Marijuana was a $5.4 billion legal industry in 2015, and with more states legalizing the use of cannabis, the demand for marijuana is expected to be even higher in 2016 and to hit the $7 billions. With marijuana turning into the country’s new gold rush, parents will have to face a tough decision – let their kids buy marijuana stocks?
This week’s report by two marijuana analysis and investment firms confirmed that the marijuana industry has turned into the country’s new gold rush, reports AllGov on February 6. According to the two firms, the ArcView Group, based in San Francisco, and New Frontier, based in Washington, national sales of marijuana went up from $4.6 billion in 2014 to $5.4 billion in 2015. For 2016, the forecast is that cannabis will be a an industry of $6.7 billion in legal sales.
As more and more states are legalizing marijuana and companies are going corporate, the industry is getting the attention of Wall Street. It is also getting the attention of parents who are supporting their children to invest into something that will grow:
“The promises and headwinds of the industry are potentially far-reaching and attracting notice on Wall Street. As more states legalize marijuana sales, analysts are weighing the stock market benefits of new businesses as cannabis goes corporate. Funds are considering the ethics of investing in marijuana. Parents are even debating whether to allow their children to buy the stocks.”
Despite the growing demand of marijuana, its stocks underperformed on the market in 2015. Analysts believe that the discrepancy between federal and state laws contributed to the struggling stocks:
“John Kagia, New Frontier’s director of industry analytics, said he has spoken at investment meetings about legal marijuana where it was ‘standing room only’ with investors trying to ‘figure out angles’ given the regulatory climate.”
In contrast to federal laws, 23 states are permitting medical marijuana use. Four additional states, Florida, Ohio, Missouri and Pennsylvania, might soon be joining them. California, Nevada, Arizona, Massachusetts, Maine, Rhode Island and Vermont will be voting to allow full marijuana use for adults.
The latest report by GreenWave Advisors describes three types of legal marijuana use. The three types include adult recreational use; medical use of cannabis; and medicinal use of a cannabis product from which the compound that gets a consumer high has been extracted.
According to the report, 2016 will be a “tipping point” at which “a majority of states transition from cannabis prohibition to some form of regulated legal market,” reports the New York Times.
“Though public opinion is shifting toward embracing cannabis reform, presidential candidates are more reticent to support legalization,” states the report. However, once federal law and state law will come into sync in regard to cannabis, the growing $5.4 billion marijuana industry will hit Wall Street and savvy parents with some crucial investment decisions for their children.