Despite being one of the hottest investment sectors of 2017, marijuana stocks are still the “weird kid at the party.” They don’t quite fit in…everyone knows it…but you make friends with them…and they go on to found a billion-dollar startup…
That’s what marijuana stocks are—misfits that make millionaires.
The federal government doesn’t even track marijuana pricing.
Unlike tobacco or alcohol, there are no national figures on wholesale prices. Nor are states required to report these numbers in a standard way. It’s all very unusual…
But if the government won’t provide us with data, we’ll find it ourselves. We have obtained a key marijuana report with incredible data points. The numbers are staggering.
They show, for example, that marijuana sales are poised for 300% growth in the next four years. (Source: “Marijuana Business Factbook 2017,” Marijuana Business Daily, May 2017.)
Let’s put that into numbers:
- In 2017, estimates for total U.S. cannabis sales start at $5.1 billion
- By 2021, they could rise as high as $17.1 billion
- Recreational marijuana sales can grow up 300%
- Medical marijuana sales are expected to grow by up to 113%
- Economic impact of dispensaries to grow 180% by 2021
It’s obvious that marijuana will create a whole new generation of robber barons. However, there is undeniably significant political risk in the United States.
Marijuana remains illegal at the federal level and some lawmakers continue to oppose nationwide legalization, including Attorney General Jeff Sessions.
Since Wall Street is bound by federal regulations, it has to restrain itself, keeping the Big Money at bay till the next election.
But don’t panic. There are still hotspots in the marijuana industry.
You just have to look a little north.
Oh, Canada: The Green-Friendly North
In case you haven’t heard, Prime Minister Justin Trudeau promised to legalize marijuana during Canada’s last election cycle. Most campaign promises fall by the wayside once a politician is elected to office, but Trudeau is actually keeping this one.
He introduced legalization a few months ago. The bill will legalize recreational marijuana for adults above 18, and it goes into effect on July 1, 2018 (which is incidentally Canada’s Independence Day).
Four stocks are poised to surge on this historic event—one of them is Aurora Cannabis Inc (OTCMKTS: ACBFF).
Chart courtesy of StockCharts.com
Aurora is a major medical producer in Canada. It has 20,000 active and pending registered patients, which may not sound like a lot, except the company, had approximately ZERO at the start of 2016. (Source: “Aurora Announces Q4 and Full Financial Year 2017 Results,” Aurora Cannabis Inc, September 26, 2017.)
In other words, Aurora recently left the ground floor…but it’s still got a long way to go.
Last year, the company began construction of an 800,000-square-foot facility to increase marijuana production. By that time, it knew full legalization was in the pipeline.
The investment costs a hefty $100.0 million, which is a lot of money, to be sure. But if Aurora can use this big investment to squeeze out the competition, it’ll take hold of a huge market.
Remember that the Canadian market, while smaller than the U.S. market, is still growing at 10% per month. Full legalization is expected to add $5.0 billion to $7.0 billion of additional revenue per month, so don’t expect that growth to slow down.
Moreover, Aurora’s new 800,000-square-foot facility is state of the art. It will use automation to cut costs, which in turn will give it a lower cost to produce per gram. Overall, the company should be able to churn out 110 tons of marijuana per year.
The first plants will be in the ground before 2017 is over…
While we are incredibly bullish on the U.S. marijuana sector, the political risk is a concern. As such, it is better to look at a Canadian producer with triple-digit upside in the near future.