How Big Tobacco Is Set To Become Big Marijuana (PM)

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July 23, 2017 7:24am NYSE:PM

NYSE:PM | News, Ratings, and Charts

From Bill Hall: Could marijuana investing be the break you need to build a million-dollar fortune in the months ahead?


That’s the question my colleague Sean Brodrick and I recently asked Money and Markets readers. And we’ve seen some lively debates at our Marijuana Millions blog.

Here’s what your fellow investors have told us so far …

  • Paid-up subscriber Michael writes: “Bought 3 companies — two growers & one bio/pharma — from the ‘Marijuana Fever’ publication. Only a small amount invested, but so far the total is up almost 12% in 6 days.”
  • Reader Thomas says: “Cannabis investing’s time has come.”
  • Reader William agrees: “At age 85, my portfolio is shrinking. This could be the boost we need. Looking forward to the right information. There’s a plethora out there, but my faith in Weiss goes above all the others.”

On the other side of the debate is one of our paid-up subscribers, Grant J. He writes: “I’m ashamed that my state of Colorado ignited this abomination of legalized recreational use. This weed will largely contribute to the eventual utter destruction of our society, and I can’t in good faith participate in this debauchery, despite the profit potential.”

Thank you, Michael, Thomas, William, Grant J. and everyone who’s shared their questions, thoughts and predictions with us. (You can join the debate here.) It’s clear that we can all agree on at least one thing …

That is, legal marijuana is an unmistakable … and unstoppable … trend that’s unfolding right before our eyes. And the profit opportunities, should you choose to accept this mission to seek them out, are as diverse as our readers’ viewpoints on the topic!

That’s why I’ve taken you on a bit of an unusual journey these past few weeks. To put you on the inside track for once-in-a-lifetime gains.

I’ve revealed how “family offices” — the preferred investment platforms for many of the world’s mega-millionaires and billionaires — are quietly funding the marijuana industry.

Why? Because they hope to cash in on what Forbes magazine calls “the best ground-floor opportunity we’ve seen since the early days of the Internet.”

If read my weekly Money and Markets columns, you know that I’m a professional trustee for ultra-wealthy families. And I can assure that the world’s super-rich are not amused when you “get too creative” with their money.

What’s more, as the Captain of the Weiss Safe Money ship, you know that I’m also a notoriously safety-conscious investor. But there are rare circumstances when the world’s elite investors are willing to step outside of their traditional comfort zone. They’ll take on additional risk to pursue enormous returns — when the odds are with them.

And right now, it’s likely that we are on the brink of one of those rare opportunities as marijuana fever spreads across the U.S.

Just take a look at this map …

During the past several weeks in this space, I’ve explained how you, too, can cash in on marijuana fever …

Just be selective and choose carefully from among the more than 200 publicly traded marijuana stocks traded on the U.S. and Canadian exchanges.

This opportunity is so rare that investors who have the foresight and risk appetite to get in early could find it to be highly profitable. So in case you’re still on the fence, I’m going to briefly recap the journey that we’ve traveled together over the past eight weeks …

We began on May 26, when I told you to Get Ready to Step Out of Your Investing Comfort Zone. Specifically, to consider how Joe Kennedy Sr. — JFK’s father — secured deals to import liquor just before the repeal of Prohibition, which made him fabulously wealthy. I explained how the legal-marijuana market looks primed for profits … just like alcohol was just before Prohibition was repealed.

Next, in the June 2 issue, I explained how Marijuana Is Going Mainstream. I pulled back the curtain on an exclusive wealth-management conference held in ritzy Huntington Beach, Calif. There, some of the world’s wealthiest families gathered and paid about $2,000 a pop to soak up expert tips on tax strategies, real estate and, yes, capitalizing in the legal-cannabis space.

I also told you about how Peter Thiel, the co-founder and former CEO of PayPal (PYPL), directed his multibillion-dollar venture capital fund, Founders Fund, to make a multimillion-dollar investment in Privateer Holdings. (That’s the marijuana company that holds Marley Natural Brand, named after the late reggae singer Bob Marley.)

