A billion dollar rite of passage in the emerald triangle

Wednesday, 7 February 2018
Melbourne, Australia
By Bernd Struben

  • Roll another one…
  • Do you have a plan?

I got a call from an old friend over the weekend.

Back in the early 90s we attended the University of Michigan together. These days she lives in a town called Eureka, in Humboldt County.

You may have heard of Humboldt County. It’s one of three counties in northern California that make up what’s known as the Emerald Triangle. The other two are Mendocino and Trinity.

Humboldt County has long been synonymous with high quality marijuana. Today the Emerald Triangle is the largest pot producing region in the US. Indeed, that’s how it earned its name.

Locals have been growing marijuana there since the 1960s. But the industry really took off in the region in 1997. That followed the approval of the Compassionate Use Act in November 1996. This act legalised medicinal marijuana in California.

As we know today, it was a sign of far larger things to come.

On 1 January this year, the recreational sale and use of marijuana became legal across California — the most populous state in the US, and the sixth largest economy in the world.

Like alcohol, the minimum legal age for buying marijuana in California is 21. And like alcohol, buying your first legal weed is fast becoming a rite of passage.

At least, according to my old uni friend.

While she enjoyed a few puffs back in the day, she smoked her last cannabis when she had kids. Now her oldest son has just turned 21.

And, along with ordering his first legal bottle of wine at his birthday dinner, he bought his first legal marijuana at a state licensed store. Far better, my friend said, than having him try to buy some on the black market.

Her son is not alone.

A December report by Arcview Market Research expected legal sales in North America to reach US$9.7 billion in 2017. That’s up 33% from sales revenue in 2016.

Meanwhile BDS Analytics estimates legal sales in California alone will hit US$3.7 billion in 2018, ramping up to US$5.1 billion in 2019.

That’s some serious growth. And savvy investors are cashing in.

More, right after the markets.

Markets

Things took a late turn for the better in US markets. After initial losses, all the major indices headed into the black around 2:30pm New York time. While that was too late to impact European markets, I’d expect a healthy bounce on the European exchanges today.

Overnight, the Dow Jones Industrial Average closed up 567.02 points, or 2.33%.

The S&P 500 gained 46.20 points, or 1.74%.

In Europe, the Euro Stoxx 50 index finished down 83.85 points, or 2.41%. Meanwhile, the FTSE 100 fell 2.64%, and Germany’s DAX lost 294.83 points, or 2.32%.

In Asian markets, Japan’s Nikkei 225 is up 468.47 points, or 2.17%. China’s CSI 300 is down 1.08%.

In Australia, the S&P/ASX 200 is up 54.16 points, or 0.93%.

On the commodities markets, West Texas Intermediate crude oil is US$63.91 per barrel. Brent crude is US$66.86 per barrel.

Gold is trading for US$1,325.79 (AU$1,679.28) per troy ounce. Silver is US$16.67 (AU$21.12) per troy ounce.

One bitcoin is worth US$7,690.28.

The Aussie dollar is worth 78.95 US cents.

Roll another one…

When you think of savvy investors, you probably think of people like George Soros, John Templeton, or Warren Buffett.

Names like Snoop Dogg and Willie Nelson or Richard Marin and Tommy Chong (Cheech & Chong) probably aren’t the first that come to mind.

Yet these men (yep, they’re all men) are riding the wave of marijuana mania sweeping the world to the tune of many millions of dollars.

This headline ran in The Australian Financial Review last week, ‘Willie Nelson’s pot brand raises $15m to extend geographic reach’. The article continues:

GCH Inc, a Colorado firm that markets country music legend Willie Nelson’s brand of weed, said that it has raised $US12 million ($15 million) to expand beyond its current market of Colorado, Washington, Nevada and Oregon. That brings its total funding to $US29.5 million.

Earlier this month, a private equity firm backed by billionaire Peter Thiel said it has amassed $US200 million for its cannabis portfolio, which includes the official brand of the late reggae star Bob Marley…

Nelson, a pioneer of outlaw country music who has been arrested several times for marijuana possession, brings a level of authenticity to the market…’

Bully for Willie Nelson. But what if you’re not a famous pot smoking, outlaw musician?

