While I was in Toronto at the Benzinga Cannabis Capital Conference, I sat down for a brief chat with Alan Brochstein. He’s known as the “Cannabis Capitalist,” a former analyst turned fund manager, and founder of 420 Investor. He knows the cannabis industry inside and out. And so, when he says there are three developments that are worth watching, you should listen.
That is, if you’re interested in making money. Still with me? Good!
I only had a short meeting with Mr. Brochstein. And it only lasted as long as it was because the guy who was meeting him after me got lost. We all did; I just have an annoying habit of showing up early. So I had time to get “unlost.”
When we talked, I asked Mr. Brochstein if there were emerging trends that cannabis investors should be watching. Here’s what he said.
Game-Changer #1: The Coming Price Squeeze
A phrase repeated by speaker after speaker at the Benzinga Conference was “commoditization of cannabis.” Mr. Brochstein said we will see supply shift to South America and Africa, due to their low costs.
I sat in on presentations by companies growing in Colombia. They can grow pot for under 10 cents per gram. Canadian companies, growing in greenhouses, are proud to get their costs under $1.00 per gram.
Do you see how that can change the game? This one won’t happen soon, but it’s coming.
Eventually — perhaps 2021, 2022 or beyond — we’ll face overproduction anyway. When that happens, you’ll want to be invested in companies that are more than just growers. I’m talking about companies that bring an added benefit or have a new technology that sets them apart.
Speaking of that …
Game-Changer #2: Geo-modifiers
This is making cannabinoids through means other than pot plants. In other words, changing the DNA of plants to make cannabinoids, and better cannabinoids.
You can even do it with yeast. Which is why many in the industry prefer to call it “cellular agriculture.” Only two companies were pursuing cannabinoid biosynthesis just two years ago. Now there are a dozen.
This raises the possibility — down the road — of making cannabinoids in factories, not on farms.
Another speaker at the conference, David Elsley, the president of Cardiol Therapeutics (OTC Pink: CRTPF), hammered home this point when he was on stage. He pointed out that drugs are made in factories. THC and CBD, the ingredients customers want in pot, are drugs. Why SHOULDN’T they be made in factories?
“Plant synthesis is enzyme-based, and that’s very slow,” Mr. Elsley said. “Chemical synthesis is the way to make anything at scale.”
Do you think this won’t disrupt the cannabis industry? Not now; I mean eventually. And sure, there will always be a place for flower products in cannabis. But you can see the potential on the therapeutic side.
Mr. Brochstein gave me a couple names to check out. After I do my homework, I’ll consider passing them along.
Game-Changer #3: Microdosing
Microdosing is taking a very small amount of a substance with the purpose of experiencing its therapeutic benefits without the high. When it comes to cannabis, tiny doses of THC can be used to help reduce pain, promote sleep, improve mood, increase creativity and treat depression, stress and anxiety.
Microdosing usually involves consuming an amount of THC — the cannabinoid responsible for pot’s “high” — of 5 milligrams or less. Microdosing is a good solution for people who can’t consume or are afraid to consume cannabis.
And this could be an excellent branding opportunity for all sorts of consumer-oriented companies. There are already some rushing to market in this space. I’m researching those right now.
So, I came away with my conversation with Mr. Brochstein with three good ideas. That’s pretty good. And during the rest of the convention, I discovered other new trends. Some are megatrends that will reshape the entire industry.
I’ll write about those down the road. For now, here are two ways for U.S. investors to invest in cannabis.
- One is the stalwart ETFMG Alternative Harvest ETF (NYSE: MJ). It’s a good fund, but it also holds companies with a tangential (at best) connection to cannabis, like tobacco companies.
- The other is the AdvisorShares Pure Cannabis ETF (NYSE: YOLO). This fund is very new. It invests at least 80% of its assets in companies that get half their revenue from the marijuana or hemp industry. The other 25% of its investments are in pharmaceuticals, biotech and life sciences securities. I hold this fund in my own portfolio, and may trade in and out of it at any time.
The U.S. marijuana boom is just getting started. There are new developments that could shake up the market — and careful investors should be investigating these game-changers right now.
To help you do just that, Martin Weiss and I are holding a special briefing all about the dozens of opportunities we see … and will reveal a breakthrough strategy to help you profit from them. You don’t want to miss what we have in store.
Go here for the details and to RSVP.
All the best,