A Kiwi Cannabis Jackpot

Oh, baby I get by (Ah, with a little help from my friends)
All I need is my buddies (Ah, with a little help from my friends)
I say I’m gonna get high (Ah, with a little help from my friends)
Oh yeah (Ooh)

The Beatles

Pot is a dangerous subject.

A drug. Illegal. For some, unethical. For others, their go-to vice.

Some will never touch the stuff. Others can’t live without it.

It’s more popular in New Zealand than you might realise. According to the UN, New Zealand has the ninth-highest cannabis usage in the world in terms of percentage by population.

Plus, that statistic only considers users between the ages of 16 and 64.

In NZ, there’s a growing number of cannabis consuming retirees. They’re not necessarily smoking joints either. Many of them use THC or CBD derivatives like oils.

There’s no smoke. No smell. Just a drop of oil on the tongue. And there’s not necessarily any ‘high’ either. For many, the effect is relief. Relief from aches, pain, shakes, or anxiety.

If you’re not familiar, THC and CBD are two compounds normally found in cannabis. They affect you differently.

Medical Users Table

Source: Analytical Cannabis

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There is also, potentially, a lot of benefits yet to be fully understood by the medicinal community. However, the growing rate of acceptance among all age groups is encouraging pharmaceutical researchers to dig deeper.

 

A budding industry

Now, I understand if you’re not interested in being a consumer. That’s not my goal today.

I believe the greatest value of cannabis is for investors.

You see, whether you like it or not, the pot industry is exploding. It’s fuelled by a wave of legalisation around the world that’s creating huge opportunities in both the recreational and medicinal sectors.

Demand is skyrocketing…and it’s driving suppliers to get smart.

I’m not talking suppliers like the sulky kid down the street who grows a few plants in his grandma’s basement.

I’m talking about corporate, streamlined operations with thousands of plants. Indoor factories with rows and rows of meticulously manicured buds. Industrialised, scientific growing environments manned by professional horticulturalists.

Pot

Source: Pixabay

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These commercial growers are not only producing lots of product, they’re drastically improving the quality. They’re measuring the chemical levels in their products and finding new ways to refine the results.

For consumers, this means both cheaper and better weed. [openx slug=inpost]

 

High expectations

It’s the birth of an industry.

If North America is any example, legalisation could create HUGE opportunities for investors.

For example, here are some pot stocks that have generated massive returns in 2016 and 2017.

  • GW Pharmaceuticals — 34% returns over 12 months
  • Canopy Growth Corporation — 223% returns
  • Aurora Cannabis — 426% in a year
  • Aphria — 330% returns in 12 months
  • Cronos Group — 1,062% in a year

And the best part? New Zealand hasn’t yet experienced this pot stock gold rush.

That means you, the investor, still have time to get in early before take-off.

And what’s going to trigger this sort of explosion?

A change in legislation. It must happen before any formal commercial sector can appear.

Although some companies have already begun setting up their infrastructure for a potential legalisation, they can’t start producing, or go public, until the laws relax.

Fortunately, it looks like a referendum might be on the table as soon as 2019 or 2020. The joint effort between the Greens and Labour has guaranteed that some sort of referendum will occur before the next General Election.

The Greens have proposed some slight changes that could be important first steps towards full legalisation. The changes would include legal possession and cultivation for personal use, a minimum age limit for personal users and the removal of penalties for anyone growing for medical use.

That’s in line with Jacinda Arden’s comments on the matter reported by CNBN in October 2017:

‘During the campaign I’ve always been very vocal about the fact that I do not believe people should be imprisoned for the personal use of cannabis. On the flip-side, I also have concerns around young people accessing a product which can clearly do harm and damage to them.’

Hopefully she’s not just blowing smoke.

The referendum would be non-binding, but I reckon a lopsided result would give legislators the kick in the bum they’d need to get things moving.

And according to recent polls, about two-thirds of Kiwis approve of either decriminalising or legalising cannabis. If they pipe up when the referendum comes around, that would probably be the equivalent of a green light.

Good signs for pot investors.

Regardless of whether or not you support the measure, legalisation seems to be the global trend…and it’s leaving a trail of wealthy investors. That could mean big returns for those that can get in early.

Cheers,
Taylor Kee

Editor, Money Morning New Zealand


Taylor Kee is the lead Editor at Money Morning NZ. With a background in the financial publishing industry, Taylor knows how simple, yet difficult investing can be. He has worked with a range of assets classes, and with some of the world’s most thought-provoking financial writers, including Bill Bonner, Dan Denning, Doug Casey, and more. But he’s found his niche in macroeconomics and the excitement of technology investments. And Taylor is looking forward to the opportunity to share his thoughts on where New Zealand’s economy is going next and the opportunities it presents. Taylor shares these ideas with Money Morning NZ readers each day.


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