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In my last two Money and Markets articles, I’ve put you on the inside track when I revealed that “family offices” — the preferred investment platforms for many of the world’s mega-millionaires and billionaires — are quietly funding the rapidly growing legal marijuana business.
They are increasingly attracted to the industry’s potential eye-popping returns. And it’s easy to see why.
Last week, we talked about how Peter Thiel’s $2 billion San Francisco venture capital firm Founders Fund recently made a multimillion-dollar investment in Privateer Holdings. Privateer is a private marijuana company that holds the Marley Natural brand. (Named after late reggae singer Bob Marley.)
Thiel is well-known in Silicon Valley as the co-founder and former CEO of PayPal (PYPL). His Founders Fund was an early backer of Facebook (FB). So when Thiel places a bet, many investors know that it could pay off nicely to follow his lead.
We also talked about how Joe Kennedy Sr. turned Prohibition repeal into a goldmine for his family. And how marijuana could right now be where alcohol was just before Prohibition was repealed.
I also reported that, according to reputable market research, legal marijuana was a $3.4 billion business in 2015 in the United States. In 2016, the U.S. legal marijuana market doubled to $7.1 billion. And two major studies show that the legal marijuana industry will top $40 billion in the U.S. over the next five years.
So now you know who is supporting the legal pot business with their own money and why. It’s also just as important to understand who is against it … and why they are protecting their turf in what could turn out to be a battle over billions of dollars of revenues.
I think you’ll be shocked to learn who one of the biggest opponents to medical marijuana is. I know I was.
No, the marijuana industry’s biggest enemy is not the Trump administration or U.S. Attorney General Jeff Sessions. It’s the Big Pharmaceutical companies like Teva Pharmaceuticals (TEVA), Pfizer (PFE), Johnson & Johnson (JNJ) and Allergan (AGN)!
That’s because if the federal government finally allows medical marijuana to become a legitimate part of the healthcare industry, Big Pharma could lose billions of dollars, a new report finds.
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The report, released in the Health Affairs journal, was compiled using a study conducted by researchers at the University of Georgia. It showed a dramatic decrease in Medicare prescriptions in states where medical marijuana is legal.
Their findings are summarized in the chart below:
The study, which was first outlined by the Washington Post, helped stir up the debate over how a legitimate cannabis market might be able to reduce the national opioid problem.
That’s because the University of Georgia data shows when medical marijuana is available, pain patients are increasingly choosing pot over powerful — and potentially deadly — prescription narcotics.
Specifically, the researchers found that — in the 17 states with a medical-marijuana law in place by 2013 — prescriptions for painkillers and other classes of drugs fell sharply, compared with states that did not have a medical-marijuana law.
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In fact, the drops were quite significant …
In medical-marijuana states, the average doctor prescribed:
- 265 fewer doses of antidepressants each year
- 486 fewer doses of seizure medication
- 541 fewer anti-nausea doses, and
- 562 fewer doses of anti-anxiety medication.
Get this: In the U.S., we currently consume more than 84% of the entire worldwide supply of oxycodone … and almost 100% of hydrocodone opioids.
Prescription-drug manufacturers like privately held Purdue Pharma made more than $27 billion in revenues from OxyContin alone since 1996.
In fact, in 2007, Purdue paid one of the largest fines ever levied against a pharmaceutical firm for mislabeling its product OxyContin. Three executives there were found guilty of criminal charges.
Considering all of this, it seems the pharmaceutical trade has more than enough reasons to fear the legalization of marijuana.
An analysis conducted by the folks at New Frontier Data makes a surprising prediction. That is …
The legal use of cannabis products for ailments ranging from chronic pain to seizures could cost marketers of modern medicine somewhere around $4 billion per year.
Look, I am NOT on a crusade for legalized pot. Personally, it’s not my thing.
But as a professional investor with more than 30 years of Wall Street experience, I’ve been trained to set my personal biases aside. When I take a dispassionate view, I can best evaluate money-making opportunities for my clients.
Big Pharma has not taken the challenge to its bottom line from the weed industry lightly …
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And the fact that it has openly lobbied against the medical-marijuana business — and in some instances donated large sums to fight legalization — has caught my eye.
