the roadmap to marijuana millions 2016. 11. 10. · billion in 2013 – 373% growth in barely three...

Plot Your Course to a 7-Figure Weed Windfall!

BY MICHAEL ROBINSON

THE ROADMAP TO MARIJUANA MILLIONS

1

Nova-X Report:

The Roadmap to Marijuana Millions: Plot Your Course to a 7-Figure Weed Windfall!

1

Dear Nova-X Report Member,

Hi, I’m Michael Robinson.

Nothing on Earth today – and I mean nothing – is growing as much or as fast as the market for legal marijuana.

Not smartphones or software, not automotives or aerospace, not biotechnology, real estate, gold, oil, software… nothing.

Consider this: By 2020, the market for legal marijuana will top $22.8 billion.

When that happens, the legal market for cannabis “could be bigger than the National Football League, which saw roughly $12 billion of revenue last year,” according to Fortune.

In the United States alone the sanctioned market for cannabis will reach $7.1 billion this year, up from $1.5 billion in 2013 – 373% growth in barely three years.

Investment bank Ackrell Capital predicted in March that between 2016 and 2029 the market for marijuana will reach $100 billion – 1,308% growth.

Amazingly, those huge numbers hide the fact that this market is a market still in its infancy.

After all, marijuana is still illegal in most of the U.S.!

For that reason, there’s no accurate way of really knowing just how big this market could ultimately be.

Some estimates place the number of some-time marijuana users in the neighborhood of 50 million people. As many as 7.6 million indulge on a daily basis.

Clearly, those are huge numbers. Yet as more and more places legalize cannabis, this market could boom into the stratosphere.

This means you have a rare opportunity to get in on the ground floor of this nascent industry and to acquire a stake in dozens of potential blockbuster companies that could rise quickly as the market expands.

Already as an investor there are literally hundreds of ways you could dip your toes into the cannabis market.

Indeed, at times it seems like every business man and his mother is trying to ride this wave; new companies come out of the woodwork every day. (Which when you think about it, is not all that unusual when a veritable gold rush appears on the horizon.)

Nova-X Report: The Roadmap to Marijuana Millions: Plot Your Course to a 7-Figure Weed Windfall!

2

No doubt sorting through all the potential cannabis opportunities can be a daunting task for any investor.

But here’s the good news for you…

I’ve spent six months exhaustively researching every aspect of this market, literally examining hundreds of potential companies.

I have very strict criteria about which ones we were willing to recommend.

And ultimately, I’ve whittled it down to what I believe are the 30 best ways – bar none – to invest in the exploding cannabis market before the real growth takes place.

Based on our research we believe many of these companies – especially the smaller ones – have the potential to soar in the near future. Triple- and quadruple-digit gains are highly possible.

And even if they don’t take off on their own, there’s another way you can profit.

You see, once legalization takes hold everywhere, dozens of already established firms – in the tobacco industry… in agriculture and irrigation… in pharmaceuticals – are going to want to jump in without hesitation.

Their most logical move will be to go on a buying spree, and gobble up smaller firms that already have expertise in a particular segment of the market – for example, in marijuana “edibles.”

So it’s entirely possible that within a few short years we’re going to see a frenzied period of market consolidation.

And if that happens, investors who buy into the best small cannabis players now are going to be richly rewarded indeed.

Which big companies do we see getting into the marijuana mix?

Further on in this report we’re going to examine several of them – company’s we believe are most likely to invade the marijuana space once it begins to take off.

But first, let’s look at why this market is exploding in the first place.

Weed and the “Will of the People”According to researchers from ArcView, a highly respected Silicon Valley cannabis market research

group, there’s “a 92.8% chance” that 26 or more U.S. states – a clear majority – will allow legal cannabis in one form or another before the year is out.

And a growing chorus of voices demands that cannabis be legalized once and for all at the federal level.

What’s more, the drive to legalize cannabis is gathering strength outside the United States as well.

In May, a website called Extract Sun Times reported that “demonstrators in 829 cities in 72 countries” took part in the Global Marijuana March to legalize cannabis.

