The Cannabis Boom Means Huge Opportunities for Investors

The cannabis industry will boom.

Don’t just take my word for it. Look at the data…

According to the CIBC World Markets’ research, the Canadian cannabis market will outperform spirits (like whiskey, bourbon, scotch and gin) by 2020. It projects the industry to become a $6.7 billion market, just behind wine at $7 billion.

Cannabis should generate a whopping $1 billion in earnings … and that’s just over the next two years. If we look out further, the numbers become staggering.

The change from prohibition to legalized consumption will be enormous. By 2021, there will be over 800 million people living in areas with legal cannabis consumption. Medical marijuana sales alone will exceed $30 billion by then.

Health Canada projects medical marijuana sales to grow from $128 million in 2016 to $1.3 billion in 2024. That’s a 915% increase.

The supporting businesses, like testing labs, lighting, security, fertilizers, etc., will be worth $22.6 billion in Canada alone by 2024.

The numbers are staggering. So are the opportunities for investors.

The Cannabis Sector Is Going to Grow

Take Auxly Cannabis Group, for example. It’s an incubator for the best cannabis companies. Auxly supports them as they grow. This kind of company gives investors a wide exposure to the market.

It also reduces the companies’ risk, because Auxly does the vetting. It’s a fundamental part of the business.

This is a business model that works well in the mining sector. Companies like Sandstorm Gold and Wheaton Precious Metals pioneered it in the gold and silver space.

It needs a strong team of experts to understand the risks and values of the sector. But the results can be spectacular. During the run-up in metals from 2009 to 2011, Wheaton’s share price rose over 600%.

The cannabis market looks to be on that kind of run. However, shares of companies like Auxly are easing lower today.

ETFMG Alternative Harvest ETF (NYSE: MJ) shares are near their April low, as you can see in the chart below:ETFMG Alternative Harvest ETF

 

However, the facts tell us a different story.

The cannabis sector is going to grow. Smart investors are using these low prices as an opportunity to get in.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist