Making nearly $3.2 million in sales is a good day in any business sector. What it tells investors is that there are a lot of people hungry for what that sector is selling.
Illinois earning that much in sales during the state’s first day of legal recreational marijuana speaks to the outrageous potential that the industry has.
Illinois recently became the 11th U.S. state to legalize recreational marijuana for consumer use.
The state had 37 dispensaries open and able to sell marijuana on the first day of legalization. Cumulatively, the dispensaries processed 77,128 transactions. (Source: “Illinois cannabis sales bring in $3.2 million on day one,” CNN Business, January 2, 2020.)
Meanwhile, U.S. marijuana legalization in general continues to gain steam. It’s one of the most important and talked-about events on the horizon for the marijuana stock market.
And Illinois shows why.
“This is one of those moments where we recognize that the significance of yesterday was that it was the end of prohibition and the beginning of how we hope to grow a new industry here in Illinois and then teach other states how to do it,” said Toi Hutchinson, Governor J.B. Prtizker’s senior adviser for cannabis control.
“The amazing thing about that is that there’s a significant portion of these dollars that go directly into this community reinvestment fund, so we can continue to rebuild communities that have been hardest hit by the war on drugs.”
Hutchinson’s statement is actually more important to investors than you might think.
Not only is it socially beneficial to funnel funds from the marijuana sector into communities that have been over-policed for decades during the U.S.’s misguided War on Drugs (which continues to this day), by reinvesting in these communities, Illinois will help curtail the black market.
The fact is, non-licensed pot sellers, even in states (or entire countries, in Canada’s case) where the drug is legal, still present a massive threat to the legal marijuana industry.
Illegal dealers have been filling the void that the government created when it first criminalized marijuana. Since then, many marijuana users have grown comfortable with their black-market dealers, making them hesitant to switch over to legal weed suppliers.
Furthermore, legal weed has been made more expensive through taxation and licensing fees.
It’s also worth noting that, with legalization, the penalties for illegally selling marijuana have been decreased.
Although many studies have shown that punitive measures often don’t dissuade crime, the few people who would be turned off from buying black-market marijuana would perhaps be willing to make the jump to the black market now that there are so few legal consequences for doing so.
By putting cannabis tax money into the communities where many of the black-market dealers thrive, there’s a good chance that consumers will trickle into the legal marijuana market and help boost sales.
Boosted sales, of course, translates into higher revenues, which in turn means higher values placed on U.S. marijuana stocks.
Not to mention that we’re talking about recurring revenue; habitual marijuana users will come back time and time again, similar to people who drink.
Another special thing about the Illinois cannabis market, and why it’s indicative of an absolute powder keg of potential in the U.S., is that it was the first state to legalize recreational cannabis via a legislative measure rather than starting the legalization process with a referendum.
What Illinois has shown is that there is a politically viable (and financially rewarding for government and private industry alike) path toward marijuana legalization, something that national political figures have most certainly taken note of.
Today we have, without a doubt, the most pro-marijuana political class of a generation. There are real calls in both Houses—and among presidential hopefuls—to push through marijuana legalization in the near future.
In particular, several of the candidates for Democratic Party presidential nominee have made marijuana legalization a top priority in their political platforms.
The reality is that times have changed, and marijuana is no longer a dangerous, divisive political issue. In fact, the vast majority of Americans support U.S. marijuana legalization.
With that in mind, it’s only a matter of time before pot legalization becomes the law of the land.
And when that happens, U.S. marijuana stocks and international pot stocks alike will exponentially increase in value.
The challenge for investors then is scouting out the best marijuana stocks and getting in on the ground floor before the hype and build-up toward federal U.S. marijuana legalization sends share prices skyrocketing.
The U.S. marijuana industry is going to be big business; of that there is no doubt. Illinois and its impressive day-one sales of legal pot helps solidify that outlook.
What’s more, Illinois has shown how to effectively counter the still-powerful black market while pushing marijuana legalization through traditional political channels, rather than resorting to a referendum.
Pot stocks could see explosions in value not unlike what they experienced several years ago when Canada first announced that marijuana legalization was on its way.
The task now is to find the best U.S. marijuana stocks (or pot stocks with the greatest U.S. presence) and wait for the almost-inevitable.