Nova-X Report: The Roadmap to Marijuana Millions: Plot Your Course to a 7-Figure Weed Windfall! Nova-X Report: The Roadmap to Marijuana Millions: Plot Your Course to a 7-Figure Weed Windfall!

33

Events such as that underscore the fact that even the most optimistic growth forecasts almost certainly understate the sheer size and scope of the coming “above ground” cannabis market.

For a snapshot view of how this unstoppable trend is developing, we can look to the state of Maryland, which allows medical marijuana and began decriminalizing adult-use recreational cannabis in 2014.

The Washington Post reported in June that “Cannabis sales in Maryland would total $9.7 million the first year, likely starting in mid-2017, and reach $60 million by 2020. Those projections will increase as Maryland loosens restrictions.”

There’s a very interesting wrinkle to this story.

You see, when Maryland began accepting application for marijuana licenses, in order to make the process fair, they concealed from the reviewers any personal information that could reveal who was applying.

The Post’s story revealed that “The people lining up to profit from Maryland’s legal medical-marijuana market include former sheriffs and state lawmakers, wealthy business executives and well-connected political donors.”

The list of folks applying for the right to produce and market cannabis included one man who still runs a minimum-security jail in the state, and another who headed up Maryland’s Fraternal Order of Police.

In other words, it isn’t your stereotypical “stoner” who’s lining up to get a piece of the cannabis pie. The industry is attracting men and women who we’d consider upstanding members of the community.

This “mainstreaming” of marijuana is also happening in Massachusetts.

During the Nov. 8 election, Massachusetts approved legal use of recreational marijuana, making the Bay State one of the first states to approve weed for medical and recreational use.

The Boston Globe reported in March that legal weed in that state could bring in as much as $1.17 billion in revenue. And just like in Maryland, marijuana’s proponents are drawn from the very heart of the mainstream.

“More than 100 entrepreneurs, venture capitalists, advocates, and others gathered for a cannabis industry meet-up held at Microsoft’s NERD Center in Cambridge. Venture capitalists in suits grilled a parade of local startups on their business models.”

“We’re starting to see a shift from ‘marijuana people’ getting into business to… business peo-ple getting into marijuana.”

– Dan Riffle, The Marijuana Policy Project

MILLIONS OF MILLENNIALS CLAMOR FOR CANNABIS

The 83.1 million millennials are some of the most vocal and adamant supporters of legal marijuana. Fully 68% of them want cannabis to be legal and available.

In fact, a July, 2015 study out of Denmark revealed that millennials in that country now prefer marijuana over alcohol as their recreational substance of choice.

The millennial cohort is between 19 to 35 years of age. They’re going to be around for a long time, propelling the drive toward full legal acceptance of cannabis.


4

And if you need more proof that marijuana is going mainstream, consider this…

Nothing is more mainstream than the TV sitcom.

On July 13 Variety revealed that Netflix is planning to air a sitcom set inside a legal pot dispensary. Called “Disjointed,” the show is the brainchild of TV genius Chuck Lorre, creator of such mainstream blockbusters as The Big Bang Theory and Two and a Half Men.

Finally, two unprecedented catalysts are about to push the market for legal marijuana further into the mainstream and up into the jet stream.

Your Pharmacy May Soon Carry CannabisYou see, since 1972, marijuana has been classified as a Schedule

I controlled substance. Schedule I drugs are those considered to lack medical use and present a high potential for abuse.

As a Schedule I drug, marijuana gets grouped alongside heroin, LSD, and ecstasy.

But in the face of mounting pressure from the doctors, medical researchers, state governments and Congress, the Drug Enforcement Agency (DEA) have come under pressure to downgrade marijuana to a Schedule II drug, or maybe even a Schedule III.

Adults 18-34 35-49 50-64 65+

80%

60%

40%

20%

0%

Surging Support for Adult Use Legislation 1969-2015

196919852000/20012015

U.S.

A “BABY BOOM” IN LEGAL WEED

According to the U.S. Census Bureau, by 2030 one fifth of the population – 72 million Americans – will be 65 or older.

Those Baby Boomers will all confront a slew of age-related ailments, such as glaucoma, cancer, arthritis and back pain.

