A couple weeks ago I was at an investor group event, where we were touring the facility of a particular investment opportunity when I had this conversation…

“It’s actually quite embarrassing,” he said.

“What? Why?” I asked.

“That an investor group as sophisticated as this one would be interested in this industry,” he answered.

“What do you mean, ‘this industry,’ is it a bad thing?”

“Of course,” he said, “This is a complete waste of money and it’s just wrong.”

“Why do you say that?” I asked.

“Nothing good will come from this. Marijuana is a drug that leads to criminal activity and all these investors here will lose their money,” he answered.

“Have you ever tried marijuana? Or do you know anything about its benefits?” I asked.

“There are no benefits, except for it leading to negative things. And no, I have not tried it,” he said.

Our conversation went on for a while. He was obviously very against marijuana, although he didn’t know much about it.

I honestly didn’t really care what he thought about cannabis and didn’t even really try to talk to him about the industry – what I found incredible was that this guy is in charge of a major venture capital fund and his negativity towards the marijuana industry is so strong.

Clearly, the marijuana industry has it’s skeptics. But the most important thing is that many of those skeptics are basing their negative opinion purely on emotions and not looking at this industry as a business deal.

And that is when it struck me more than ever… Investing in the cannabis industry is going to be huge, because the simple nature of it being a drug is an automatic deterrent for many investors, which creates all the more opportunity for you and I.

Now, we could go back and forth all day about the negatives and positives about cannabis; about how it’s a gateway drug and how marijuana will kill you.

But here is the fact: Marijuana is much safer than alcohol or tobacco.Even President Obama, who’s pot smoking experiences are well documented, has stated that he believes marijuana is no more dangerous than alcohol.

But my favorite Obama quote is when he said this, “At a certain point, if enough states end up decriminalizing [marijuana], then Congress may then reschedule marijuana.”

And that is where we’re at today; a possible turn around in the way the US Federal Government classifies cannabis.

So what does that mean?“Moving marijuana to a less-restrictive schedule would boost research on the drug and the development of marijuana pharmaceuticals that doctors could prescribe…”

Marijuana would technically still be illegal by federal standards, but this move, which may happen in the first half of this year, would be the first significant move towards the decriminalization of marijuana since it began to be regulated in 1906.

But let’s get realistic, it’s all about the money. The government is not going to make the cannabis industry legal unless two things happen:

1. The government can significantly tax the sales and/or consumption of marijuana.

2. A major corporation lobbies to elect individuals or change laws that will allow the sales/production of marijuana and it’s byproducts.

So… number one is already happening in the state of Colorado, and the federal government is sniffing around because… Colorado has raised more revenue from marijuana taxes than from alcohol.

Number two is already in effect as well, even though you and I can’t see it… Warren Buffett’s Berkshire Hathaway is invested in all types of businesses that some how gain advantage from political decisions (hmmm….), like his railroad biz BNSF that profited immensely from the blocking of the Keystone pipeline by Obama.

Berkshire Hathaway owns a company that manufactures equipment to increase the amount of marijuana that can be grown in one location. How long do you think it will take Buffett and the numerous other individuals and corporations that possess political power to pressure the government to make the marijuana industry less regulated?

My bet is that the government eventually gets persuaded… so I hope you hate marijuana too, as there’ll be more for me.

 

Along with the Transportation Revolution (our auto bubble), marijuana is another trend that I will be following and monitoring to take advantage of all opportunities that we can find.

MACRO TRENDS

Transportation Revolution

Uber and Lyft have recently started to offer services for paratransit passengers in response to the inefficient and overpriced traditional options.

However, the Amalgamated Transit Union (ATU) is not too happy about this, arguing that the service that they provide (at overly inflated prices with terrible service) is the only service that complies with government mandated requirements.

While the ATU’s argument may be true, the fact of the matter is that paratransit customers prefer  to use options like Uber and Lyft instead of the backwards services that are currently provided.

The same situations have been happening around the world with taxi unions putting up a fight against less expensive ride hailing services.

But guess what? The public has spoken and the free market has prevailed – people will pay for what they want, not what they are forced to use.

So while there may be growing pains for a time, the future is in ride services that are provided with the most value and convenience.