5 Charts Show Marijuana Stocks Could Be Promising Investments
Yahoo! Weed Survey Has Positive Signals for Marijuana Stocks
There was a time when it was hated like a sin. Now it is much sought after. America has come a long way since Reefer Madness. Today, more Americans want marijuana legalized than some of us want to believe. That is not only because they smoke weed, grow it, or sell it, but because many are now investing in it.
The truth is, marijuana stocks are the new it investment idea that has a faction of the market in a frenzy.
In the last year, many have seen their marijuana investment doubling, even tripling. Marijuana stocks sold like hotcakes (or brownies, if you will). In fact, this investment idea gained so much popularity that an investment fund in Canada launched the world’s first-ever marijuana ETF this month.
But why this sudden surge in demand, you ask? First, the 2016 U.S. elections brought good news as state after state voted to legalize marijuana in one form or another. Then, right next door, Canada’s federal government gave the green light to the impending legalization of marijuana.
Legalization kills the drug’s black market. In turn, all of the profits flow to the legal medical and recreational marijuana industries, where companies can make money and return it to investors. Make sense?
In short, the last year has been annus mirabilis for marijuana stocks.
And yet, for many, investing in marijuana companies remains an off-the-wall idea. That’s because a lot of questions are still unanswered, including the following.
1. Is Marijuana Investment Risky?
The short answer: of course it is! All investments are risky. How else would they make you money if they weren’t risky? Isn’t that the first lesson they teach us in Finance 101? No risk, no reward!
The right question to ask is “how” risky it is. The answer to that hinges on a handful of other questions, like: can marijuana be socially acceptable?, will it be able to break the shackles of stigma?, will people accept it beyond its medical use?, how fast will it get legalized?, and how favorable will our government’s drug policies be?
While we can theorize the answers to these questions, the truth is that you or I may have our judgments clouded by our personal bias for or against the drug. So let’s discuss facts, not theories.
Picture a man aged 18–35, who makes less than $50,000 a year, has no college degree, has a child, follows no religion, holds liberal views, and voted for Clinton. That, my friends, is what a typical American pothead looks like. No, I didn’t make that up. Like I said, I’ll give you facts.
This, and a bunch of other interesting statistics were published by Yahoo! News and The Marist Poll this week, who jointly conducted a survey on “weed & the American family.” (Source: “Weed & the American Family,” The Marist Poll, last accessed April 20, 2017.)
Below are four charts highlighting some key stats from the survey, and one additional bonus chart. These may help answer some of your questions on marijuana investment.
2. Can Marijuana Become Socially Acceptable?
According to the survey, the answer to that question appears to be affirmative. For the majority of Americans today, smoking weed is socially acceptable.
Chart Source: Lombardi Publishing; Data Source: The Marist Poll, op cit.
Further poll results showed that most Americans are indifferent to their doctor, their children’s school teacher, a religious figure, their favorite celebrity, or their favorite athlete smoking marijuana.
3. Can Marijuana Shed the Stigma Attached to It?
Reasons may vary as to why marijuana use is still considered taboo but, roughly speaking, you’ll find two kinds of haters—those who consider it sinful and those who consider it a risk to health.
But the stats are seemly supporting marijuana stocks, because these ideologies appear to be losing their following. When asked to compare marijuana with tobacco, alcohol, and opiates, the majority of surveyed respondents found it to be the least of the four evils.
Chart Source: Lombardi Publishing; Data Source: The Marist Poll, op cit.
The majority of Americans (a good 52%) were found to have committed this so-called “sin” at least once, while 22% smoked marijuana occasionally, and 14% did so at least twice every month. What’s more intriguing is that the majority of pot-users turned out to be parents. Hmm…interesting!
4. Will People Accept Legalization of Recreational Marijuana?
The majority of Americans already accept the legalization of recreational, according to the survey by The Marist Poll. Some 49% support legalizing recreational marijuana versus 47% who don’t.
Although not a landslide win for pro-legalization marijuana fans, that two percent still tipped the scale in their favor.
Chart Source: Lombardi Publishing; Data Source: The Marist Poll, op cit.
On the contrary, support for medicinal marijuana was significantly high, with a whopping 83% supporting its legalization for medical use. Now, these numbers bode well for marijuana investment.
5. Will U.S. States Legalize Marijuana?
We’re already getting to legalization in the United States. Here’s my bonus chart for marijuana stock investors.
A total of 29 U.S. states and the District of Columbia (D.C.) have so far legalized marijuana for medical purposes. Eight of these states and D.C. have also legalized its recreational use. And a bunch of others are expected to legalize it this year or the next. Check out the map below for a snapshot of what the future of recreational marijuana looks like (I’ve excluded medical marijuana for now).
Source: Lombardi Publishing
6. Will the Government’s Drug Policies Favor Marijuana?
It’s a possibility!
It’s true that President Donald Trump’s aides are vocally anti-marijuana. Of particular note are Attorney General Jeff Sessions and White House Press Secretary Sean Spicer, both of whom have gone on record with an anti-marijuana rhetoric.
So, for Donald Trump—the politician—legalizing marijuana is not top priority. But for Donald Trump—the businessman—there is a business incentive in legalizing this drug. The legal marijuana industry can become a big source of tax revenue for the government.
Take, for instance, Colorado, which raked in over $200.0 million in taxes from over $1.0 billion in marijuana sales last year. What’s more interesting is that $40.0 million of this revenue went to developing schools in the state.
Long story short: the incentive is there for the government to legalize marijuana and profit from it.
From where I see it, the U.S. marijuana market looks ripe for investment. Just look northward and you’ll see how marijuana investment has turned into a bonanza ahead of pot legalization in Canada. The below chart shows the performance of four of the top Canadian marijuana stocks in the last year—stunning double- and triple-digit returns!
Chart Courtesy of StockCharts.com
Final Word on Marijuana Stock Investing
Prospects are looking good for the marijuana industry. Times are changing and so are our societies. The fact that most American millennials are opening up to legalization pf this drug bears good news for those who are pro-legalization and want to invest in the industry. It is no shocking revelation that U.S. marijuana stocks could deliver promising returns to early birds, should marijuana use get legalized.
One word of caution, though; investments that hinge on wild speculations are fraught with risk and danger. So don’t jeopardize yourself by putting all your eggs in one basket. A rule of thumb is to not commit more than five percent of your portfolio to one investment. Diversify!
