Time to Invest in Marijuana?

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

By Bill Bonner, Chairman, Bonner & Partners:

“Would you like to make a billion dollars?” begins an email from an old friend. He was completely serious.

“I don’t know if you’ve been following the development of the medical marijuana business in Colorado, California, Washington and elsewhere. But this much is clear – it is fantastically lucrative.”

Don’t Bogart that Joint…

Recently, at a party, a friend took a joint out of his pocket, lit up, and passed it around. Imagine our surprise! We had not seen marijuana in use since 1969.

We looked forward to taking a deep toke… filling our lungs… and reliving those happy times. (Would someone put “Sympathy for the Devil” on the record player, please…) But the joint never made it to us. It went up in smoke, “bogarted” by our friends.

The resurfacing of marijuana in middle-class settings, and our own juvenile reaction to it, made us wonder: Are baby boomers getting younger? If so, maybe investing in the medical marijuana business is a good idea.

Our friend thinks so. And he’s not the only one. Only a few months ago, another friend offered us the opportunity to invest in a similar marijuana venture in Canada. We declined. (Alas, we may never make it to true billionaire status!)

Marijuana, the story goes, will soon be made widely available for people who need it. And to those who don’t. Especially the baby boomers. They are the target audience. They have no fear of the weed… and they have plenty of aches, pains and anxieties that it may help.

There is some research suggesting that smoking too much pot when you are young may stunt your intellectual or emotional growth. It may also harm your career or your family life.

But for the baby boomers these things pose no threat. They already stunted their intellectual and emotional growth in the 1960s. And they made a mess of their careers and families in the 1970s, 1980s and 1990s. Now, they have to live among the debris… with few responsibilities and lots of time on their hands. Many think pot helps.

A Marijuana Monopoly?

Could pot help their finances get high too?

At first, we dismissed the possibility. Marijuana is too easy to grow. It will be cheap and readily available to everyone. Profit margins will be narrow, with no moat to keep out new competitors.

But the cronies are not so dumb.

If marijuana were simply legalized, prices would probably be low… supplies abundant… and profits few.

That may be the real reason it is has not been made legal already: There was no profit in it. The dealers… the police… the prisons…all colluded to keep it illegal.

But what if, instead of legalizing it, you could turn it into a state-sponsored monopoly, like state lotteries?

Licenses could be issued to cronies who contribute to political campaigns. Only a few carefully monitored growers would be permitted… distribution would be tightly controlled… and competition would be prohibited. Then there would be fat profit margins to divvy up.

Our friend comments:

“We have a friend working in the state legislature. He just happens to be intimately involved in the governor’s initiative to legalize medical marijuana. We have made substantial investments in political contacts in [the state capitol].”

The fruit of these investments, he goes on to say, will be an explicit licensing system, giving a few well-connected players what amounts to monopoly franchises in the pot space.

Even in the weed space… the fix is in. By Bill Bonner, Chairman, Bonner & Partners.

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  8 comments for “Time to Invest in Marijuana?

  1. Gil
    Aug 14, 2014 at 11:35 pm

    Every bubble deflating needs a new bubble to replace it.
    Trouble is they are running out of things to bubble up, and yes a nice bust of crony capitalism and get all the old biddy’s excited at reliving their youth, and you can clearly see the benefits.

    However I will still buy my blow from the local dealer and support the small guy against the crony capitalists.

  2. JM Hatch
    Aug 16, 2014 at 1:32 am

    While MJ easier to grow than tobacco, which is easy enough, there has to more to why people didn’t try to grow tobacco at home with near monopolies and high taxes. You may grow up to 1/10 of an acre for personal use. No permit is needed for personal use. A permit must be obtained to grow it commercially as well as a host of tax & auditing requirements.

    My guess is people don’t grow tobacco because of some ballance struck between cost vs. convenience & possibly influence of marketing/fashion. So, ask why more people are not growing tobacco at home and see if those same reasons applies to pot.

