I never thought I’d see more people invest in marijuana than smoke it.
But those investments are exactly what’s about to happen given a recent survey from some of the most influential and social analysts in the BioPharma space. In fact, according to Investing.com and our research, two-thirds (2/3) of the analysts love the potential of the marijuana industry since the $50 Billion market is already developed, albeit illegal. The process of stepped legalization has started and continuing prospects look promising.
Yet there are dual dilemmas facing public medical marijuana companies in the United States. First, even if it’s legal for in-state cannabis companies, no businesses are federally legalized to sell the plant or the plant’s derivatives in any shape or form. Will the federal government’s tacit overlooking of the national cannabis laws continue?
Second, public companies are by nature of their investors, interstate and qualify for none of the single state exemptions. According to Chet Billingsley, CEO of Mentor Capital, Inc. (OTC: MNTR) “Marijuana investors repeat the tale of Joe Kennedy in the 1930’s and how he amassed a stock position before the lifting of prohibition and made a fortune from the re-legalization of alcohol. Many public companies are copying this model. They are positioning to have market share and established market presence when marijuana prohibition lifts.
This makes the analysis of public marijuana stocks an indirect art rather than a financial science. Like selling picks and shovels to gold miners, there are legitimate investment purposes today in the marijuana industry by those that supply land, extraction equipment, insurance, financial services, software, consulting and the like. The establishment of brand identity, without actually “touching the bud,” as they say, is also key in establishing a footprint in advance of the lifting of marijuana prohibition. But, many other companies do little more than attach “canna” to their name and must be suspect.
Investors interested in the sector may look for cash on the balance sheet to mitigate the need for the company to issue shares for financing, a low number of outstanding shares and limited new stock distribution to insiders as healthier signs in a cannabis company working to establish a presence ahead of nation-wide legal acceptance of cannabis.“
Tro Kalayjian, Chief Medical Analyst for Chimera Research, agrees telling us, “The biggest impediment to investing in medical marijuana, particularly in the United States, is federal law. That also makes for the most interesting investment catalyst when legalization occurs.”
What is so appealing about the prospects of a federally approved company devoted to cannabis is that after spending a few days with people that suffer from glaucoma, rheumatoid arthritis, Tourette Syndrome and cancer was the fact that now, the plant will be seen as a positive force and less of a negative one. All of them told me they would welcome legalization of medical marijuana given its proven health benefits. For them, they’re hopeful that this will be a year where cannabis may shed its federal prohibition.
Indeed, Cheryl Shuman, the industry’s leading voice and now medical marijuana business advocate couldn’t help but tell me that, “As a cancer survivor that credits marijuana with providing me with a better quality of life and allowed me to build a successful internationally respected business in the sector, I strongly believe Marijuana is the investment opportunity of our lifetime. Each and every day I get to play matchmaker to investors and cannabis related businesses. Every one of them is interested in investing in the green rush.”
Many consider Shuman “The Martha Stewart of Marijuana” because she heads up a loose global network medical marijuana advocates who working together to target politicians, the media and big pharma. But while some of the States and its pro-recreational marijuana allies try to enable young people to be use marijuana for recreational purposes, Cheryl is trying to inspire and enable investors, politicians and the general public to consider the medical benefits of the plant.
Yes, plenty of recreational marijuana advocates are also pushing for federal approval, but their ability to resonate and enlist followers isn’t taken seriously given their recreational “get high” positions on cannabis. That will take time to change and will require new players to add some professionalism to the industry.
According to Shuman, those professional companies are right around the corner. In a soon to be published survey she helped me conduct with Nemus Bioscience and Mentor Capital (disclosure: we all jointly conducted a large survey to investors in BioTech), investors not only anticipate Federal legalization of cannabis for medical reasons but nearly 75% believe that investing in those professional companies is a great idea.
So with the legal marijuana market estimated to grow 64% to $2.34 billion in 2014 from $1.44 billion last year, the potential for companies like Nemus to help legitimize the industry and to draw profits from it appears to be on the horizon.
So here’s my prediction: When the case for medical marijuana reaches critical mass with the general public and new companies introduce safer more effective cannabis-derived treatments, you will see real political reform here. That is when the political naysayers will no longer have the moral high ground to maintain the status quo, and that is when patients in need of safer cannabis-derived medical treatments will demand the reforms that will enable them to easily access the drug.