By any measure, 2016 was a great year – a watershed, in fact – for the tech- and pharma-heavy cannabis niche.
For instance, ever since Sept. 2, when I sent my Nova-X Report subscribers the 30 pot stock recommendations in my "weed investors' bible," "The Roadmap to Marijuana Millions," we've seen incredible gains all across the market sector.
And what had been a phenomenal year got even better with a massive victory: On Nov. 8, voters in five states (five juicy untapped markets) voted to legalize medical and recreational marijuana. That boosted the cannabis niche's growth prospects immensely. Remember, this is an investing arena that was already expected to grow by more than 31% a year until at least the early 2020s.
But… the buoyant marijuana markets took notice when President-elect Donald Trump tapped U.S. Sen. Jeff Sessions (R-AL) to be the next U.S. attorney general. The nation's would-be top cop is known for his, shall we say, "retrograde" views on marijuana – legal and otherwise.
That news cast a great deal of uncertainty on investments with an otherwise vertical trajectory.
So, naturally, pot stock investors – and those considering it – are wondering what the future might hold for this high-growth, immensely profitable investing niche.
"A Problem of Resources"
Sen. Sessions is, in fact, an outspoken critic of marijuana.
In an April U.S. Senate meeting, for instance, Sessions said, "We need grown-ups in charge in Washington to say marijuana is not the kind of thing that ought to be legalized."
He also said in the same meeting that "good people don't smoke marijuana."
Still, it's quite a stretch to think that, even in his new position of power, Sessions will be able to effect the kind of massive public policy overhaul it would take to revoke legalization.
Currently, marijuana is illegal under federal law. But because of a congressional rule from 2014, the U.S. Department of Justice is not allowed to use funds to interfere with the implementation of state cannabis laws. Also, a recent Aug. 16 court ruling states the DoJ can no longer prosecute medical marijuana businesses where the defendants are following state laws.
Fundamentally, this means one certain thing: Marijuana legalization is determined by state voters right now.
And it's highly likely to stay that way.
I'm confident of that assertion because of what Donald Trump himself has been telegraphing so far. From a policy perspective, the president-elect is on the record saying marijuana policy is something best left to the states.
Plus, during his confirmation hearing earlier this week, Sessions played down his anti-marijuana stance. While he said he wouldn't "commit to never enforcing federal law" he added that enforcing anti-marijuana laws is "absolutely… a problem of resources for the federal government."
What's more, the president has no power to nullify state laws, and only Congress has the power to pass federal laws. As it stands, Congress' attitude toward marijuana is likely to reflect the U.S. electorate.
And that view has changed radically over the last 20 years.
Most Americans – about 60% of them, in fact – now favor legalizing marijuana, according to recent polls. With legalization's popularity continuing to climb, it's highly unlikely Congress will vote against legalization going forward.
In fact, there are several bills working their way through Congress that could further ease legalization.
For example, the Marijuana Business Access to Banking Act would update federal banking rules to resolve conflicts between federal and state laws and allow banks and credit unions to provide services to legitimate marijuana businesses.
So the truth is, despite the juicy, scary headlines touting the "new Drug War" Trump and Sessions are "planning," the debate over marijuana legalization is larger, by far, than one presidential administration.
In fact, considering all of these political developments, there's one extremely bullish reason investing in marijuana stocks will remain profitable even with Sessions at the DoJ…
My 2017 Legal Marijuana Forecast
President-elect Trump ran on the platform that he is a successful businessman.
And as a businessman, he'll have a hard time ignoring the massive amount of money legal marijuana companies are making.
In 2015, Colorado alone collected more than $135 million from fees and taxes from such businesses. And it uses that money mostly for school construction projects.
That's just a taste of the juicy, rich revenue that's filling the pipeline right now…
California, which has a relatively long history of legalized medical marijuana, just approved legalized recreational marijuana. This could become the best example of how much money legitimate businesspeople can make here.
At this point, it's impossible to know marijuana's full economic impact on California, but it's safe to say it will be in the billions of dollars. Other states will look at California's success in rolling this out as their model for legislation.
And as more states legalize recreational marijuana, the profits will be enormous. In 2016, legal marijuana sales are expected to reach $6.7 billion. By 2020, sales are expected to climb to $21.8 billion. By 2026, $50 billion.
That's a 225% increase in just four years – and a lot more to come after that.
Now I want to show you how to easily find the right pot stocks to buy (and how to buy them) for the biggest profit potential in 2017. This is a great time to buy, too.
Along with most other shares, cannabis and related stocks went ballistic during the "Trump Bump" right after the election.
But the niche has cooled off a bit, offering some attractive entry points for the savvy investor.
How to Find the Best Pot Stocks
To some extent, finding a good cannabis stock is like finding any other "screaming buy" stock.
You want to look for companies with strong leadership, and if you find one where the leaders are looking to consolidate and merge, so much the better.
Beyond that, it's well to look for cannabis companies that are exposed to both retail medical and retail recreational sales, with a diverse, versatile product range.
Remember, marijuana legalization is gathering steam across the entire continent, with (successful) movements operating in the United States, Canada, and even Mexico. Look for companies that operate in two or three of these "emerging markets," and you'll find a strong player worth owning.
I've already shared with you some of the best big-cap legal marijuana plays…
- Microsoft Corp. (Nasdaq: MSFT), which is partnering with a California startup called KIND Financial to help ensure that cannabis companies stay inside the legal lines.
- Scotts Miracle-Gro Co. (NYSE: SMG), which is embracing the fast-growing community of legal marijuana growers, "planting the seeds" for robust new paths to growth. Scotts, already the world's largest maker of lawn-care and gardening products, has made a $150 million purchase of General Hydroponics and several other pot-related acquisitions.
- GW Pharmaceuticals Plc. (Nasdaq ADR: GWPH) manufactures pain drugs using compounds present in cannabis. GW Pharma has developed a multiple sclerosis treatment and has another drug in the works to treat children with severe epilepsy.
However, most marijuana stocks aren't listed on major indices because they don't meet the qualifications. Most are listed as penny stocks – an investment vehicle that's notoriously risky, but that can be immensely profitable when you do your research.
That means there are risks involved…
But as I mentioned earlier, I did the hard work of researching these sorts of shares for my paid-up Nova-X Report readers. And I make sure every single one of those gets a "weed investors' bible," "The Roadmap to Marijuana Millions."
To learn how to get your free copy, just click here.
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- Nova-X Report: The Roadmap to Marijuana Millions
The post Marijuana Investing Will Still Produce Big Profits in 2017 appeared first on Strategic Tech Investor.
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.