    I will note that A single high quality pot plant makes more than enough for home consumption, but it would take far more tobacco to meet the needs of that particular addict. If I was to consume either product, then I’d rather grow it myself that take the risk of buying something adulterated by corporations. Others will feel differently.

  3. tom kauser
    Aug 16, 2014 at 5:34 am

    Dim bulb

  4. tom kauser
    Aug 16, 2014 at 5:50 am

    Before you go any further a website called W.I.K.I.P.E.D.I.A. which is free can help you get up to speed! ENDO CANNABINAL system is the page you are looking for and after you refrain from the giggles read “POT TRIGGERS THE CELLS IN THE BODY TO PREMATURELY KILL THEMSELVES BEFORE THEY CAN TURN CANCEROUS” AMOUG OTHER THINGS BODY GOOD. Also look up fiber and be warned cannabis has 10k industrial uses and its promotion will shutter many billion dollar industrial companies! 1969? You have alot of research to do before you “plant that seed and watch the profits roll in”? I have been eating pot for years and never felt better and look 33 when I am 53! Its a great thing to control free radicals too! I LOVE COLORADO

    • Aug 16, 2014 at 6:56 am

      Thanks Tom, for letting me know that you’ve been “eating pot for years” – which means that you’re high when you’re commenting on this site, which explains the utter wackiness of your comments. Mystery solved!

      Remember when I asked you under one of your recent wacky comments, “What are you smoking?” Ha, not smoking. Got that wrong.

      I’ll keep your condition in mind next time I read your comment.

      That said, I agree, there’s much to love about Colorado.

  5. Eric Balti
    Aug 16, 2014 at 9:34 am

    This article is about Florida. There are several factors in Florida that provide a serendipitous outcome for the connected crony capitalists. First, the Democrats, in an attempt to increase voter turnout for the 2014 election, have been pushing a state constitutional amendment to legalize marijuana. Amendment 2 [Florida Right to Medical Marijuana Initiative] would allow prescriptions for any “conditions for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient.” The organization leading the push for Amendment 2 is People United for Medical Marijuana, which is almost entirely funded by major Democratic donors.

    In response, the Republicans, passed the “Compassionate Medical Cannabis Act of 2014” which legalizes the use of
    “low-THC cannabis” such as the Charlotte’s Web strain. It regulates the Florida medical-marijuana industry by limiting the number of growers to those horticultural companies that have been in business for at least 30 years, are already growing at least 400,000 plants, and have the financial means to start growing marijuana while meeting all the regulatory requirements.

    In addition, the state Department of Health will issue one medical-marijuana license in each of five regions in the state. Each licensee will have exclusive rights to grow, process, and sell medical-marijuana in their region. Reportedly there are only 21 growers in the state who would qualify to obtain one of the five state licenses.

    While it’s easy to see the opportunities for crony capitalism from the Republican law, there are excellent opportunities with the Democratic initiative as well. For example, local business regulations will make it difficult for small companies to obtain marijuana dispensary licenses. Licensing “consultants” to help businesses navigate the regulatory maze have already sprung up to help with licensing and compliance. The medical disability industry will hugely benefit from the influx of the “disabled” due to chronic effects of marijuana use.

    As with most healthcare related issues, there are multiple opportunities for the well-connected to profit.

    • martin
      Aug 16, 2014 at 6:44 pm

      Talk about wacky comments Wolf. Eric here thinks that the Disability Industry is going to be in the money due to the “chronic effects of marijuana use”. That is a f#%king laugh, the ONLY people needing the help of the miserable and corrupt medical community will be the dumb schmucks that never consumed at all in their boring and staid lives.

  6. Mike in Tokyo Rogers
    Aug 17, 2014 at 1:38 am

    Lordy, what have we come to? Legalized marijuana?
    What will your mother say when they find your corpse laying on the kitchen floor stone cold after just one hit of pot?

Comments are closed.