What’s more, CBS News reported that a whopping 76% of doctors favor legalized marijuana. So, it’s only a matter of time before patients choose pot instead of morphine. And this represents a potential treasure trove of revenues for medical-marijuana companies.
With more than 200 marijuana stocks currently available on the publicly traded markets, you have a chance to participate, too. But do your homework, be selective and — here’s this week’s big tip — look for companies that have a leg up in the medical-marijuana business.
Best wishes,
Bill Hall
P.S. Want to learn more about how marijuana stocks can provide money making opportunities? 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.
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Bill, From your previous reports,still waiting for that buy signal?You mention the 5 tops ,is it go time?Thank You, Norbert
I agree and would like to know what company that investments in this. As well as China’s oil. Thank you.
Would like some specific marijuana recos; some individual stocks as well as an etf.
As a subscriber to Safe Money Report I would appreciate your suggesting one or more companies to consider for investment that have a leg up in the medical-marijuana business. For the average investor it is extremely difficult to evaluate these companies.
Thank you for a great service, Harry
“Patent Medicines” (which is what they really are), often cause more problems from side-effects, which then may need another patent medicine to ease those effects. It is a never ending cycle, and very profitable for those with government ordered monopolies on the “cures” (which often don’t actually cure, but merely relieve symptoms).
Would you recommend any marijuana stocks at this time?
Interesting that most of the pill consumption decrease is in the areas where just making someone “s—faced” or “high” whether with pot or alcohol or whatever is all that is needed to affect the mental aspects of the “syndrome” BUT in the disease where a real physical benefit has been shown that the medical usage actually increases (glaucoma)!
I guess if you can treat a real physical abnormality without becoming blotto normal people will choose the pill and a normal life.
Most people I hear of get a medical marijuana permit so they can legally get pot to get high!
BUT, just like alcohol stocks are among the BEST I’m sure pot will to but not for treatment!
The pharmaceutical industry can huff and puff (pun intended) as much as it wants about the need for strict scientific control over weed development and distribution. Given the proven hardiness of the illegal weed industry, however, it seems likely the drug industry will sooner rather than later turn to it’s usual smarmy campaign of acting in the public interest to co-opt weed use. While the pharmaceutical industry has proven itself supremely good at this little ruse, one can only hope that lawmakers have the moxie to see that legalization will only work if in fact it works for end-users who, through many decades of making their way have also shown themselves supremely successful in running their own show. In light of this, one has to think the most successful pot businesses will be run by entrepreneurs with, to use another pun, the “head” for weed culture. Hopefully those not so inclined will do everyone a favor and lose their collective shirts. Yes, this could prove revolutionary, but hey, why not? After all, legalization is happening, not due to desperation in the pot community, but rather it’s outstanding success – success that has never been threatened by either police action or the pharmaceutical industry.
Big Pharma is TERRIFIED of legalized cannabis! Here’s why- “Substituting cannabis for one or more of alcohol, illicit drugs or prescription drugs was reported by 87% (n = 410) of respondents, with 80.3% reporting substitution for prescription drugs, 51.7% for alcohol, and 32.6% for illicit substances.†From “Substituting cannabis for prescription drugs, alcohol and other substances among medical cannabis patients: The impact of contextual factors†(PubMed – 2015).
“The three main reasons cited for cannabis-related substitution are “less withdrawal†(67.7%), “fewer side-effects†(60.4%), and “better symptom management†suggesting that many patients may have already identified cannabis as an effective and potentially safer adjunct or alternative to their prescription drug regimen.†From “Cannabis as a substitute for alcohol and other drugs: A dispensary-based survey of substitution effect in Canadian medical cannabis patients†(Informa – 2013).
So what happens when 8 out of 10 folks start growing their own medicine? And at just weeks shy of being 70 years old, the only pharmaceutical I use is thyroid pills, and thyroid insufficiency just runs in my father’s side of the family. Cannabis takes care of all the rest!
I get a laugh out of the freeloaders who are not SMR subscribers but want “picks” from a disguised advertisement.