Published on March 08 2018

Big Alcohol Hasn’t Been This Scared Since Prohibition

By Justin Spittler, editor, Casey Daily Dispatch

Big alcohol is terrified of marijuana.

I don’t mean alcohol executives have watched the propaganda film Reefer Madness one too many times… I say this because marijuana is a grave threat to their business.

Even Molson Coors admits this. Coors is one of the largest U.S. beer companies. It sells the popular brands Blue Moon and Miller Light (among many others).

And it recently identified marijuana as one of the biggest threats to its business. Here’s a direct quote from its latest annual report published on February 14:

Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer.

In other words, Coors thinks its customers will smoke more marijuana and—as a result—drink less beer. That’s obviously bad for business.

• Coors isn’t the only major beer company worried about this, either…

Boston Beer, the parent company of the popular Sam Adams brand, recently said that marijuana could eat away at its business. The same goes for Craft Brew Alliance, which makes Kona and Omission beers.

These companies have good reason to be nervous, too.

After all, marijuana legalization is sweeping the nation. Medical marijuana is now legal in 30 states and the District of Columbia. Recreational marijuana is legal in eight states.

Not only that, recent research by University of Connecticut and Georgia State University found that alcohol sales fell 15% in a number of states that introduced medical marijuana.

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• It’s now only a matter of time before marijuana is legal at the national level…

Now, I realize some readers don’t want to hear that. That’s because a lot of folks think marijuana is dangerous to society. Some even think it’s evil.

But I didn’t write this essay to argue in favor of or against marijuana legalization. At this point, that’s frankly a pointless discussion.

And that’s because marijuana legalization is happening whether you like it or not. The movement simply has too much momentum at this point. It’s a runaway freight train.

Coors obviously thinks so, too. If it didn’t, it wouldn’t have called marijuana a major threat to its business.

That alone should get you curious about investing in marijuana. But many investors are still nervous about investing in pot. And there are a number of reasons for this… but one of biggest ones is recent price action.

• We just saw a huge pullback in marijuana stocks…

The U.S. Marijuana Index fell 36% between January 23 and February 27. Many individual marijuana stocks fell even more. We’re talking declines of 50% or more in a matter of weeks.

This “crash” has freaked out a lot of investors. I know because nervous readers have been flooding my inbox lately. They’re asking me if the marijuana boom is over.

Cannabis stocks have tanked almost every day since the Sessions comments. I have a long-term perspective on equities. I understand all stocks carry risks, but any current thoughts or outlook on this sector?

—Joe

I invested in marijuana stocks. Since it has dropped some 30%, what is the Casey recommendation now? Hold or cut losses? Please advise.

—Clara

Marijuana stocks are taking a beatdown. I understand they are high-risk, but are there any new discoveries that would change your outlook?

—Dave

I understand all of these concerns. But you must understand a few things…

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• Number one: this recent pullback is perfectly normal

Remember, marijuana stocks have been on a tear over the last year. They’re still up big since we initially told you about this opportunity.

The North American Marijuana Index surged 233% between last June and this January.

After a run like that, pullbacks aren’t just normal. They’re healthy. They allow a market to catch its breath before climbing higher again.

I know because I’ve spent the last year researching the marijuana industry around the clock.

But I haven’t just sat at my desk like other “experts.” I’ve gone to the frontlines of the global marijuana boom.

I’ve been to Vancouver, San Francisco, and Denver. Along the way, I’ve met with marijuana venture capitalists, CEOs of multinational marijuana companies, and even master growers.

This “boots on the ground” research has helped me understand how the marijuana industry really works.

• Number two: we at Casey Research never encouraged you to buy marijuana for short-term gains…

Instead, we recommended them as a long-term speculation.

Still, it’s easy to lose faith in a speculation when it doesn’t do what it was “supposed” to do or what you thought it “should” do.

But the best investors know that you can’t let minor setbacks shake you out of a quality investment. Instead, marijuana investors need to be patient. They need to focus on the big picture… and the future for the legal marijuana market is as bright as ever.

So if you own marijuana stocks or have been thinking about buying them, here’s what I suggest you do.

Don’t panic or obsess over daily movements. Marijuana stocks are volatile. That’s just what you get when you invest in an up-and-coming industry.

Use down days as buying opportunities. This way you can start to build positions in quality stocks.

Use proper position sizes. This one is crucial. You see, I’ve been getting emails from subscribers about how they’re down huge sums of money due to the recent pullback in marijuana stocks. We’re talking tens of thousands of dollars.

Now, I don’t know these people’s financial situations. But I’m going to go out on a limb and say that they probably shouldn’t have wagered that much money on marijuana stocks. So, be sure to only bet money that you can afford to lose.

Investors who follow these simple steps will set themselves up for huge gains… without exposing themselves to harmful losses.

Regards,

Justin Spittler
Tulum, Mexico
March 8, 2018

P.S. Be sure to keep an eye out for part two of this story. In it, I’ll tell you how Coors is likely to fight back against big marijuana. As you’ll see, this is a huge opportunity for investors… and one of the best reasons to buy marijuana stocks right now.