Then on June 9, I explained why Big Pharma is dead-set against the inevitable legalization of marijuana across the U.S. as they prepare to battle over billions of dollars of revenues. That’s because a report recently released in the Health Affairs journal showed that pain patients are increasingly choosing pot over powerful — and potentially deadly — prescription narcotics.



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What’s more, CBS News reports that a whopping 76% of doctors in the U.S. favor legalized marijuana. So it’s only a matter of time before patients begin choosing marijuana over morphine.

On June 16, I told you about another industry that’s becoming Paranoid About Lost Profitsbecause of legalized marijuana … and that’s Big Booze. Here’s why: There’s an inverse correlation between alcohol consumption and cannabis use, according to the well-respected researchers at Cowen & Co.



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In that article, I also revealed one of my favorite charts about the marijuana industry:



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As you can see for yourself, if the estimated yearly demand for recreational marijuana is in the right ballpark, then more Americans crave cannabis than cabernet or candy bars.

With estimates for the recreational pot business coming in at around $50 billion annually, the potential market for the Big Green is in the Big Three of America’s vices … trailing only cigarettes and beer. Wow!

And here’s more bad news for Old Joe Kennedy’s booze business: According to a study by market research firm C2G, about 27% of beer drinkers said they have already substituted cannabis for beer … or would make that switch if marijuana was legal in their state. Yikes!

On June 23, I turned the tables and told you how Big Tobacco has been embracing the cannabis industry — and setting itself up to profit — if and when marijuana becomes legal at the federal level.

And here’s why:



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As this chart clearly shows, cigarette companies have been grappling with declining sales for more than a decade.

It shouldn’t surprise you — given the crossovers in manufacturing and marketing as well as Big Tobacco’s skill in navigating regulation at the federal level — that legal pot is a natural fit for tobacco companies looking to turn around their declining unit volumes.

On June 30, I revealed another surprising link between marijuana and Big Tobacco. Researchers discovered it while combing through more than 80,000 top-secret documents that had been released following the 1998 national tobacco settlement.

They found that top tobacco executives at Philip Morris (PM) and other firms had begun looking into marijuana as early as the 1970s in anticipation of the Big Green becoming legalized in the U.S.

I also explained how Big Tobacco is all set to become Big Marijuana. It already has a wholesale network to distribute marijuana while safeguarding the system against bootleggers. Funneling marijuana sales through the same distribution channel could help cut down on illegal sellers who obtain marijuana through illicit channels.

On July 7, I wrapped up my discussion on Big Tobacco’s plans to get their hands on the whole marijuana pie — rather than just a piece. It wants a cut from marijuana-infused edibles, which account for a whopping 30% of all retail cannabis sales in Colorado. These edibles are rapidly becoming the most-desired product on the legal marijuana market. One reason why: They deliver higher levels of THC into the bloodstream.

And finally last week, you learned how the Marijuana Industry is Shaking Off Old Stereotypes as it becomes more mainstream. In fact, a study published by Consumer Research Around Cannibis shows that the typical medical marijuana consumer is upscale, insured and physician-diagnosed.

In that article, I presented four statistical snapshots that likely changed your view of typical medical marijuana consumers. I know they were certainly eye-opening when I first saw them. I’ve put one of them below.



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And that brings me today’s stop on our journey through the Big Green. I’ve certainly learned a lot about an industry that’s being quietly whispered about in hallways all around Wall Street. I hope that you did, too. And I hope your takeaway is that there’s a lot of opportunity coming our way.

Look, as I’ve told you before, I am NOT on a crusade for legalized pot. Personally, as a buttoned-up kind of Wall Street guy, it’s not my thing. But as a professional investor with more than 30 years of money-management experience, I’ve been trained to set my personal biases aside. That way, I can take a dispassionate view and evaluate the best money-making opportunities for my clients.

And all the facts that I’ve learned — and shared with you — on my journey along the marijuana trail have me convinced that the New York Times got it right when they called legal marijuana “The Next Gold Rush.”

So if your risk profile permits, I suggest that you consider jumping onboard!

Philip Morris International Inc. (NYSE:PM) closed at $119.58 on Friday, down $-0.28 (-0.23%). Year-to-date, PM has gained 33.04%, versus a 11.47% rise in the benchmark S&P 500 index during the same period.


This article is brought to you courtesy of Money And Markets.


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