This Little-Known Fact Creates Big Opportunity for Pot Investors

Have you heard of the “Green Silicon Valley”? That’s where I recently traveled, to get a firsthand look at the legal-marijuana industry.

I wanted to see for myself whether the cannabis market represents as big a potential money-making opportunity as I’ve been hearing.

That’s not necessarily the word on the street … or on Wall Street, for that matter. Rather, it’s coming from family offices and private-equity firms across the U.S.

After my intensive four-day research trip to Denver, I can tell you there is indeed a green gold rush happening in America. And that Colorado is the epicenter of it.

It was indeed an eye-opening trip! And today I’m going to pass along an important research nugget that I learned during my time there. One that could make your wallet a little fatter.

But first, let’s go through a brief review:

In last week’s column, I explained how — in many ways — today’s marijuana market resembles the tobacco market before it matured. Before cigarettes were mass-produced and sold through vast distribution networks.

I also showed you one of my favorite charts that reports why Big Tobacco is eyeing the possible treasure trove that legal marijuana represents. It’s such a big deal that I’m going to show it to you again.

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If this yearly demand estimate of recreational marijuana is on point, then pot will be in the Big Three of America’s vices … trailing only cigarettes and beer.

And as the captain of the Safe Money ship, I know that these so-called sin stocks that satisfy America’s vices can lead to huge family fortunes. If you want to know more, check out my article about how Old Joe Kennedy cashed-in BIG when Prohibition was repealed in the U.S. in the 1930s.

But let’s turn back to the present and the current sin-stock opportunities. And let’s revisit why today’s Big Tobacco companies – with their well-documented track record of generating enormous profits under intense scrutiny — have their eyes set on the whole marijuana pie. Rather than just a piece.

After all, the newest generation of the tobacco management elite already know how to distribute a controlled substance. Funneling marijuana through the same production and distribution channels as tobacco makes a lot of sense. Especially to state regulators, who are itching to slap a big tax on legal marijuana sales.

Indeed, Big Tobacco has the trucks, routes, employees and established systems in place to account for and collect all the new tax revenue that will potentially come rushing in.

Now, I’m going to share with you a little-known fact about the marijuana business. I learned this from an industry insider during my recent Colorado trip …

This gives tobacco companies yet another competitive advantage to cash-in on what could be the next American gold rush. And it gives you the opportunity to profit as well …

The information came directly from a pot industry executive of a publicly traded company. It came up during a conversation we had at his growing and production facility.

It’s something that few in the popular press are even talking about.

Here’s what he shared …

Marijuana-infused edibles account for a whopping 30% of all retail cannabis sales in Colorado. These are rapidly becoming the most-desired product on the legal-marijuana market.

Why? It’s because edibles are highly appealing to consumers trying to use marijuana with discretion. They are attracted by the advances in scientifically perfected taste and dosage delivery.

Consider this: It’s a lot easier for individuals to pop a tasty, low-THC mint (THC is the active ingredient in marijuana) than it is to light up in front of their workplace.

That means the companies that manufacture THC-infused cookies, gummies, brownies, caramels, hard candies, chocolates, Rice Krispies treats and more are racking up big sales numbers.

Depending on their margins, they’re racking up big profits too.

What’s This Got to Do With Big Tobacco?

As I reported in my June 23 article, far fewer Americans are smoking cigarettes currently than they have in the past. But what I didn’t tell you is that, despite the decline in smokers, U.S. tobacco revenue has been climbing.

Check out this chart from The Wall Street Journal:

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Sure, tobacco profits are soaring. But cigarette price increases have been the primary reason the industry has been on its recent roll.

But when you dig deeper, there is a “bright spot” where sales volumes are increasing. And that’s in smokeless tobacco.

The “U.S. Smokeless Tobacco Market Report 2017,” published by Market Research Hub, presents some intriguing statistics. Smokeless tobacco volume accounted for around 16.8% of overall tobacco products sales in 2016. That represents an astonishing gain of about 40% over the past 10 years.

Indeed, industry experts are reporting that more and more consumers are turning to smokeless tobacco products like Skoal, Copenhagen and Levi Garrett to get their nicotine fix by “dipping” snuff or chewing a wad of shredded leaves. That’s because by holding an average-sized tobacco plug in their mouths for only 30 minutes, they end up with as much nicotine as if they had smoked four cigarettes.

In fact, smokeless tobacco products are like marijuana-infused edibles in that they also get the THC into their body at higher concentrations. With smoking, only 50% to 60% of the THC can get into the bloodstream.

Bottom Line: Big Tobacco possesses enormous production and distribution advantages when it comes to scaling the marijuana industry across America. It also has experience with manufacturing and marketing ingestible products that consumers will buy even in the face of stiff taxes and regulation.

Once Big Tobacco moves in, they’ll likely use their consolidation experience to snap up the smaller companies — both public and private — that are experienced in the fast-growing edibles segment of the marijuana market.

With more than 200 marijuana stocks currently available on the publicly traded markets, you can potentially profit by focusing on the producers of marijuana cookies, candies and cakes. But you’ll need to do your homework, be selective and — here’s this week’s big tip — look for companies with bakers and pastry chefs on their payrolls.

Best wishes,

Bill Hall

P.S. Don’t forget Sean Brodrick, my natural resource specialist and I just put the finishing touches on “Marijuana Fever!” — the eye-opening investigative report we designed to help you seize this once-in-a-lifetime profit opportunity … 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.