In that case, you can still get a piece of the action in what Sam Volkering calls ‘2018’s pot stock frenzy’.

Over at Australian Small-Cap Investigator, Sam has just released a brand new report. In it, he highlights Australia’s potentially huge role in the global medicinal marijuana market.

Sam has narrowed his focus to two ASX listed small-caps in particular. Stocks he believes are perfectly placed to capitalise on the resurgent boom in the legal marijuana trade. In fact, he believes these two companies could gain 553% to 1,000%…or more.

And it all starts this year.

While California legalised medicinal marijuana in 1996, Australia only made that move last year.

Then, at the start of this year on 4 January, Health Minister Greg Hunt dropped this bombshell. The government is proposing to open the door for Australian medicinal marijuana exports. A final decision is expected towards the end of April.

To give you some idea of the potential on offer here, have a look at the chart below.



chart image

Source: Grand View Research
Click to enlarge


Research house, Grand View Research, estimates the legal medicinal marijuana market will hit $55.8 billion in just seven years.

And a select few Australian firms are in a great position to take advantage.

One of the two Aussie stocks Sam’s recommending has roots in the Emerald Triangle. That’s right, the Emerald Triangle, where it’s developed a reputation for top-quality marijuana treatments for ailments including insomnia and eczema.

But that’s not what placed this stock at the top of Sam’s list. He’s most excited about the company’s potent new cannabis treatment to fight aggressive brain, breast and pancreatic cancers.

They’re still in the trial phases. But according to Sam:

Their early results are ground-breaking. There’s no guarantees. But a successful, cannabis-based treatment could launch this stock into ‘hi-bagger’ territory…potentially on-par with the 873% gains Auscann has racked up in the last 12 months.

If you’re not familiar with Auscann Group Holdings Ltd [ASX:AC8], the company grows medicinal marijuana and produces a range of cannabis-based treatments for the Australian market.

Check out it’s stunning share price growth below.



chart image

Source: marketindex.com
Click to enlarge


That’s all the time and space we have for pot stocks here today. But you can get all the details on both of Sam’s favourite plays for 2018’s pot frenzy right here.

Would you invest in marijuana stocks? Have you made — or lost — money in pot stocks in the past? Drop us an email at letters@portphillipinsider.com.au. If we publish your letter we’ll only use your first name.

Do you have a plan?

When the stock market was taking a tumble over the past days, did you have a plan in mind?

Perhaps you got the jitters and sold a large portion of your stock holdings. Or perhaps you’d made up your mind this was just a modest correction, and you were determined to hold on.

Following today’s recovery on the ASX, that looks like it may be the case…for now.

But as the past week demonstrated, it doesn’t take much to wipe out weeks or even months of gains.

You can help protect your gains in the market by setting — and sticking to — stop losses. A few targeted short investments (betting on a stock’s price to fall) can also reduce your losses when the market does tank.

These are just two of the strategies trading veteran Jason McIntosh uses at his advisory service, Quant Trader.

Here’s what he wrote to his subscribers yesterday, while the ASX 200 was busy falling 3.2%.

Sharp selloffs are a nerve-racking time for many traders. Much of the stress comes down to not having a plan. This often leads to rash decisions. 

Yes, this week’s selloff is a big deal. But it’s not unique…

The best strategy is to stick to your plan. You might not know what the market will do next. But you know what you’ll do. This gives you more control than most.

And remember, Quant Trader has an exit point for each stock. This is a key part of the strategy — it’s a built-in safety net aimed at preserving capital for the inevitable recovery.

Good trading isn’t about ideal conditions — it’s about consistency and discipline. This is what brings you out the other side during the downturns.’

You should haver received an email from publisher Kris Sayce earlier today inviting you to learn more about Jason’s premium advisory service, Quant Trader.

If you missed that, check your inbox. Or you can simply click here.

And before logging off…

In today’s Australian Tribune: ‘China’s Terrifying New Era of Government Control

The Roman historian Tacitus once observed that “the more corrupt the state, the more numerous the laws”.

This age-old assertion still rings true today. And as technology has advanced, so too have the methods of total control.

Mass surveillance and the collection of personal data have arguably become the modern indicators of government corruption.’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd