The billion-dollar beverage giants have set their eyes on an entirely new industry, an industry that they fear will soon swallow them up if they don’t get ahead of it.
So, if you think you missed the cannabis boom…. Now may be the time for you to get in.
In a matter of days, Canada will legalize recreational marijuana—and it will be the staging ground for other parts of the world.
The highest estimates have global legal cannabis sales reaching nearly $146 billion by 2025. With recreational pot in Canada, the legal recreational sales bonanza is beginning.
As the hype around this up and coming sector grows, the beverage industry is now scrambling to get on board with a string of mega-deals. Cannabis has finally won over the grizzliest of bears and the most skeptical short-sellers, and it is all looking up from here.
Three deals in particular are creating the perfect environment for investors.
And with that in mind, here are 5 stocks that cover pretty much anyone’s investment strategy, whether you want to try to make big bucks on this rampage, or play it safe with a fundamentally strong beverage company that’s getting in on this game …
#1 Coca-Cola (NYSE:KO)
Coke just validated cannabis.
If even Coca-Cola thinks the cannabis market has “incredible potential”—then it does. While Coke’s September 18th announcement that it was “closely watching” the cannabis market and considering marijuana-infused wellness drinks doesn’t compare to the $4 billion another beverage-maker pumped into a grower, it is still a very big deal. More than any other big beverage company scrambling to get into cannabis right now, Coke lends credibility and legitimacy. This was a major, carbonated nod.
If Coke moves forward with this, it would likely consider CBD—a non-psychoactive component in marijuana for an infused drink that could ease symptoms of inflammation, pain and nausea.
For Canada’s Aurora Cannabis (OTCMKTS: ACBFF), it was yet another nice boost, because rumor has it that Coca-Cola is in talks with this company.
And it’s lost on no-one that if Coke starts dabbling in pot, it will be an easier ride—plus, they’ve got the entire Canadian market to experiment on, with recreational legalization just days away. Canada would be the staging ground for the rest of North America.
Wells Fargo is convinced. Its analysts see Coke positioning itself for the long-term here. It also estimates that cannabis-infused drinks are going to be a massive market. They’re eyeing $50 billion in sales annually in the U.S. That would give cannabis-infused drinks nearly half of the entire U.S. beer market sales annually.
This is a great time to get in on Coke—before any official decision is made. When you consider the potential size of this market, Coke’s brand new direction could get a major pot bump. It will also have a domino effect: Watch other non-alcoholic beverage makers follow Coke down this path.
#2 Scythian Biosciences (CSE:SCYB, OTCMKTS:SCCYF)
The playbook is simple: Scythian Biosciences identifies, acquires and flips key businesses – netting a huge profit along the way.
It just cut the best cannabis arbitrage deal in history, and somehow it is still under the radar—but not for long.
Scythian Biosciences, a little-known cannabis incubator, just closed a deal with Aphria, one of the few cannabis majors in the world.
Aphria gave Scythian 15.7 million shares of stock to incubate cannabis assets, right before the first pot rampage exploded. That’s a 6.3 percent share in arguably the strongest cannabis producer in the world—and it also makes Scythian the largest single Aphria shareholder.
When the deal was agreed upon, those shares were trading at CAD $12, worth $193 million.
At the time the deal was closed, Aphria shares were trading at CAD $17.78, making Scythian’s position worth over CAD $278 million.
That’s a massive payoff, all in a day’s work. And that’s what Scythian is brilliant at—it’s a world class incubator and this is its third win-win deal in a row.
Forbes is all over it, and everyone else will be soon. Forbes is right, too. From a ground-floor investment perspective, this isn’t just a big deal—it’s possibly the most mouth-watering arbitrage event in this rapidly transforming sector.
Right now, the market is paying attention to Aphria because the deal gave it “access to world-class assets” in the “most advanced regulatory jurisdictions across LATAM and Caribbean markets”, according to Forbes. It gave them first-mover advantage in Argentina. It gave them market leadership in Jamaica, and gave them Colombia—the prime agro setting with export channels to the rest of Latin America.
