The Department of the Treasury Should Embrace Cannabis
In 1935 the US Department of the Treasury founded the FAA.
The Federal Alcohol Administration.
It was created to tax… wait, I mean regulate the alcohol industry after the repeal of Prohibition.
In 2003, the name was changed to the more pertinent “Alcohol and Tobacco Tax and Trade Bureau,” which is better known as the TTB.
In 2015 they collected $22.3 billion in excise taxes, which makes them the the third largest tax collection agency in the U.S. Government, after the IRS and U.S. Customs and Border Protection (CBP).
Every year they release their budget, which includes their priorities.
This is literally their number one priority: “Collect the Revenue”
…followed by, “Increase Tax Collection Efficiencies and Voluntary Compliance.”Hmmm…
Have they seen these two charts?
Do they see the next generation’s decline in alcohol consumption?
Their customer base is shrinking!
Time to diversify! They’ve got to pivot their business model to make money from another source…
So what regulated substance are people starting to consume more of?
That’s right, marijuana.
Now, I’m not going to get into the “is marijuana actually bad?” debate.
I’m not going to show you how many professional athletes are starting to choose cannabis instead of harmful opioid painkillers like oxycontin.
I’m not going to tell you about ultra-marathoners who use cannabis to conquer 200 mile races.
I won’t list all of the scientific studies that have been repeatedly proven to treat epilepsy (many times for children).
And I won’t show you the dozens of reports that show that cannabis can play a positive effect on those with PTSD.
Instead, I just want to talk about cannabis from an investing standpoint.
So, how should we be investing in the multi-billion dollar cannabis industry?
We look to where the industry is headed and what clients they will be serving.
Traditionally, cannabis has been associated with the ‘stoner’ community.
You know… the guy wearing a tie-dyed t-shirt who sits on the couch all day eating chips and watching cartoons.
But that is changing. Fast.
Athletes, high level executives, and even stay at home moms are turning to cannabis products.
Whether it’s to relax, alleviate pain, or to help focus, the consumption of marijuana products will continue to increase.
That’s because new product lines are allowing consumers different choices.
And most importantly, these new products can be eaten, not smoked.
These edible products, appropriately names “edibles,” will be the future. And that’s one of the areas of the cannabis market we want to invest in.
(Check out the margins compared to these other vices!):