The cannabis market is starting to soar.
The United States is a huge market opportunity, with market projections growing from an estimated $8.5 billion last year to $23.4 billion in 2022, if only a few additional states legalize recreational use. And we're talking about as much as $50 billion if most states follow the trend.
But the biggest opportunity of all could come in a form people hadn't been talking about as much...
It's an opportunity that runs counter to the recreational market trend and the obsession with the cannabinoid THC - the one that causes users to get "high."
I'm talking about some of the other highly prized cannabinoids present in marijuana - one in particular that one of the world's biggest, most well-known companies has taken a sudden interest in...
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There's Much More Than THC at Work in Marijuana
My colleagues, friends, and readers have all heard me talk (or seen me write) about cannabidiol (CBD) in terms of its health impact.
It's just one of the non-psychoactive cannabinoids in cannabis.
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CBD helps relax people, reduces inflammation, eases pain, and can potentially treat many diseases, including chronic traumatic encephalopathy (CTE), as we discussed earlier this month.
With all those effects, it's no wonder that it's also being explored as a potential general health ingredient.
If the health effects of CBD and other cannabinoids prove out, the regulated pharmaceutical market will be unimaginably large - $50 billion, $100 billion, or more.
This past week, an explosive new projection and the rumored participation of a very surprising company both advanced the idea that CBD will be even bigger than THC - even if you don't count the pharmaceutical market.
The company we're talking about is one of the largest brands in the world.
It makes perfect sense for this company to be looking at CBD as a health ingredient, since it's been diversifying away from the product that made it famous for years.
This company owns coffee drinks.
This company owns bottled water brands.
This company owns fruit juice.
This company owns vitamin-infused water.
And in what could play out as a blockbuster, it looks for all the world like it wants to own a cannabis-infused beverage...
Look Who's "Kicking the Tires" with the Cannabis Industry
Coca Cola Co. (NYSE: KO) is rumored to be seeking a joint venture or other arrangement to make CBD-only beverage products. BNN Bloomberg had the scoop, saying that Coke is looking to make CBD-infused health or "recovery" drinks, which would be positioned similarly to energy drinks or Gatorade.
The shock is how early and quickly Coca-Cola is ready to get into the CBD beverage business.
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Most market observers believe that the association of CBD with cannabis would have kept companies out of that market until consumer understanding of the difference between CBD and THC increased over time.
For Coke to have its wholesome image associated with cannabis products is a critical endorsement of the changing consumer perception of cannabis and of the potential opportunity a plunge into the CBD business presents.
But the best way to make money on this monumental rise in the CBD market that's coming isn't buying Coke's stock. It's not even necessarily in grabbing shares of cannabis giant with which Coke is negotiating, either.
The smartest, most lucrative plays are still off the mainstream radar... for now.
Here's what I mean...
CBD Is a $22 Billion Sub-Industry in the Waiting
The current rumor is that Coca-Cola is talking to Aurora Cannabis Inc. (OTC: ACBFF), one of the four biggest cannabis companies in the world. And because CBD is legal across the United States, there's no reason it could not also seek a separate domestic deal.
For its part, Aurora - which itself has been involved in a binge of cannabis-related takeovers in the last year - emphasized Tuesday in a carefully worded statement that it has no deal with any beverage company... yet.
First, that can change tomorrow. That's often how it goes.
Second, it doesn't matter whether Coke strikes a deal with Aurora or some other cannabis company.
This is a flag in the ground about how serious, how potentially lucrative the legal cannabis market will grow to be.
So, how large is the CBD industry that it's pushed the largest soft drink company in the world to act?
Brightview, a respected cannabis industry analysis firm, now believes that the CBD-only market worldwide will grow to $22 billion by 2022. That's in the United States alone. From under $600 million this year, that represents a growth of 132% per year for four years.
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Brightview thinks of CBD as the future vanguard of an "anti-pharma" health movement, with people taking daily supplements of CBD, using it to substitute for pharmacological disease treatments, adding it to their food, and as Coca-Cola probably foresees, taking it in their beverages.
In this landscape, CBD supplements would become much more widely available. Consumers will be buying them at big-box discounters like Costco, grocery stores, health food stores, drug stores, and more.
If Brightview's projection is even partially right, the cannabis companies that can execute on sharp, CBD-focused business plans will make vast fortunes for their investors.
And that's why we're here, continuing this conversation about cannabis investing... and why I'm so excited about CBD.
But as I said, the owners of Coca-Cola stock - or even Aurora, for that matter - aren't going to be the beneficiaries of this market sea change when we look back a few years from now.
It's going to be in the smaller companies that are just finding market penetration because of constantly improving consumer sentiment and education.
It's going to be the companies that aren't yet on the radars of big beverage, big pharma, or big alcohol yet... some of which not even publicly traded.
It's going to be the companies that resemble penny stocks in price... but not in know-how, experience, and leadership in an industry space that outsiders like Coca-Cola still know far less about.
These winners aren't easy to find without rolling up one's sleeves and doing hours and hours of the right kind of research. And not all CBD companies are created even close to equal.
And that's why we're going to keep this conversation about cannabis - and specifically, the CBD market - going here in the coming days and weeks. I can't wait to share more of my research and predictions on this with you.
Critical: New Law Expected to Mint the Next Generation of Millionaires
In this exclusive Money Morning executive briefing on the new “Marijuana Millionaires” law, our Executive Publisher Mike Ward sat down with one of America's leading cannabis experts.
Together, they cover why billions of dollars will begin to flow into the markets when new marijuana legislation goes into effect on Oct. 17... and how to position yourself to secure up to $2 million from this historic event.
About the Author
Greg Miller started working on Wall Street in September, 1987, just a month before the “Black Monday” stock market crash.
During his career there, he became an expert in just about every kind of publicly traded security - from blue-chip and small-cap stocks to municipals, junk bonds, and derivatives. As a portfolio manager, Greg was responsible for over $500 million of assets in mutual funds and insurance company accounts.
After leaving the Street, he designed a successful options trading strategy and made lucrative tech investments for a financial publication. He has also helped develop new products and worked with other editors to hone their strategies. He’s always been dedicated to deep, fundamental research - and he always will be - because he believes buying the very best companies at the right price is the best way to amass wealth in the stock market.