The global marijuana boom is tough to ignore.
And as it heats up on legalization, some of the best bets can be found in small caps, such as:
• Aphria Inc. (APHA)
• KushCoHoldings (KSHB)
• HEXO Corporation (HEXO)
• OrganiGram Holdings (OGRMF)
They may just be the next big runners, as we’ve seen with Canopy Growth and Tilray Inc.
In fact, three key catalysts could help.
Catalyst No. 1 – Booming Sales
Analysts at Piper Jaffray say the market for legal cannabis could be worth $15 billion to $50 billion a year, with global sales growing to $250 billion to $500 billion. Analysts at Cowen believe U.S. cannabis sales alone could reach $80 billion by 2030 -- an increase of $5 billion from earlier estimates, and a 4% compound annual growth rate.
We also have to consider that corporate America is just beginning to jump on the bandwagon.
Catalyst No. 2 – Interest from Corporate America
Canopy Growth (CGC) attracted interest from Constellation Brands, for example.
In fact, Constellation increased its stake in Canopy Growth by $4 billion. Constellation’s investment in Canopy -- the biggest known deal in the marijuana industry -- shows just how far traditional alcoholic beverage companies are willing to go to find growth.
“We believe the emerging cannabis space represents one of the most significant global growth opportunities of the next decade, and frankly, our life time," said CEO Bill Newlands. "An opportunity that is opening up much more rapidly than originally anticipated."
HEXO Corporation (HEXO) is in a joint venture with heavyweight, Molson Coors to create non-alcoholic, cannabis-infused drinks, as well.
Catalyst No. 3 – H.R. Bill 420
Now comes news of H.R. 420 – a proposed bill that could regulate marijuana like alcohol.
Representative Earl Blumenauer (D-OR) just introduced the bill, which is designed to remove marijuana from under the Controlled Substances Act and allow it to be taxed and regulated like alcohol at the federal level.
“While the bill number may be a bit tongue in cheek, the issue is very serious. Our federal marijuana laws are outdated, out of touch, and have negatively impacted countless lives,” Blumenauer said. “Congress cannot continue to be out of touch with a movement that a growing number of Americans support. It’s time to end this senseless prohibition.”
The proposed H.R. 420 called the “Regulate Marijuana Like Alcohol Act” would create federal regulations for cannabis. Marijuana would be overseen by the Bureau of Alcohol, Tobacco Firearms, and Explosives (BATFE).
Here’s what it would do if passed:
One, it would remove cannabis from the Schedule 1 drugs on the Controlled Substance Act and transfer enforcement authority from the DEA to the (BATFE).
Two, it would also for creation of federal permits for the cultivation, packaging, selling and importing of marijuana.
Should it make its way through Congress, it could ignite one of the biggest investment booms we’ve seen in quite some time.
In short, this may be one of the hottest, safest spots to invest in for the New Year.