The recreational and medical marijuana (MMJ)
market in North America continues growing by leaps and bounds, driven steadily
forward by changing attitudes among the citizenry, as well as law makers
regarding cannabis consumption. One of the major factors has been how much
revenue the industry can contribute to state coffers in the form of taxation,
and the variety of jobs created serving this burgeoning market form a strong
secondary impetus for state legislatures to take a second look at passing, at a
bare minimum, some form of MMJ legislation, which is often the first step
towards broader legalization.
Cannabis has become quite the cash crop, raking in
$14B a year in California alone, making it the number one cash crop in the
state, which is saying a lot considering how much of the country’s produce and
nuts come from California. California produces over 90% of the country’s
artichokes, broccoli, cauliflower, celery and garlic, as well as fruits like
plums and kiwis, even the lion’s share of walnuts come to us from this one state’s
farms. In Oregon, only the state’s abundant apples continue to outrank
marijuana as the largest cash crop today, further illustrating how lucrative
the basic product for this yet-nascent industry has become.
The U.S. MMJ sector alone was valued at around
$2.3B in 2014 according to ArcView Market Research’s latest comprehensive
report, and the report also pegs the value within the next four years as more
than quadrupling to around $10B. Given the roughly 38% growth rate of the MMJ
sector since 2011, this projection seems well within reason and IBISWorld’s MMJ
market research report tracks very well with the 2014 ArcView data, putting
U.S. MMJ sector revenues at around $2B. The recent GreenWave Advisors report
from October 2014 estimates that total U.S. retail marijuana sales revenue
could rise to around $35B within the next five years if the substance is made
legal in all 50 states, with a lower boundary around $21B if legalization
proceeds at a more conservative pace.
The Congressional appropriations bill passed in
early December of 2014 even placed landmark restrictions on the DOJ when it
comes to going after states that have already passed marijuana reform laws,
barring them from spending any monies on such activity, thus giving markets a
clear indication of where things are headed. With MMJ currently legal in 23
states and D.C., and recreational sales in Colorado outstripping MMJ sales for
the first time as of mid-2014, the underlying industry trend seems quite clear.
Especially considering the shifting attitudes of U.S. citizens illustrated by
the Gallup poll conducted in October, which showed a clear majority (52%) of
Americans now favor marijuana legalization. This is the first time since Gallup
started polling on the issue 45 years ago that a majority of those polled were
in favor of legalization.
This glowing portrait of the industry’s underlying
dynamics is why many investors are flocking to share price-accessible sector
players like Nhale, Inc. (OTCQB: NHLE). Nhale is currently focused on pursuing
a variety of acquisition opportunities across the medical and recreational
cannabis markets, emphasizing targeted operations with a proven business model
and the potential to make a significant impact. The company’s execution of a
$10M debt financing deal with Toronto-based private investment group Four
Twenty Investments, Inc. has set the company up nicely to vigorously pursue
their previously disclosed acquisition strategy as 2015 kicks off.
The company is currently pursing acquisition
opportunities in Colorado, Washington and Oregon, as well as up in Canada. The
company even announced favorable results of talks with a licensed producer in
Washington back in mid-December aimed at negotiating an LOI, even as sales in
the state, where recreational marijuana stores only opened back in July of
2014, have jumped 400% and are on-track to hit around $200M within another
year, according to analysis by Marijuana Business Daily. In Oregon, Nhale has
executed an LOI to assess another prospective grower and the company currently
estimates revenues could exceed $30M in 2015 if all of their deals currently
under negotiation in states where recreational marijuana is already legal go
through successfully.
To get a closer look at the company, visit
www.nhaleinc.com/investors.html
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