It's only been 24 days and I'm already exhausted by the onslaught
of articles about "budding" industries, "bong" bubbles, or "high"
hopes for the
Why can't we have a serious discussion about an industry that,
like it or not, is here to stay?
No one can deny that the legal marijuana industry is among the
in the United States.
It's estimated that more than $1.43 billion worth of legal
marijuana was sold in 2013, and that number is supposed to
increase by 64% to $2.34 billion in 2014.
Former managing director of Wells Fargo Bank and editor of,
The State of Legal Marijuana Markets
Steve Berg recently stated, "Domestically, we weren't able
to find any market that is growing as quickly."
Presently, 20 states and D.C. have some form of marijuana
legalization. And while only two states, Washington and Colorado,
offer legalized marijuana for recreational use, Berg's report
predicts that 14 more states will legalize marijuana for
recreational use by 2018. He and a host of other well-informed
analysts anticipate a 700% increase above the current industry
value to over $10 billion…and that's a conservative estimate.
So, if industry experts expect to see the marijuana industry
grow over 700% in the next four years, where are the best
opportunities for investors?
I recently screened the 20 most popular stocks in the
marijuana industry. "Popular" might be an overstatement
considering the incredibly light volume in 15 of the 20 stocks I
investigated. Micro-caps look like market giants in comparison.
As a result of the low volume, I immediately eliminated 75% of my
original screen. I was left with the following five stocks:
Fusion Pharm (
), GreenGro Tech (
), Medbox (
), GrowLife (
), Advanced Cannabis Solutions (
Interestingly enough, four of the companies were on the
agricultural side of industry. The only company not affiliated
with growing marijuana was Medbox. It's a manufacturer of
"automated dispensing solutions", code for a highly regulated
vending machine for various pharmaceuticals and marijuana
But after further research, I quickly discovered that it's too
difficult to fully understand the business models of each of the
companies due to lack of available information. And common
sense tells you to be highly skeptical when the majority of the
information out there comes in the form of a press release.
So, it just doesn't make sense to
in such a speculative industry no matter the growth
I suppose you could take the money set aside for your next
Vegas trip and buy equal amounts in each of the five stocks I
mentioned knowing that there is a very good chance that you will
lose everything. On the other hand, you might get lucky and hit
the jackpot…stranger things have happened.
I do think opportunities will present themselves once the
marijuana industry matures. If more states move towards
recreational legalization over the next two years I could see big
industry move in, particularly if banks decide to invest in the
For now, the marijuana industry is the Wild West. We could be
witnessing the making of future national brands…the question is,
are you willing to take that gamble? I'm not…at least for
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