As it happens, cannabis-based remedies are uniquely suited to treating those diseases.

So as the elderly population grows, so will the size of the medical marijuana market.

Social acceptance of cannabis will grow as well, as millions of people discover the benefits of medical marijuana for them-selves.


5

In fact, the DEA recently held a landmark vote that, had it passed, would have done just that.

It’s impossible to exaggerate the impact a shift like this would have on the market for cannabis and for the fortunes of investor who buy in early.

Right now medical researchers are only allowed to legally purchase the marijuana they need for their studies by going through the National Center for Natural Products Research at the University of Mississippi.

This restriction makes it extremely difficult for researchers to study marijuana and to develop drugs and treatments from it.

A reclassification of weed would make it exponentially easier for scientists to obtain cannabis and would remove the legal hazards of obtaining it.

A natural outcome of this more permissive environment would be for pharmaceutical companies to ramp up their research efforts around cannabis.

This added demand for marijuana could initially put an extra $1.5 billion into the pockets of cannabis growers nationwide who will suddenly have new markets for their product.

And even though the DEA did not reclassify marijuana, it could do so the next time around. After all, mainstream voices are calling for this recalssification.

For example, the American Medical Association (AMA) told ABC News in April that it supports the DEA’s review in order “to help facilitate scientific research and the development of cannabinoid-based medicines.”

And according to online reporter Andy Szal of Manufacturing.net, “Despite the recent DEA decision, signs of the federal government loosening its restrictions on marijuana remain prevalent. One day before the DEA announcement, the Obama administration indicated that it would allow many more U.S. universities to conduct marijuana research.”

But even though the DEA has failed so far to reschedule cannabis, an even bigger catalyst hit on Nov. 8 of this year.

The Vote Heard Round the WorldOn Nov. 8, tens of millions of Americans in nine states headed to the polls and voted on the future of

marijuana.

WEED AND THE CONTROLLED SUBSTANCES ACT

Probably nothing will have as big an effect on the legal-marijuana industry as the reclassification of cannabis.

Here are five things the government looks at before rescheduling a substance.

1. The drug’s chemistry must be known and reproducible.

2. Adequate studies must be performed proving the drug is safe.

3. Adequate studies must be performed proving the drug does what it’s supposed to do.

4. The drug must be accepted by “qualified experts.”

5. All evidence for these claims must be widely available.


6

California, Massachusetts, Maine, and Nevada voted to legalize the recreational use of marijuana. And voters in Arkansas, Florida, North Dakota, and Montana passed ballot initiatives legalizing medical marijuana.

Only Arizona, where recreational cannabis was up for a vote, decided against legalization.

Together, these states (excluding Arizona) represent a total population of 75 million people.

That means one in five Americans – 20% of us – woke up Aug. 9 finding themselves in a state where medical and/or recreational cannabis is legal for adults 21 and older.

Following this election, 2016 is likely to go down as a watershed year for the marijuana industry, because the outcome could pave the way for more than $200 billion being unleashed into a market that you could already be invested in.

That’s not just one man’s opinion. History says it’s so.

Over the years, whenever even a handful of states enacted new marijuana laws, weed stocks soared. As many as 44 of them increased more than 1,000%.

Eleven of those rose past 10,000%. Five soared past 25,000%.

And three past 50,000%.

And one even surged more than 130,000%.

Close to 90% of Americans live in a state that allows some degree of legal marijuana use

Marijuana Legalization in the United States

Adult Use & MedicalMedicalCBD OnlyNo Laws

On Jan. 1, the first day marijuana could be sold to recreational users over the age of 21, a line of nearly 500 customers snaked out the front door of [Hank Borunda’s] Greener Side dispensary. He raked in $47,000 in 24 hours; within three months, he says, he grossed $1.5 million.

– People Magazine


7

An increasing number of experts and observers say that federal legalization is not a question of if… but when.

A recent poll by Quinnipiac University found that “89 percent of voters in the United States believe that adults should be allowed legal access to medical marijuana when a physician prescribes it.”

And Business Insider reported in June that “56% of [California] respondents in a national CBS poll in April indicated that they supported legalization.”

“2016 could very well be the year that marijuana prohibition begins crumbling to the ground.”

