This Number Proves Pot Stocks Are Here to Stay

And we've got the best pick to make investors "richly rewarded"...

Pot stocks are here to stay - and the best ones are going to be hugely profitable. That's because the cannabis industry is booming...

June was the best-selling month ever for recreational marijuana in Colorado, bringing in a whopping $24.7 million in total sales, according to state tax collections reported on August 8 (the most recent available report). So far in 2014, the state has pulled in a total of $29.8 million in pot-related taxes on both medical and recreational use, from $308 million in sales.

"The marijuana industry is growing rapidly, and there's big money to be made for investors," Money Morning Defense & Tech Specialist Michael A. Robinson said.

Colorado's recreational pot revenue may soon surpass its medical-use sales. In January, the state's 2.9% sales tax on medical marijuana brought in nearly 50% more than its recreational pot sales tax counterpart. But by June, the medical sales tax brought in just 20% more than the recreational weed tax, theAssociated Pressreported this month.

Colorado's not the only state raking in the pot profits. Another just collected more than $1 million in its first-ever month with legalized recreational sales padding the tax collector's bill...

Pot Profits Spread Beyond Colorado's Borders

Besides Colorado, Washington is the only other state that's legalized marijuana for recreational use. July sales reached nearly $4 million, creating more than $1 million in tax revenue - higher than Colorado's first month of recreational sales.

"It's off to a healthy start, considering that the system isn't fully up and running yet," Washington Liquor Control Board spokesman Brian Smith said.Pot Stocks to Buy

According to a forecast by the Economic and Revenue Forecast Council earlier this year, the state's recreational marijuana market is projected to bring in nearly $190 million over a four-year period starting mid-2015.

Not only are the states that have legalized cannabis use raking in cash, but their success is encouraging more states to open up their free markets to the drug.

Right now, 15 states have decriminalized certain amounts of possession of the drug, and 40 states have taken at least some action to ease their drug laws since 2009, according to Pew Research Center.

Public sentiment toward the drug is also becoming drastically more positive.

Best Pot Stocks to BuyAccording to a recent Pew poll, 54% of Americans believe the drug should be legalized, up slightly from 52% in 2013. Support has risen a sharp 13% since 2010.

Additionally, 69% of people think alcohol is more harmful to a person's health than pot, and 63% believe it's more harmful to society than pot. A recent government poll showed that 18.9 million Americans over the age of 12 used marijuana in the prior month - 7.3% of the population.

"With increased acceptance and legalization of marijuana for both recreational and medical purposes, this is one resource whose production and use are sure to grow exponentially, perhaps for decades," Money Morning Resource Specialist Peter Krauth told readers in April.

With recreational legalization just beginning to catch on, there are few pure plays in the sector - and even fewer that aren't risky - for now.

For instance, Growlife (OTCMKTS: PHOT), which sells lights for indoor growing and other equipment for legal cultivation, saw its shares zoom nearly 300% from January through April. But on Aug. 5, the U.S. Securities and Exchange Commission shut down trading on PHOT. It charged four promoters with manipulating shares, along with some other marijuana-related microcaps, in a pump-and-dump scheme.

While it'll take some time for the best investments in this sector to shine through, the medical side of the marijuana market offers a smarter play right now.

You see, medical legalization already has an established market across 23 states plus Washington D.C. Four more have pending legislation (Florida, North Carolina, Ohio, and Pennsylvania). Medical pot sales bring in millions to these states - California receives between $59 million and $109 million in estimated tax revenue annually.

Most of the medical pot stocks getting attention are those traded over the counter (OTC).

For instance, Cannabis Science Inc. (OTCMKTS: CBIS) is involved in the research and development of cannabinoid-based therapies for the treatment of HIV/AIDS and cancer. With a market cap of $61.79 million, the stock trades at $0.07 a share and is up 41.75% year to date. And Medical Marijuana Inc. (OTCMKTS: MJNA) was the first publicly traded company venturing into medical marijuana and industrial hemp farming. It has a market cap of $147.58 and trades at $0.16 a share, up a slight 0.32% year to date.

But Robinson stressed that he generally doesn't recommend OTC stocks unless they meet specific requirements, because they're too risky.

Instead, both he and Krauth agree there's a "king of the crop" when it comes to investing in pot stocks - with a market capitalization of $1.79 billion, this drug-developer "is in its own cannabis class"...

The King of All Pot Stocks in the Booming Cannabis Industry

Robinson and Krauth call GW Pharmaceuticals Plc. (Nasdaq ADR: GWPH) is "a much smarter pot stock play on the medical side."

Founded in 1998, GWPH is "the global leader in the development of plant-based cannabinoid therapeutics" according to Robinson. Cannabinoids are naturally occurring chemical compounds in marijuana that can have medicinal effects on the human body, such as reducing inflammation, nausea, and pain. The most well-known cannabinoid is tetrahydrocannabinol (THC), which is the main psychoactive compound in cannabis.

GWPH has teamed up with some of the world's largest publicly traded drug firms to research these chemicals and to develop cannabinoid-based drugs. It currently boasts a robust pipeline that utilizes the more than 65 types of cannabinoid compounds already discovered.

"The company is developing a portfolio of cannabinoid medicines," Krauth said. The one he's most excited about is the company's lead product, Sativex.

Of Sativex, Robinson said the drug "has awesome potential to treat patients with pain from cancer as well as those with a condition known as MS spasticity, which results in muscle spasms and stiffness, associated with the diseases multiple sclerosis."

The drug's already been approved in 25 countries, and is in phase 3 clinical trials with the U.S. Food & Drug Administration. GW Pharmaceuticals has received more than $113 million from its partners for the development of Sativex. If it makes all its milestones, the company should receive an additional $325 million in coming months.

"So far this year, the stock is up some 120% as the company continues to report progress on its drug pipeline. However, I still see plenty of upside," Robinson said. "With its solid science, multiple uses for its main cannabis-based biotech product, and strong alliances with global drug leaders, GW Pharmaceuticals is one of the very best pot stocks and should leave investors richly rewarded."

Like the cannabis industry, the tech sector is another that's brimming with opportunity and Apple and IBM - two tech giants that have been rivals for 30 years - just joined forces. The deal is great for both firms, because it unites the best of both companies. But for investors, one stock is the clear winner...

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