• April 23, 2018

Turning in Coca-Cola for Cannabis

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Turning in Coca-Cola for Cannabis

Whether you’re investing in the new technology stocks, real estate stocks, biotechnology stocks, or directly into companies. It’s no secret that anything related to Cannabis investing has great potential. In fact, the Cannabis industry is projected to reach $75 billion in sales by 2030, according to Cowen & Co, a research firm. This is almost as great as the North American carbonated soft drink market in 2017.

Marijuana is poised to grow larger than soda in the coming years. Cannabis is a rapidly growing market.  Thirty states and Washington D.C. have legalized Medical marijuana, and another Nine states and Washington D.C. have legalized recreational marijuana, and that number is expected to keep growing. According to Bloomberg, More than one in five American adults can smoke, vape, eat or drink cannabis however they please.  Originally Cowen predicted that the market, assuming federal legalization, would reach $50 billion by 2026, but that seems way to low a prediction now. Analyst Vivien Azer says, “New forecasts suggest that the market is already that size.”

Meanwhile, soda sales are trending down, as health consciousness grows. Consumers aren’t buying the sugary drinks as they realize the effects such drinks have on their health. In fact, per capita, carbonated soft drink consumption has declined to a 31-year low in the United States in 2016, according to trade publication Beverage-Digest. The market in North America fell from $78.3 billion in 2016 to $76.4 billion last year, according to Euromonitor International.

Soda may be in a bad position, but alcohol is in a worse one. Binge drinking rates have declined in states with legal weed. Azer states that this shouldn’t be unexpected: “We have consistently argued that cannabis and alcohol are substituted social lubricants.”

In 2017, Helping Settle the Marijuana and Alcohol Debate: Evidence from Scanner Data looked at the correlation between Marijuana and Alcohol. The study showed that legalizing marijuana reduced alcohol sales by 13.8 to 16.2 percent and confirmed Azer’s statement. The study said, “We find that marijuana and alcohol are strong substitutes.”

States that have only legalized medical marijuana are seeing a similar trend. Liquor companies can’t deny this trend and are believed to be the reason California’s Proposition 19, failed to pass in 2010.

It’s clear that cannabis is on it’s way up and may be worth investigating. There are some ways to invest including biotech, real estate, and technology investments. It seems that cannabis could easily be in one of the top tech stocks in coming years, but there are also risk factors that need to be considered. Soda, on the other hand, is on its way out, and soda companies may need to invest in new technology or marketing to regain their footing.

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