Reader Mailbag

Today, lots of feedback on Tuesday’s essay “Trump Won’t Back Down… Here’s How to Protect Your Wealth”…

Stop spreading fake news. This isn't a trade war unless China or the EU want to make it that. You're writing about economics and trading, so you should at least know background material. Trade barriers or barriers to entry are greater in most other countries than the US. Is Facebook or Google even allowed in China? After all, the EU has its own steel tariffs, yet it denounces tariffs. You should at least know more than your readers, or stop writing this column with dated data.

—Rafal

Hello Casey team! Greetings from Nova Scotia, Canada. I am a US citizen, but have lived here in Canada over 40 years. It is impossible to take Mr. Trump seriously about anything. He knows almost nothing about economics or history or much of anything. It seems the only “big picture” he can see is of himself. How would a steel tariff on Canadian steel benefit anyone? The US has a trade surplus with Canada for the steel imported into the US. It would make anything made with steel components more expensive in both countries. It would reduce the manufacturing growth, as well as employment and wage growth, in both our countries. Didn't he recently tweet that if Canada and Mexico hurried up to complete NAFTA (in favor of the US), he might not impose the tariff? Does he think he deserves a better deal than the other countries? The USA has put a tariff on Canadian softwood lumber at least five or six times and have lost the court challenges with the international tribunal each time and needed to refund that tariff. Nothing has changed in the way softwood lumber is marketed and the current wood tariff will end up in court again. Trading partners will not stand by without imposing tariffs on goods or materials imported from the US. No one will win a trade war.

Here's what I am doing with my investment portfolio: I am buying less US stocks and more international stocks (not just Canadian). I am putting more into gold mining stocks, many of which I have held a long time with some showing profits, but many junior mines lagging. The ones I am most confident in are being added to. I have some gold/silver bullion in addition to stocks, and the total is about one-third of my portfolio. I view the coins as a means of “storing” some of my wealth, rather than as an investment. I am taking some of my profits and watching/following trailing stops. I enjoy your information service and wish you all the very best with everything.

—Jerry

How many Fords or Chevys made here were sold in the EU? California or other US-produced wine? Or Sam Adams beer? Or furniture made here? They tax them. They are far more protectionist than we are. Trump is telling them to drop their duties and play fairly.

—Patrick

No winners in war? You had better go back and study history.

—John

Hi, Mr. Spittler. You wrote, “In other words, we need free trade as much as any country on the planet.” I agree. But do you think we have "free trade" now? I don't. And I think that Trump is right to create some havoc with other countries that have taken advantage of the current "non-free trade" situation that they currently have with the US. Do I like free trade? Yes. Do we have it now? No. So what do you think Donald Trump should do? Nothing? Look very carefully at who "holds the cards" in this argument, and then don't be such a 'fraidy cat.

—Dan

And more responses continue to pour in regarding Doug Casey’s interview on arming teachers

Why not use metal detectors and cameras? We have them in the courthouse so no guns can kill the judge or other people. If it is a child that teacher has in their room, it would be hard to kill them. It would be a good try. Thank you.

—Leroy

Like most of your views/opinions, Doug, I again agree with you about arming teachers, etc. I am 75, and was born and grew up in Namibia and South Africa. Similar to you, we owned guns and knew how to handle and use them without any mass shootings of people. I also long ago stopped shooting things and live quietly in New Zealand since 2001. Take care and all the best.

—Andries

Thank you, Justin and Doug! I am an avid follower of your financial guidance, and very pleased that you are willing to "continue" to display, by personal example and testimony, that respect for every individual's rights is encompassed and protected by the 2nd Amendment, i.e., you’re either a free man or a slave! Your timing on this issue is just as important as writing about the commodity cycle. I believe the people who want to confiscate, steal, or restrict weapons are actually both dangerous and stupid.

—Mike

I agree with you. Liberal "know-nothings" want to limit or ban gun ownership, which is really stupid. Schools are currently soft targets, like military bases and most large cities. These are areas where only law enforcement and the bad guys have guns. How many people would Major "Allah Akbar" Nidal Hussain have killed if much of his audience were allowed to be armed? Would he even think to draw his weapon? An Ann Coulter letter specified all of the people responsible for the deaths at the school in Florida. The school chancellor was boasting that, since he took over in 2011, students like the shooter were not arrested because that may hinder the shooter from attaining higher education or a good job later in life. Fuzzy liberal thinking like this is partly to blame for the number of deaths.

—Jack

Hi Doug, I have a lot of respect for your knowledge of money management, but I question very much your opinion on gun control. In 2017, 13,158 people were killed by guns. This is almost as many killed by car accidents: one every 30 minutes. 29.7 per million in America, as opposed to 7.7 in Switzerland, 6.8 in Belgium, and 0.6 in France. Almost all of these mass murders were caused by AR-15 machine guns that shoot 45 bullets per minute. And you think that an old female schoolteacher with a hand gun can face an aggressive killer armed with an AR-15? The first thing she will do is try to hide to save her life. You really think that someone with a machete can kill has many people as with an AR-15? Come on! Since the secession war, there has been more American citizens killed by guns than all American soldiers killed by war. Keep killing your fellow Americans by promoting more guns instead of restricting guns like all other civilized countries do. Thanks.

—Marc

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