The marijuana market as a whole is a lot like the Grand Canyon – it looks fantastic up close, but from a distance, it’s absolutely breathtaking.
Last year, total marijuana sales – legal and black market – in the United States topped $86 billion. In 2018, all across the country, nearly 49 million people spent an average of $1,755 each on marijuana.
The thing is, some $68 billion of that was from totally illegal black market sales.
But that still leaves us with around $18 billion in legal transactions. For comparison, that’s about the size of the U.S. urgent care healthcare segment in 2018.
So the “$68 billion question,” as it were, is how quickly that “legal gap” will close and start putting mega-profits in pot stock investors’ pockets.
The short answer: much faster than anyone out there is predicting. Bringing illicit sales into the legal “light” doesn’t require convincing new customers to try something new; no new consumption habits need to be formed.
It’s a well-established market, full of folks just waiting to fork over their money.
And they will fork it over by the truckload…
These Projections Could Be Conservative
Just how quickly can legal sales fill that gap?
I think, given the pace of legalization, legal sales could fill most of that $68 billion gap in five years.
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After all, Canopy Growth Corp. (NSYE: CGC) wouldn’t have agreed to acquire Acreage Holdings Inc. (CSE: ACRG, OTC: ACRGF) if it felt that federal legalization was, say, 10 or 15 years out. Neither would Acreage have agreed to sell if it thought that lucrative future was years hence. Such a deal would entail too much risk for Canopy and give away too much opportunity for Acreage.
Remember: Canopy plunked down 300 million perfectly good dollars to secure the right to acquire Acreage. That’s far too much money, even for a company like Canopy, with billions in cash, to leave sitting around for a year or two.
Closing the gap with illegal sales would put the legal marijuana market at around $100 billion by 2025, once you factor in population growth.
But that $100 billion in revenue only counts current users of traditional marijuana products converting to legal sales. It does nothing to account for totally new users who switch after legalization or the development of new markets.
Nor does it account the creation of new marijuana markets. Once we factor those in, the revenue growth that the right cannabis companies enjoy will push their valuations through the stratosphere.
Let’s take a look at some of those new markets…
Look for Cannabis to Crush Records Here
Medical marijuana will expand – and prosper – rapidly as knowledge about its superiority over
“Big Pharma” drugs (especially opioids) spreads.
To that, we can add the proliferation of new methods of consumption such as vape pens, “gummies” and other edibles, and THC-infused beverages. These products will rope in an entirely new set of recreational users. So between growing medical use and new recreational consumers, that could easily add another $30 billion in sales.
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But so far we’re just counting final retail sales only. To all this, you have to add the revenue of the entire cannabis ecosystem.
For example, cultivators sell cannabis to product manufacturers. Manufacturers pay extractors. Distributors move the product and sell to retailers. Yet others, like KushCo Holdings Inc. (OTC: KSHB), sell packaging.
Between the growth of new markets and the ecosystem that rises up around it, revenue could easily exceed $250 billion in the United States alone.
And we better not forget the big one – cannabinoid-based pharmaceutical drugs.
Frankly, I find accurately estimating the maximum size of the cannabis pharmaceuticals segment a near-impossible task.
But I’ll take a shot anyway.
The potential for breakthrough discovery treatments is too significant, but let’s add another $100 billion in sales in the United States as a ballpark, conservative estimate.
By that count, in five years, total sales across the legal marijuana ecosystem could exceed $350 billion per year. And from a base of $20 billion, revenue has to grow nearly 80% per year to get there.
That’s the kind of average share price appreciation investors have to look forward to. In unique cases, growth will run at multiples of that healthy figure.
It’s stocks in companies with that incredible level of growth for which institutional investors will pay a very high price. Big money wants in, and once federal regulations are lifted, institutional money is going to rush in.
Revenue growing at 80% annually on its way to $350 billion per year could easily launch the value of cannabis stocks well north of $3 trillion.
And when the bidding starts, you’ll be there to sell your market-leading cannabis stocks to them for a fortune.
America’s Green Gold Rush Is Just Getting Started – Claim Your Stake Now
At this very moment, big investment firms and members of the Fortune 500 are building enormous war chests.
They’re preparing to push billions upon billions of dollars into the cannabis market – and they could strike at any moment. So right here – right now – you have a once-in-a-lifetime opportunity to beat them to the punch and stake your claim.
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