The Top 5 Reasons You NEED To Be Investing In The Medical Marijuana Niche
Are you looking for a good investment idea, or a niche to get into that looks to have exponential growth over the next 3 to 5 years? Did you know that medical marijuana is the fastest growing industry in the United States? The industry grew from $1.5 billion in 2013, to close to $2.7 billion in 2014. That is a nice 74% increase with only a handful of states allowing the medical or recreational use at that time. That $2.7 billion more than doubled to $5.4 billion in 2015 according to ArcView, a leading cannabis marijuana industry group. We have a niche growing 74% in one year and then 100% the following year, and that is with California and about 15 more states voting to add laws allowing medical marijuana this year.
When, and if, the Federal law changes to move marijuana from a class 1 drug, like heroin, to a class 2 drug, that will open up such thigns as interstate commerce for plants and materials, federal funding for research, and doctors being allowed to prescribe it. President Obama is in favor, as well as Hillary Clinton, to move cannabis from a class 1 drug to a class 2 drug. This will also allow for the "conceal and carry" laws to change as well, allowing for less burdensome travel policies.
So what are the top 5 reasons you need to be investing in the medical marijuana space in 2016 and beyond?
1. The Fastest Growing Industry In The US, No, Make That The World - We are looking at a hyper growth industry competing in a deflationary world (see oil, silver, stocks), and a low to zero interest rate environment. Translated, this means there is massive bang for your buck here compared to other niches. The most amazing thing so far in these growth numbers is that they only include a handful of US states. We have yet to have California approve full recreational use, which they will be voting on in 2016, and have an 82% approval rate right now for positive passage. If California was in Europe, it would be the third largest GDP of the European Union.
Do you think the USA won't make if Federally legal? Consider this, Canada, our neighbors to the north have a new Prime Minister who is 100% behind the full legalization of marijuana, recreational and medical. We only share about 1,800 miles of wooded border with Canada. As far as tax revenue and ATVs running through the woods all night long, you can see where the US will have to respond.
Not enough for you?
How about Mexico? The Supreme Court of Mexico just made a historic decision that opens the gateway for medical use, growing, and cultivation. Mexico also sees this as a way to lower the drug cartels power, as well as raising need revenue. The US will share roughly 4,000 miles of wooded and mountainous border with two nations well on their way to full legalization of marijuana and cannabis. If you thought the tax revenue lost by the states that border Colorado was bad a few years ago, wait until you see the missed tax revenue when Canada and Mexico go full legal.
Still not enough?
Did you know ballot initiatives for the UK and Australia are coming up over the next 18 months as well? As one UK politician quipped, "As the US does, so does the world."
Still want more? (as the infomercial would say...)
With the US dollar appreciating 30% against some major currencies this year like the Russian Ruble and Brazilian Real, the economies of commodity based currency nations are getting hammered right now. What does that mean? If you made your living on oil, minerals, metals, and mining you are going broke, and fast. You need to find some major growth and fast. Does that help explain the world wind rush by Canada (commodity currency based on oil, minerals, and mining), Mexico (oil and gas), and even Australia (very mineral and mining rich) getting into the weed game? You decide.
Emerging market economies are getting the worst beating of all as the US Dollar rises and the Japanese Yen does its' best to sink as low as possible. Do you think the warm, moist regions like Vietnam and Cambodia make for a perfect climate for marijuana cultivation. As their export power dries up, in order to stay competitive on a global scale, they will need products that they can supply and others can't in some form or another.
2. The Niche Is New, So The Power Players Are All Toddlers - Since the niche is less than 10 years old, and has really only picked up steam over the past few years, there are very few entrenched players. This is great news for new companies when competing for traffic online or funding. Unless you have an aged domain like Marijuana.com or Cannabis.net, it is a free for all out there as far as ranking in search engines and getting noticed. This niche does not have players with 25 year histories in Google, like the casino, adult, forex, or pharmaceutical niches.
Thinking of growing or investing in a physical product? No problem there, thanks to the JOBS ACT of 2009, it has never been easier to invest in a startup. You now have venture funds and private funds set up to invest in new products in this niche. Snoop Dog currently has a $25 million dollar fund set up to invest in cannabis related businesses.
States will be going full bore into licensing growers, real estate plots, dispensaries, kitchens, and anything else they can to raise tax dollars in order to help balance budgets. Do you feel like getting some land and setting up a growing area, the space is wide open, no pun intended. Want to start a kitchen to create cannabis edibles? You will be able to apply for a license, and then have to get your kitchen certified. Want to make a product? Costs have never been cheaper to get plastic and glass prototypes done with 3D printing and by using sites like Alibaba.
This is the Wild West right now, with all the land grabbers and settlers putting up their flags all over the world.
3. The Big Boys Won't Sell You Traffic...Yet.
With marijuana being a class 1 drug right now at the Federal level, Google and Facebook will not sell you traffic or take ads for your business.
Isn't that a bad thing you might be asking?
Not if you are bootstrapping a project or you have a low budget. That just leveled the playing field. Doesn't matter if you have $50 million in venture funding now or you are a new cannabis start up tech company, you still can't spend it on Google or Facebook. So now the big boys can't outbid you and drive all the traffic to their sites or apps. Google is allowing some traffic to strain guides and such, but nothing to major keywords. We are all on a level playing field to get traffic, so get your Tweets and Facebook LIKES ready.
And if you do start to get traffic and a following? Guess what? All those dispensaries and doctors have very few places to spend their advertising dollars since Park Avenue (New York Ad Agencies) won't touch ads either until the drug is declassified at a Federal level. So if you get traffic, you will get plenty of people with nowhere else to spend their advertising dollars but with you.
4. Baby Boomers - Yep, this pot thing isn't your 16 year old out in the garage anymore. According to recent studies, the fastest growing set of information seekers online about medical marijuana cards and cannabis are baby boomers. The "now over 70 years old crowd" wants in, they want it for sore backs, cataracts, arthritis, sore hips, and knees. They just don't want to get caught in a sting operation or look stupid, so they are treading cautiously now. The baby boomers were born after Word War 2 ended and are currently anyone between 51 and 70 years old The baby boomers just happen to be the most powerful generation in US history as far as amassing wealth, and currently control about 70% of the wealth in America. They are also about to hit a time in their life when medical aliments start to pick up speed and degenerative pain begins to be a regular occurrence. They not only want to buy cannabis and use it, they also want to invest and profit from it.
Again, this isn't your kids weed smoking in the garage in 1960, this is big business with a "B" for billions.
5. Demand Is Outstripping Supply - You don't have to be a University Of Chicago Economics major to see that growing demand is outstripping supply. This trend looks like it could be going on for quite some time as a few billion people get access to medical marijuana and recreational marijuana for the first time What does that mean in terms of economics? For one, it means you have fat margins to work with in this niche, with no margin compression on the horizon due to a massive customer base that is growing.
Think of this as the first time Coca Cola was mass produced. How long did it take for everyone almost on earth to try their first Coke? 40 years? Just think of that cycle starting with a rich generation (baby Boomers) wanting it and a voting generation (Millennials) that doesn't think it should be criminalized anymore, and many feel should be made outright legal.
There are major market inefficiencies already since cannabis is classified as a class 1 drug. It means that you cannot transport the product over state lines. This leads to an oversupply in the Pacific Northwest of America, and a lack of supply in the Northeast of America. Do you think someone is not taking advantage of this arbitrage in the market right now?
Next time you see that U-Haul with Colorado plates in New York, you might have a smile.