How to Get High on the Cannabis Carousel

If you were hoping we’d point you in the direction of a discreet local dealer…

Or reveal to you a new strain of this super plant GUARANTEED to stone you out of your mind…

Sorry. This isn’t that kind of newsletter, I’m afraid.

Don’t get me wrong; we’re still interested in getting you high.

High…returns.

But let’s face it: making big gains on the stock market is a pretty good feeling all by itself, right?

So when it comes to marijuana stocks, how do you know which ones are set to soar?

Is there a set of criteria specific to this new and relatively unexplored frontier that we can refer to? Is it really possible to make bank on bud?

The initial spread of weed’s legalisation across the US got investors all up in a tizzy. But nobody really understood the landscape.

How could they?

Download your free report to learn ‘Three Golden Rules for Investing in Pot Stocks’.

Suddenly something teens had been smuggling into school lockers since the 1960s was being touted as a medical saviour, a recreational green light…and even an individual right!

The right to get high: it seems like a conversation young people might have at a festival.

But it’s actually taking place in some of the stuffiest lounges of the establishment wheelers and dealers.

Which is why investors should sit up and take notice.

But again, this is an entirely new area. Which is why questions abound like the following:

Is it better to invest in a grower or distributor? Is the whole scene still too legally uncertain for buying stocks with confidence?

And how can you tell one company is better than another when there is no history to compare it to?

We still don’t fully know the answers to these questions, but we can say this:

There’s one particular area where humble Mary Jane is likely to be a shooting star….

Solving the cannabis pain points

Now let’s back up for a second.

Marijuana’s a hot topic in the investing world, and it seems like everyone’s got something to say on it.

From old guys telling you to stay away from what they believe is merely a trend or dangerous ‘investment bubble’, to weed aficionados who clearly have — ahem — non-economic interests in the commodity…

Pot stocks tend to push people’s buttons.

But we believe that — in the midst of this furore, moral signalling and cynicism — one crucial detail is often overlooked…

The fact that marijuana could very well revolutionise pain relief solutions all over the world.

For instance, have you heard of CBD oil?

It’s making huge waves on the internet as a wonder product that can help treat a wide range of symptoms — from insomnia and back pain to anxiety and arthritis.

One popular product, NuLeaf CBD oil, has a five-star rating on a popular review site, with customers citing a similar set of phenomena:

My fibromyalgia pain has gone from a 10 to a 2 and I’ve just started a week ago… I bought the 240 mg and take 2 drops twice a day…

And:

Amazing…I noticed relaxing in my neck and shoulder muscles with minutes of taking 5 drops. And then in about 15 minutes I experienced an overall calmness in my body.’

Let’s be honest — you’ve got no customer more willing to splash out cash on a new premium product than someone who’s in chronic pain…

Someone whose doctors have been unable to help for years.

Then there are those who have chronic skin conditions, but don’t want to keep putting harsh chemicals on their skin to treat their illnesses.

It’s just been announced ASX-listed company, Botanix Pharmaceuticals Ltd [ASX:BOT] is currently running clinical trials assessing cannabidiol-based gels for dermatitis and acne treatment.

As anyone who had to buy Clearasil as a kid will tell you, there’s lots of money in teenage spots!

Botanix wants a piece of the $450 billion US drug market, and if trials are successful, there’s no reason why it can’t get it.

Then there’s the tremendous promise cannabis shows in treating nausea, chemo side effects, HIV symptoms, muscle spasms and a range of other health issues.

This is why marijuana could truly be a new miracle in the biotech sphere…not only in the sense of helping folks, but also in generating huge returns for investors who can see beyond both the cynicism and the hype.

It’s worth noting that though the recreational pot market is a lot larger, medical pot patients are far more willing to pay top dollar for a premium medical cannabis solution.

This opens up a range of high-ticket opportunities.

By this stage, you might be thinking, ‘Well, that’s great for the North Americans. What about here?’

Movements on the Australian front have been slow but steady.

We currently have 28 pot stocks on the ASX, 14 solely operating in weed and the other half only partly involved.

But that number’s only likely to grow in the coming months.

Here’s where we as a nation sit legally:

Money Morning

Source: World Bank/ ABS/ WHO/ UNODC/ Prohibition Partners
[Click to open new window]

As you can see, it’s clear marijuana’s medical use is well on its way to being recognised more than its supposed recreational benefits.

But in general, we’ve a huge cannabis market here across the board

As reported recently (my emphasis added):

In Australia, New Frontier Data suggests the total current cannabis market, legal and illegal, is worth between $4.6bn and $6.3bn, with an estimated 2m users who consume about 391,903kg of cannabis a year.

And a recent bill to legalise recreational marijuana in the ACT has ‘overwhelming support’.

This much is clear…

Cannabis is not a fad. It’s not a short-lived, hyped-up trend. It’s real.

But only those who can separate the reality from the fiction will benefit.

A recession-proof industry?

One last important point…

Cannabis is the kind of all-weather investment that might be one of the few to survive a potential recession.

In the past, prevailing market wisdom suggested fast food and booze stocks were the recession-proof stocks to own when things turned south.

The thinking being that when times are tough, people still eat out and drink alcohol — sometimes more so.

Perhaps we can add cannabis to that mix too?

Good investing,

Ryan Dinse,
Contributing Editor, Money Morning

PS: Download your free report to learn four of the hottest pot stocks on the ASX right now.  Click here to download the free report.


Ryan Dinse is a contributer at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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