– The Sun Times

LEGAL WEED IS AN UNSTOPPABLE GLOBAL TREND

America is far from the only country poised to loosen the reins on marijuana.

Here are nine countries that are leading the way.

Israel – Has already approved a wide array of cannabis-based treatments for cancer, epilepsy and MS.

Canada – A full legalization program is currently being developed, with the explicit approval and support of Prime Minister Justin Trudeau.

Spain – Citizens can grow and consume cannabis; they are forbidden from transporting or selling it.

Mexico – Cannabis is decriminalized, but President Enrique Peña Nieto opposes a fully-legal cannabis market.

Australia – According to ArcView, “On October 17, 2015 the Federal Government announced that it would legalize the growing of cannabis for medicinal and scientific purposes.”

Uruguay – Became the first country ever to legalize the sale of marijuana, but so far the legal market lags behind the “homegrown” market.

Jamaica – Has decriminalized possession of up to two ounces of cannabis, and now regulates cultivation for medical and religious purposes.

Germany – Possession is illegal, but consumption is legal. Also, scientific institutions can cultivate and possess cannabis, and pharmacies can sell cannabis-based treatments with government permission.

Colombia – Since 1994, possession of up to 22 grams for personal use has been legal. On December 22, 2015, President Juan Manuel Santos signed a decree “legalizing the cultivation, consumption, export, and import of cannabis strictly for medical and scientific purposes,” according to ArcView.


8

Doctors are even more fervent in their views about pot. In fact, 82% of surveyed oncologists approve of medical marijuana.

Investors in cannabis should have every reason to be hopeful following the November election.

Finally, I’m not the only one who’s excited about this swelling marijuana investment opportunity.

Investors in cannabis should have every reason to be hopeful come November. If Britain’s recent Brexit adventure is any indication, citizens are in no mood for more government oversight and control. They are in the mood to “throw off chains.”

So when Wall Street opens for business the next day on November 9, you could be looking at the day your portfolio began to double or triple in value.

Finally, I’m not the only one who’s excited about this swelling marijuana investment opportunity.

The “Smart Money” Is Moving Into CannabisLast year, $215 million in venture capital flooded into the marijuana industry.

This cash went towards farms and dispensaries, weed technology, and real estate… every nook and cranny of the pot business.

One innovative firm called ArcView Group, out of Oakland, California, even matches up smaller


9

angel investors to early stage marijuana companies.

I’ve been speaking at length with Troy Dayton, ArcView’s CEO.

He’s told me he has raised $73 million for 116 startups. And time and time again his firm has gotten people into pre-IPO marijuana startups well before billionaire venture capitalists staked their claim.

Then there’s Privateer Holdings, which invests in privately held cannabis startups and today has a valuation of $425 million.

“We’re investing because we think it’s a great business,” Privateer Holdings CEO Brendan Kennedy recently told CBS News.

Privateer’s portfolio includes Leafly, a cannabis information platform; Tilray, a Canadian grower; and Marley Naturals, a marijuana products developer created by the family of Bob Marley.

In April of 2015, Privateer Holdings caught the attention of venture capital legend and billionaire Peter Thiel, the co-founder of PayPal (and an early investor in Facebook, LinkedIn, SpaceX, Airbnb, and Yelp).

Thiel became the main player in a $75 million Series B funding round for Privateer Holdings.

Even more conventional and institutional players are taking a close look at this opportunity.

In 2015 Bank of America Merrill Lynch release a blockbuster report called “Medical Cannabis Has High POTential,” which was the first report by a major investment bank to make a clear-eyed analysis of such a major segment of the marijuana market.

New Frontier, a leading cannabis research guide, captured the true significance of this report: “It established beyond doubt that leading financial market players are paying attention to the industry and exploring potential points of entry for their clients.”

Even Hollywood celebrities are getting into the act.

Many folks already know about the weed-related business activities of rapper Snoop Dogg, country music legend Willie Nelson, and actor and comedian Tommy Chong.

Fewer know that Grammy Award-winning singer Melissa Etheridge is developing her own line of cannabis-infused wine.

