beer drinkers said they have already substituted cannabis for beer … or would make that switch if marijuana was legal in their state.
That’s according to a recent report from the Cannabiz Consumer Group (C2G). C2G is a market research firm that specializes in forecasting the impact of cannabis on consumer spending.
|
What Wall Street insiders don’t want you to know: Why the U.S. stock market is slated for sudden destruction — but only AFTER it spins off two massive fortunes for investors who make the right moves now: Read more here … |
C2G says that brewers — who in 2015 sold more than $105 billion worth of beer — stand to lose the most from the trade-off between alcohol and marijuana. Specifically, about $2 billion annually. They also note that wine and hard-spirits sales will be affected.
Ultimately, their research analysts project, “Cannabis will cost beer 7% of its market and create a new $50 billion industry.”
$50 billion is nothing to take for granted!
And with $50 billion at stake, it’s no wonder the alcohol industry has been caught multiple times lobbying to keep pot illegal.
Since it’s likely only a matter of time before consumers decide to “fire one up” instead of “turning one up,” you should consider adding some marijuana stocks to your portfolio.
But with more than 200 marijuana stocks currently available on the publicly traded markets, you’ll need to do your homework, be selective and carefully consider your own risk profile.
Best wishes,
Bill Hall
P.S. These Products are so Provocative: At this very moment, a small handful of rogue companies are quietly creating armies of new millionaires. They’re doing it by producing things your mother warned you about: Products some claim are “sinful” … “forbidden” … even “scandalous.” Read more here …
Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.
{ 13 comments }
There is another group affected. Private prison companies. no morearrests and incarcerations, jails and prisons will have more room.
Did you give any direction for the purchase of stocks or for shorting companies in your messages to your subscribers? Safe Money that is.
Bill,read an article at option pub where you named five marijuana stocks to own,could you name those in this article, and if can’t, would you send me those names. Thanks
Oh man decisions, decisions. To be stoned or drunk. That is the question. Whether it is nobler in the mind to be stoned or drunk? Sorry Willie S.
You are on the right track ! I like that term “social lubricant” lol thats good.
what we would need to do to help fight off the lobbyists would be to list who and how much they are throwing at the negativity about marijuana and all the untruths that they are spreading, as well as the names of all the congressmen and women that are keeping their heads in the sand(and asses in the air) that are fighting the legalization and how much they have invested in the BIG PHARMA and ALCOHOL INDUSTRIES . by exposing them the public will see better who is trying to hoodwink who.
lets see the drugs from big pharma kill you in many ways while masking one problem at a time ,and the alcohol is constantly killing your liver and other internal organs.
I think the marijuana is the much safer choice of the three!
I think your thesis is flawed. The alcohol industry has done quite well in spite of the cannabis industry becoming mainstream as a result of legalization.
Supply and demand has been with us in a very big way every since the Vietnam Nam war.
Welcome to the Dumbing of America
Marijuana use directly affects the brain — specifically the parts of the brain responsible for memory, learning, attention, decision making, coordination, emotions, and reaction time.
These vices (drugs) will always be available no matter what governments do. When they are black market (taboo) that brings out more “thrill seekers” and black marketeers to serve them, but always in a more dangerous, underground economy. Remember Prohibition and the likes of Al Capone?
In some ways it is “survival of the fittest” ala Darwin. There are several places in the world where monkeys share an urban habitat with humans. Some of the monkeys will steal an alcoholic beverage if they can. A study was done, can’t find it for you now, that showed 10% of the monkeys were serious alcoholics while 10% of the monkeys would NOT drink alcohol even if a drink was freely given. The same as human populations.
The chart above labeled “Sales So High” shows the 5 of the most common drugs that Americans are exposed to every day: Alcohol, Tobacco, Cannabis, Chocolate and Sugar. But leaves out Caffeine (Coffee, Tea and Soda). And Yes all of these are DRUGS. And all of them impact health one way or another.
Alcohol, Caffeine and Sugar certainly affect “memory, learning, attention, decision making, coordination, emotions, and reaction time.”
PLEASE believe me when I tell you that Alcohol is worse than Cannabis.
And to Dee who wrote in on June 16,2017 that marijuana directly affects the brain-specifically the parts of the brain for memory, learning, attention,decision making, coordination, emotions, and reaction time. Alcohol kills more brain cells. How many times have you heard “black out drunk.can’t remember where you parked you car, been around a obnoxious drunk and watched someone who has had 2 or 3 drinks that couldn’t pass a sobriety test.
Your link to the article you wrote about incredible +500% profits in 3 months! of some companies, you seemed to leave out where those companies are today, Most are barely above where they were before the ~3 month skyrocket gain. Are you able to bail once these incredible jaw dropping gains are made? How will you know when it’s the right time to take profits? Do you use trailing stops or Stop on Quotes? I understand these are hypothetically possible, but anyone with an ounce of common sense doesn’t believe you’re capable of these gains. Be upfront and honest.
DEE you just described ALCOHOL ! yet you seem to think that the “satanic marijuana” is evil…..which one kills more people every year? weed or alcohol? THE ANSWER..ALCOHOL
yet it is legal and the governments rake in plenty of money from it. Makes you think…could it be that the government is more focused on population control and money than on the peoples health and longevity of life. they seem to keep the “weapon of mass destruction” running and prospering ,yet it is actually killing people not helping them (except to an early grave) we are talking about BIG PHARMA! and the ALCOHOL industry which are both being used to control the population so there will not be all those “old decrepit people” bleeding the governments coffers away with things like pensions and healthcare!!! o and by the way ,the pensions are not YOURS they seem to be the GOVERNMENTS and THE BIG BANKS ,yet all the money was TAKEN from your income over and above the taxes you pay! so does the government have YOUR BEST INTEREST in mind when they are creating all the loopholes to screw you some more?
I THINK THEY HAVE THEIR OWN IDEAS IN MIND !
OPEN YOUR EYES!!!! WAKE UP AMERICA!!
You hit the nail square in the head.everthing you said is true. Some people can’t see the trees for the forrest. Before the start running their mouth they need to remember the new saying “Fake News” Theygobble it up like a fat kid eating cake.
Back in the 60’s and early 70’s I started drinking (underage) and terrorize the countryside drag racing hitting signs with beer bottles while driving, hunting and shooting any and everything from butterfly’s to song birds. Stayed in trouble, fought and ran wild like a loose cannon. Then in 1972 I was turned on to getting High (smoky pot). Laid the alcohol aside. Only trouble I got into was breaking the law getting High(never got caught) Hell the local bar(hang out in the small town) the owner said it was killing beer sales. He used to get mad when I would go in Stoned and order a coke. Yes it can be a gateway to harder drugs just like beer to whiskey. But I honestly feel that that gateway is the person not the substance. Look at the people that started on beer and then graduated to hard liquor. Then I became a responsible person and laid the pot down and become a social drinker not an alcoholic. Now my Liver is paying for it even though I didn’t drink that much. Oh I know most of you will say “Well Hell he was a loser anyway but the damage was done by legal prescription drugs due to an illness and fried food. Not alcohol. And yes I worked hard my whole life and way rewarded by my hard work. If I could do it over I would have left the booze alone and stuck with the pot. Never wrecked a car or got a traffic ticket smoking pot. This is not just my personal dealings with the two above mention vices. I’ve seen the same thing with hundreds of people. Never was a Pallbearer at a friend funeral because he got high. I’ve been around and as God as my witness Alcohol has broken up more homes, ruined my lives and killed more people than pot. So before you start passing judgement turn up that drink and think about it.