Medical marijuana and investment opportunities

Legalized medical marijuana legislations have led to a boom in businesses$1.7B this year. Currently, there are only 16 States and DC which have enacted legislature legalizing marijuana. Which means this is only the beginning and there is a lot of room for growth in what may become a new and profitable industry. that cultivate, harvest and distribute cannabis to this market in several states, such as California and Colorado. U.S. medical marijuana sales are estimated to reach

This has also provided opportunities to entrepreneurs involved in investment and financing to fill the growing capital needs of growing businesses involved in medical marijuana. As these companies grow in size and scope many will require capital infusions from outside investors if they hope to capture market share before competitors. While these companies can go through private channels to raise money, another route is to go to the public markets via an IPO (initial public offering). Sensing billions of dollars in revenue, Angel Investor Network has been Launched to take advantage of ancillary business opportunities in medical marijuana industry.

Although there is undeniable potential for growth, ultimately, it will depend on the political progress in reforming marijuana laws. Nevertheless there are several companies that serve this industry as outlined in a number of publications such as San Francisco Chronicle, Benzinga, Bloomberg. Here are some to the companies that may provide investment opportunities:

Medical Marijuana (OTC: MJNA). offers services to marijuana grow collectives to ensure rules compliance. The company helps other organizations manage legal and tax obligations, and is a great stock to look at if investors expect more marijuana legislation to follow.

Converted Organics Inc. (NASDAQ: COIN) operates processing facilities that use food waste and other raw materials to manufacture all-natural fertilizer and soil amendment products combining nutritional and disease suppression characteristics. Converted Organics products maximize the grow potential of marijuana plants, while minimizing disease. The stock would surely benefit if marijuana fertilizers become more popular and widely-used.

Psychemedics Corp . (NASDAQ: PMD) provides testing services for the detection of abused substances through the analysis of hair samples. Because some employers will always want to test their employees for smoking pot, companies like Psychemedics provide the products to do so.

Altitude Organic Corp., (OTC Market: ERBB)         

General Cannabis (CANA ) General Cannabis came onto the scene. filed notice with the Securities and Exchange Commission on March 1st to raise $10.5 million via an IPO. They are probably best known for Weedmaps.com, a medical marijuana dispensary website with over 50,000 active users.

GrowOp Technology, is in the business of designing and manufacturing "large-scale portable, discreet, high-output hydroponic grow rooms." While they haven't filed any IPO paperwork yet, the company is run by a former Morgan Stanley investment manager, so a public offering is certainly within the realm of possibility.

Rapid Fire Marketing (RFMK) through its wholly owned subsidiary company, Medical Cannabis Management (MCM) looking to expand operations in cultivation and growing of medical cannabis  and hemp products.

Valeant Pharmaceuticals International (NYSE: VRX). Valeant develops, manufactures, and markets many pharmaceutical products in neurology and dermatology. However, it also makes Nabilone, a form of synthetic THC, which may be the key in the emerging market of marijuana.

Cannabis Science  (CBIS)  Engaged in the development of cannabis-based pharmaceutical products.

GW Pharmaceuticals   Engaged in the development of cannabis-based pharmaceutical products.

Pharmos Corp   Engaged in the development of cannabis-based pharmaceutical products.

Can medical marijuana sales, $1.7 billion, increase 5 times like silver and gold?

According to a new report released recently by See Change Strategy LLC, an independent financial analysis firm that specializes in new and unique markets, medical marijuana is estimated to do $1.7 billion business this year . Apparently, that is at par with the annual sales of Viagra ($1.93 billion) and of the anti-arthritis drug Celebrex ($2.37 billion) in 2010. But, those drugs can be marketed all over compared to limited permission for medical marijuana.

Their conclusion was based on more than 300 survey responses and interviews with market participants. At present medical marijuana markets exist in seven states (California, Colorado, Michigan, Montana, Oregon, Washington and New Mexico) and the business will increase as it expands to remainder of the 16 Legal Medical Marijuana States and DC. 

24.8 million People are eligible to receive a recommendation and purchase marijuana legally under state laws, but only, approximately, 730,000 people actually do. Therefore, there is a lot of room for growth. The report predicts that the current marijuana markets will double in the next five years due a combination of more legal patients and laws that better facilitate licensing and sale of medical marijuana.

The authors also estimate that medical marijuana sales can increase about 5 times and reach $8.9 billion if 20 more states allow its sale for medical use. This is an interesting hope but is it really possible and how long will it take?

Currently, medial marijuana is priced at $200 an ounce as advertised by local dispensaries in Colorado. At this price marijuana ($200) is 6 times more expensive than Silver ($34 per ounce) but 7 times less pricey than Gold ($1490 per ounce).

It took silver and gold  10 years to increase, approximately, 5 times in value:

From 2001 to 2011, gold prices increased about 6 times from $264 to $1564.

From 2001 to 2011, silver prices increased about 5 times from $8.50 to $46.

It is also notable that increase in prices of silver and gold is driven by a number of deteriorating economic and political factors and most of the increase occurred in the past three years since economic crash of 2008. In addition, the supply of these metals is limited by what is available on earth and how much can be extracted.

On the other hand, medical marijuana’s growth is dependent on legal regulations. There are hundreds of businesses around the country that cultivate and sell medical marijuana to customers.  Many of these businesses emerged in the wake of the Obama Administration’s policy to give low priority to federal prosecutions of individuals and business complying with state medical marijuana laws. That impression led advocates to believe the U.S. was easing restrictions on medical marijuana. However, it is obvious from a number of recent raids by DEA, Obama never promised anything and it will continue to be an on going struggle to the advocates of medical marijuana. 

It may be a long time before medical marijuana is legalized all across the country which will naturally lead to the growth of related businesses.