And while the market is busy looking at Aphria, Scythian —a very smart and sophisticated incubator of cannabis assets—is stuffing its war chest full of Aphria shares soon convertible to cash.
But there’s another big potential catalyst coming, too—in a matter of days or weeks, Scythian is looking to acquire an exclusive medical cannabis license in Florida.
Ahead of that licensing, Scythian took a controlling interest in 3 Boys Farms LLC—an established Florida medical cannabis company and primary care medical organization.
The U.S. legal cannabis market size was estimated at over $7 billion in 2016. And it’s expected to grow at a CAGR of 24.9 percent from 2017 to 2025.North Americans spent $53 billion on marijuana (most of it illegal) in 2016, according to ArcView Market Research. When the U.S. side of the legal market opens up, Scythian will be there too.
These are floodgates, and they could unleash serious market attention for Scythian Biosciences —which has a valuation more than 70 percent higher just on the Aphria deal.
What most people don't understand about this market is that incubator funding isn't coming from Silicon Valley … or Wall Street…
It’s coming from publicly traded companies acting as incubators, like Scythian Biosciences.
Scythian looks for the huge upside potential of these early stage investments…
But, because this space is so new, many investors don’t yet understand the profit potential of this new breed of company…And that's opened up a huge opportunity for investors that do.
Scythian is a credible international incubator. It’s also the world's first global cannabis incubator, and they've already made some game-changing deals.
#3 Diago Plc (NYSE:DEO)
Diageo was the third major alcoholic beverage company to focus on pot. It’s the maker of Guinness beer, Smirnoff vodka and Johnny Walker, and it’s already been in talks with at least three Canadian marijuana growers. It wants a piece of the action quite desperately. Now the speculation is about which grower it’s going to choose, so everyone’s watching those stocks as well.
The speculation so far centers on Aphria (again), Tilray (NASDAQ:TLRY) and Aurora Cannabis (NASDAQOTH:ACBFF).
Aphria seems to have the advantage because it’s market cap is lower than that other two—considerably. Aphria’s market cap is around $2.7 billion, while Tilray’s is about $14.4 billion and Aurora’s is over $8 billion. It also offers a better price per kilo of capacity than its peers. Perhaps more suggestive still, Aphria already has ties to Diageo through a former Diageo exec who now serves as Aphria’s chief commercial officer.
For the UK beverages giant, getting into cannabis seems to be a must.
#4 Canopy Growth (NYSE:CGC)
Canopy Growth has been the biggest cannabis stock on the market for some time, though in terms of market cap, it was just overtaken by Tilray, which has seen an 800% gain since its July IPO.
General market rampage aside, the biggest new catalyst here is the approval Canopy just won for its remaining greenhouse space at Tweed Farms, which expands its licensed footprint to around 3.2 million square feet.
For growers right now, it’s all about expanding capacity. Canopy’s Canadian platform is now 57 percent licenses “with the balance under aggressive development towards the previously announced 5.6l million sq. ft. target production footprint”, the company said in a statement on September 17th. They need this much capacity in order to meet expected demand come October 17th, when Canada fully legalizes recreational pot.
All in all, Canopy’s stock has gained 98.5 percent this year.
Canopy Growth's price target is being raised at Garnier to CAD$95 (from CAD$51).
But that’s not the only catalyst—it’s just the newest. Beverage giant Constellation Brands, Inc. (see below) announced recently that it will inject some $11 billion into Canopy over the next three years. That's got investors drooling over the expansion prospects. And in August, Constellation pumped $4 billion into Canopy, raising its shares to 38% from 9.9%.
All this activity has even earned Canopy the moniker, “the Google of pot”.
Which brings us to #5 …
More at Yahoo Finance
The Biggest Marijuana Winner of The U.S. Legalization Boom
As medical marijuana begins legalizing in all 50 states, an expected 4,067% industry boom will transform the average American’s savings into early retirement nest eggs.
It appears it’s not a matter of if medical marijuana will become legal in all 50 states, but when.
It’s not surprising when you consider a recent poll shows 93% of Americans are now in favor of legalization.
And early investors could see their starting stakes turn into retirement fortunes, as the industry is expected to surge 4,067%.