And USA Today reported in March that comedian and TV talk show host Whoopi Goldberg is launching a line of medical marijuana products aimed at women.

Growing Like Weeds – The New Generation of Cannabis Stocks Aside from early investors, the most obvious beneficiaries of a “new weed regime” will be the

entrepreneurs who actually grow marijuana. But they are far from the only ones who will profit.

A whole ecosystem is springing up around cannabis.

“These are exciting times, and new millionaires and possibly bil-lionaires are about to be made.”

– Troy Dayton, ArcView

http://moneymappress.com/subscription/nova-x-report/media/#20160902


10

I’ve identified no fewer than eight distinct sub-segments of this ecosystem.

They are…

• Marijuana Growers…

• Marijuana Technology…

• Land and Real Estate…

• Dispensaries…

• Marijuana Edibles…

• Weed-Based Wonder Drugs…

• Banking and Venture Capital…

• And Social Media.

And I’ve “smoked out” what I believe to be the best stocks in each of those groupings.

Now, the marijuana ecosystem is only just emerging fully into the mainstream. As a result, many of the companies I’m going to introduce you to here are microcap stocks. Many are new and have yet to develop any kind of market “track record.”

Bear in mind that stocks traded over the counter by their very nature are not as liquid as those on major exchanges. I always tell investors that when putting money into these kinds of stocks, they should only invest funds they can afford to tie up for an extended period or that they can afford to lose altogether.

That’s true of most of these stocks, but not all of them. Some of the most promising stocks in the marijuana space might be familiar to you.

A few of them are household names.

Given that these stocks cover more than one level of valuation and capitalization, I’ve broken them down further, into three “tiers.”

TIER 1:

In Tier 1 you’ll find diversified companies that give you a “backdoor” way to play the unstoppable marijuana trend.

Given their market cap, these stocks are less likely to turn into “moonshots.” But don’t be fooled. With legal marijuana the fastest-growing industry in the United States, these stocks could rise by triple-digits.

What’s more, because these firms are more mature and highly capitalized, you’ll be spared much of the volatility that bedevils all small- and micro-cap stocks.

All Tier 1 stocks trade on major exchanges.


11

And as a rule, all Tier 1 stocks have an average three-month trading volume exceeding 50,000 shares per day. Some even pay dividends, which means you can get paid to hold quality stocks in the world’s fastest-growing industry.

TIER 2:

Tier 2 stocks are not a highly capitalized as Tier 1 stocks.

They’re more speculative, but are still early enough in their life-cycle that a smart investment here could hand you triple- or quadruple-digit profits.

These are the ones you’ll find trading Over the Counter (OTC). Like Tier 1, these stocks have a three-month average trading volume greater than 50,000 shares daily.

And while these stocks are technically “penny stocks,” none makes it onto Tier 2 without having a share price greater than $0.25.

TIER 3:

Finally , there’s Tier 3. These microcap stocks are more risky and volatile than what you’ll find in the other two tiers.

Stocks in Tier 3 can be traded OTC. And they’ll be included on the list provided they have a three-month average trading volume greater than 15,000 shares daily and a share price greater than $0.25.

They are also the stocks with the greatest potential for growth. These are the ones that get you onto the lowest of the “ground floors.”

Tier 3 is where you’ll find your next Vape Holdings. This California-based maker of ceramic vaporizers people can use to ingest cannabis concentrates shot up from $0.40 a share to $35.90 over the course of about four months. That’s an 8,875% gain.

Or your next Mountain High Acquisitions Corp., out of Colorado. Founded by a former accountant, this holding company focuses on nutraceutical products. Mountain High, which was once trading for just $0.10 a share, rose as high as $14.00 a share – 13,900%.

Or your next United Cannabis Corp., a grower of genetically refined strains of medical-grade cannabis plants that shot up 16,700% over the course of two months, from $0.06 a share to $10.50.

If even a handful of the Tier 3 stocks featured below come through the way Vape, Mountain High, and United Cannabis have, then you are guaranteed a fortune. That’s what’s available to you today from legal marijuana.

That said, it bears repeating that because of things like low trading volume, competition, and the uncertain landscape, Tier 3 stocks are more than normally volatile. Please keep that in mind. If you are particularly averse to risk, then you should think very carefully before investing in a Tier 3 stock.

