By Justin Spittler, editor, Casey Daily Dispatch
The Coca-Cola Company has its eyes on the legal marijuana market.
And it’s watching the space for the same reasons as Big Alcohol and Big Tobacco.
The legal marijuana market is exploding before our eyes.
In the U.S., it’s already a $6.5 billion industry. By 2026, it’s expected to be a $75 billion market.
That means the industry is set to grow more than 10-fold in less than a decade. That’s almost unheard of. In fact, we haven’t seen a consumer industry grow this rapidly since broadband internet in the early 2000s.
The soda industry, on the other hand, is in a terminal decline.
By volume, soda sales have fallen for 13 years in a row. And consumption (on a per capita basis) is at its lowest level in more than three decades.
• So Coca-Cola is looking elsewhere for growth…
But the beverage giant isn’t just giving the industry a look—it’s in serious talks with Aurora Cannabis.
Aurora is one of the largest Canadian cannabis producers.
Together, the companies would develop cannabis-infused drinks. But these drinks wouldn’t get people high (aside from maybe a sugar high).
I say this because Coca-Cola doesn’t want to infuse its drinks with tetrahydrocannabinol (THC), the compound in marijuana that gets people stoned. (At least, not yet.)
Instead, it wants to infuse its drinks with CBD, or cannabidiol. CBD is another compound in marijuana. It doesn’t get people high like THC, but it does offer many health benefits.
People take it to treat everything from anxiety to insomnia to chronic pain. In fact, the benefits of CBD are so widely recognized that it has become the “next big health craze in the United States.”
And that’s exactly why Coca-Cola has its sights set on the CBD industry. A company spokesman told Bloomberg two weeks ago:
We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly.
To be fair, Coca-Cola also told Bloomberg that “no decisions have been made at this time.”
But I wouldn’t rule out a deal closing between Coca-Cola and Aurora soon. And I’m clearly not the only investor who thinks so.
• Aurora’s stock surged 17% on the day of the announcement…
This is a huge, one-day move.
And it wasn’t just Aurora… the North American Marijuana Index popped 5% higher that day, too.
And you can bet the whole sector will run even higher if Coca-Cola closes a deal with Aurora.
Still, many investors are asking themselves… “How much higher can marijuana stocks possibly run?”
That’s a fair question. After all, the average marijuana stock has more than tripled in value over the past year. The best ones are up much more than that.
Now, some of these big moves are warranted. But not all are.
• Some marijuana stocks have completely lost touch with reality…
I’m looking at you, Tilray.
Tilray is another Canadian cannabis company. The stock went public on July 18. And the timing couldn’t have been better.
Just look at this chart.
Tilray’s share price jumped from $17 to as high as $300 on September 19. That means the stock jumped 18-fold in just over two months.
As if that weren’t crazy enough, consider this…
Tilray’s market capitalization reached $25.8 billion at its peak. That’s higher than 288 companies in the S&P 500. We’re also talking about a company that did just $20.5 million in sales last year.
This is completely insane. So it wasn’t much of a surprise that Tilray’s share price lost 54% since peaking two weeks ago.
Still, Tilray’s meteoric rise and fall has led to a lot of people writing off the entire legal marijuana market as a “bubble.” But… that would be a mistake.
• It’s still the early days for the legal marijuana market…
Crisis Investing chief analyst Nick Giambruno summed it up best in a private email he recently sent to Doug Casey and me:
Taken together, the medical, industrial, therapeutic, and recreational markets for cannabis will easily be bigger than alcohol and tobacco, and could very well be bigger than the soft drink industry. An enormous, new, global industry is being born.
Put another way, the industry has massive, long-term potential.
There are also several major catalysts on the horizon that could push marijuana stocks much higher. Nick explains:
There is a good reason behind the mania, in my opinion. And I’d bet the mania will get even bigger in the weeks ahead as hemp is legalized at the federal level, CBD is rescheduled, Canada goes live with total legalization (on October 17), and other big states legalize in the near future.
In short, there are plenty of reasons to still be bullish on legal marijuana.
• So consider speculating on marijuana stocks if you haven’t yet…
Just be sure to use discipline. Do your homework first. Only bet money you can afford to lose. And no matter what, don’t chase high-flying stocks. Let the opportunities come to you.
I also strongly encourage you to sign up for Nick’s Crisis Investing newsletter. I say this because Nick hasn’t just been covering the marijuana space… He’s put his subscribers in a position to get rich.
In fact, four of the marijuana stocks that he’s recommended in Crisis Investing have gone up 100% or more. One is up 605%, another is up 192%, and the other two are up 115% and 110%, respectively.
Those are incredible gains. But Nick says the best is yet to come…
He explains why in his brand-new video presentation right here.
October 3, 2018
Today, another reader shares some thoughts on Doug Casey’s recent essay on the nanny state…
Many years ago, as a kid in my early teens, I had the pleasure of knowing an older man… a WWI veteran, in fact. He would gaze into the open fire he used to heat his one-room house and pontificate on the state of the world. This was back in the late 1950s. He would quote the last testament and say the world will have to tolerate some world government ruled by a dictator, who would rule for a time until the average joe would become fed up with his shenanigans and rebel. He said you might think there has been blood spilt in WWI, but nothing like you will see when the majority rise up and kick government into touch.
And as always, if you have any questions or suggestions for the Dispatch, send them to us right here.
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