legal weed play

This Is the Perfect Time to Own My Favorite "Pick-and-Shovel" Legal Weed Play

There's tremendous momentum in the legal cannabis sector right now. The boom is crackling with excitement and flush with money, reminiscent of the old California Gold Rush.

Call this the "Green Rush," where weed investors are pulling in profits hand over fist.

Yesterday, for instance, it was reported that the 50 licensed marijuana retailers in Nevada, which only went "fully legal" 12 days ago, are already running out of marijuana to sell.

And California is less than six months from opening a legal, recreational market that will dwarf all other legal weed states, plus the entire nation of Canada. I'll tell you why I'm expecting monster profits there in a minute.

But... one of my favorite legal weed plays has been in the news lately for an entirely different reason.

Now, it's not a grower, and it's not a retailer (I save those recommendations for my paid-up Nova-X Report subscribers as part of a comprehensive, well-balanced, 30-stock weed portfolio), but it will be one of the biggest, most important players in this boom sector, especially when California lifts the curtain on its market.

And I couldn't be happier with the price we're getting here...

The "Green Rush" Is Very Real

legal weed playComparing the legal cannabis sector to the legendary 1850s California Gold Rush might seem like hyperbole, but it's no idle boast.

Sure, plenty of forty-niners struck it rich, but the real fortunes went to the folks who sold the prospectors the things - tools, clothes, food, housing - they needed to chase their dreams of gold riches.

In fact, this is where we get the term "pick-and-shovel play" from.

Levis Strauss is a famous example. The Bavarian immigrant didn't pull an ounce of gold out of the ground, but he sold dry goods and, of course, well-made, reasonably priced denim overalls to the surging crowd of gold seekers hitting San Francisco at the time.

Today, Levi Strauss & Co. is a globally recognized brand (and a $4.5 billion company). You can't buy their stock, but I'm willing to bet you've bought more than a few pairs of jeans from Strauss' heirs.

In 2017, the profit potential in marijuana isn't much different... except for the fact that there's exponentially more money to be made.

Just like in the 19th century, 2017's "pick-and-shovel" cannabis plays will mint millionaires.

You can be one of them.

When Regulations Are Good for Stock Prices

Just a few weeks ago, I attended the fourth annual Cannabis Business Summit and Expo in Oakland, Calif., not too far from where I live. I tend to think of "Oaksterdam" as the "spiritual home" of the legal weed movement because of initial successes legalization advocates and activists had there in forming California's long-established medical marijuana industry.

The hottest profit trend on display at the expo wasn't growers, or dispensers, or even edibles, but compliance.

how to invest in legal weedYou see, it varies from state to state, but the legal cannabis industry has voluntarily embraced some pretty stiff regulatory regimes, not only to satisfy opponents like weed "Flat-Earther" Jeff Sessions, but also to ensure people are kept safe as they consume the product and to make sure everything is dealt above-board.

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Regulation in this case is a boon for investors, because the regulations generate a very real need for other firms to come aboard and offer their expertise, by way of products and services, in a way that boosts bottom lines.

With regulations thick on the ground, you can see that compliance is critical. In some cases, a company that makes just one wrong compliance move can face severe legal sanctions that could damage its reputation and cripple the business, so there's a real incentive here for getting it right the first time.

Many pot entrepreneurs lack the knowledge and experience necessary to comply with all state and local regulations, from employment and labor laws to inventory control and everything in between.

We're talking about a market likely to top $35 billion in three years; the stakes are just too high to leave anything to chance.

Entrepreneurs are turning in droves to the one company that can make it all easy for them...

That's why I love Microsoft Corp. (Nasdaq: MSFT) in this space. And I love the share price even more right now.

Mr. Softy Toughens Up

The Redmond, Wash.-based tech juggernaut was quick to spot the opportunity in the legal cannabis sector, thanks largely to savvy CEO Satya Nadella.

Microsoft has marketed its cloud-based services heavily to players in the sector, and it's beginning to pay off. Its "Azure" cloud service banked $6.7 billion in the most recent quarterly reports.

best legal weed investmentsHere's where California's recreational weed market comes in. Now, its medical marijuana market alone accounts for some 33% of all legal sales in the United States. Conservative estimates suggest California's new market will be worth $1.57 billion in the first year after legalization, before it triples by the early 2020s.

The Golden State's "seed-to-sale" regulations will be some of the toughest yet - far more comprehensive than they are in other states like Washington and Colorado.

And all the state's vendors are going to need the product that Microsoft is laser-focused on right now.

This is a huge profit catalyst for "Mr. Softy" that really makes the case for owning it now.

Of course, Microsoft got hit in the "Tech Wreck" last month that sent shares of some of the best, most innovative tech firms tumbling.

A lot of them have yet to recover any serious steam. Microsoft, in particular, took another hit recently when Nadella announced he was putting 3,000 jobs on the chopping block.

The media, which, let's face it, typically has a negative knee-jerk reaction to layoffs, read this move as an impending corporate profit crisis.

I read it as an incredibly smart move.

You see, Microsoft is still in fundamentally great shape, even accounting for the Tech Wreck. What Nadella is doing here is, in essence, doubling down on the company's cloud efforts. He's concentrating efforts and freeing up the capital and headspace needed to bring serious firepower to bear on the lucrative cloud niche.

Azure cloud sales grew a whopping 93% last quarter, toward that $6.7 billion I mentioned earlier. It makes perfect sense for Microsoft's leadership to want to grow and steward that rich revenue source, to do whatever they can to see it thrive.

The company is around $2.80 off its 52-week high right now, and for everything that's happened, it's remained essentially flat for the past 30 days.

That means, even if you missed my initial recommendation in the wake of the Oakland cannabis expo, you're still getting a great price and a "second chance" to own what I think will be an indispensable player in the legal weed boom. And if you did pick up shares, by all means, accumulate a bigger position.

Michael's Nova-X Report readers get his "weed investors' bible," The Roadmap to Marijuana Millions. It's packed with 31 recommendations for making money in the "Green Rush," including a new compliance superstar-in-the-making that costs a tenth of what Microsoft does right now. Click here to learn how to get your copy.

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