We’re going to dive into all of these stocks now, segment by segment. Our journey starts where the entire market for marijuana does – with the marijuana growers themselves.


MARIJUANA ECOSYSTEM #1 MARIJUANA GROWERS

It all starts with the “growers.” They plant the seeds, harvest the crop, and send their produce through the value chain of the marijuana market.

Gone are the days when small groups of “stoners” planted their seeds in vacant lots and in tiny pots and window boxes on the upper floors of tenement brownstones. Today’s marijuana producer is a sophisticated, educated player in the “agribusiness” community.

In Colorado in 2014, more than 320,000 plants were cultivated each month, according to the Colorado Department of Revenue. More than 148,000 pounds of marijuana flower was legally sold.

As more and more growers scramble to get their crop to market and supply what looks to be a bottomless demand, consumers of cannabis benefit from falling prices.

A recent report on the online news site Globalnews.ca said that in Washington State, “Prices are down because there is plenty of pot to go around. In fact, the state is allowing licensed producers to grow up to 12.3 million square feet of marijuana, or the equivalent of about 300 football fields, to supply the medical and recreational marijuana markets.”

And the party’s just getting started.

It is entirely likely (some would say inevitable) that within a few short years the number of states where cannabis is completely legal will more than triple. And the day may come when all 50 states will at least allow medical marijuana.

When that happens, the scale of cultivation will rise exponentially. “First Mover” companies like CannaGrow in Colorado and Canopy Growth Corp. in Canada that operate multi-acre fields will reap huge rewards as the cannabis market explodes more than 3,400% – to as high as $150 to $200 billion.

Because so many savvy players see such an enormous upside for cannabis, the plant has attracted the attention of some innovative researchers. One company, 22nd Century Group is transplanting cannabis DNA into tobacco plants. The goal? To create a hybrid with the properties of cannabis and the robustness and ease of cultivation of tobacco.

And there’s a segment of the cannabis market that is easy to overlook – the hemp market. Hemp is a cannabis plant that has none of the THC that gets people high. Hemp clothing is durable and lightweight. Hemp plants are healthy food for livestock. The oil from hemp makes very useful waxes and resins. It can even serve as a key ingredient in plastics and biofuels.

Some estimates peg the global hemp market at more than $800 million. And again, that’s in the face of cannabis’s quasi-legal status.

Another exciting facet of cannabis cultivation is the explosion of high-tech greenhouses (or “grow houses”) designed specifically to accommodate marijuana.


14

These enterprises are a boom to the makers and suppliers of all manner of high-tech electrical and mechanical apparatuses. We’ll discuss that in more detail a little later.

First, let’s take a look at some of the key marijuana cultivators operating today. Any one of them could potentially soar 1,000% or more in the coming years.

CannaGrow Holdings Inc. (OTC: CGRW)

In many states, the debate around marijuana comes down to one question: If pot is legalized, should it be just for medicinal purposes or also for recreational purposes?

Regardless of the choice, it’s pretty clear that marijuana growers will need to establish top-flight cultivation methods, use highly secure facilities to please regulators, and operate store fronts that serve only their stated legal purpose.

To glean the needed expertise, growers can turn to CannaGrow Holdings Inc. (OTC: CGRW). The Colorado-based firm has already learned a lot about marijuana cultivation. It operates a massive five acre facility near Boulder that uses state-of-the-art irrigation, heating, ventilation, and horticulture techniques.

In effect, firms looking to enter the legal pot industry don’t even have to worry about cultivation plans. They can simply contract to buy some of CannaGrow Holdings’ output.

A study conducted by BOTEC Analysis found that a growing facility can produce roughly 40 grams of pot per square foot of space. That’s just one harvest, though Colorado’s abundant sunshine means that you can have multiple harvests per year, which would increase the yield per square foot.

At roughly 16,000 square feet, CannaGrow’s facility would yield 640,000 grams. That’s about 22,500 ounces, or more than 1,400 pounds of marijuana. At an average wholesale price of $2,000/lb., there’s a lot of value in the firm’s potential output.

And that’s just one facility. Once CannaGrow lines up demand for all of its output, look for the firm to break ground on more facilities, likely in the states having large and growing legal pot markets.

You would think that pot growing is as simple as planting a bunch of seeds in the ground, adding water, and waiting to harvest the buds of the plant. That’s how it worked for decades among the illegal growers in Northern California.

But as the pot industry becomes much more legitimate, consumers are demanding more potent grades while regulators want to make sure that authorized strains remain inaccessible to the general public.

So we’re now seeing a big shift towards greenhouse growers, and CannaGrow aims to be one of the nation’s largest greenhouse operators.

CannaGrow’s efforts are overseen by John Wells, a horticulture specialist committed to growing pot without pesticides while using advanced soil management techniques and integrated pest management protocols.


Wells has a unique background. For more than a decade he managed a nursery that produced millions of ornamental plants for wholesale distribution across North America.

He also ran a large native plant nursery in the Amazon that was sourced by tens of thousands of seeds and cuttings from rainforest plants.

CannaGrow faces some great growth prospects. In just the State of Colorado alone, more than $500 million worth of pot has been grown in regulated greenhouses. And sales set new records each month.

According to ArcView Market Research, sales of legal cannabis should grow 25% this year, to around $6.7 billion. And when you consider that more states will either initiate or expand legal pot laws, the market appears to have a long runway to growth ahead of it. The analysts at ArcView project a 30% yearly growth rate and expect a $22.8 billion national market for legal pot by 2020.

CannaGrow is also learning how to navigate the wide range of restrictions and mandates that Colorado requires of pot growers. That knowledge will be very helpful as more states look to legalize pot for the first time or broaden its usage from medicinal to recreational.

As with many young firms, CannaGrow will need to strengthen its balance sheet in order to realize its vision. Look for the firm to raise more cash in coming months, which will dilute the interest of current shareholders.

22nd Century Group Inc. (NYSE MKT: XXII)

As you dig into the emerging legalized pot industry, you start to discover an unusual trend. Many of the industry’s most promising researchers have a strong background in either tobacco or opiates. It’s no coincidence.

All three of these substances have been used throughout history by healers to help alleviate pain, and in some case, provide clear therapeutic benefits.

22nd Century Group Inc. (NYSE MKT: XXII) has chosen to focus its genetic engineering research on tobacco and cannabis.

This firm has amassed more than 200 patents over the past 15 years and has another 50 pending. The goal is to produce new strains of tobacco and cannabis that contain all of the beneficial compounds with few of the harmful ingredients.

Of course, when you’re talking about tobacco, you’re talking about the possibility of nicotine addiction. 22nd Century Group has focused much of its R&D on reducing the amount of nicotine in its proprietary strains of genetically engineered tobacco.

Their efforts are paying off.

In fact, this firm’s tobacco contains 97% less nicotine than regular tobacco. This new tobacco could prove a godsend for people looking to quit smoking but who need to be weaned off of nicotine.


15

The elimination of cannabinoids in hemp is expected to revitalize the hemp industry worldwide. 22nd Century intends to lead this important effort.


16

At the same time, there are people who want to keep their nicotine fix, but would just as soon avoid the tar and other additives that lead to cancer. For them, 22nd Century has created a tobacco with the lowest tar-to-nicotine ratio in the world.

But for our purposes, what’s most interesting is 22nd Century Group’s other division, Botanical Genetics LLC. That subsidiary owns a range of patents regarding cannabis, and aims to provide the legal hemp and medical marijuana markets with unique plant varieties containing little if any THC.

Hemp is basically a cannabis plant that has none of the THC that gets people high. Decades ago, famers loved to grow hemp because it had a remarkable number of uses. Hemp clothing is durable and lightweight. Hemp plants are healthy food for livestock. The oil from hemp makes very useful waxes and resins. It can even serve as a key ingredient in plastics and biofuels.

22nd Century Group appears to be one of the few publicly traded firms looking at the hemp market, and this may shape up to be the next cannabis-inspired niche. Thanks to the growing acceptance of medical and recreational marijuana, the time for hemp’s revival may soon be at hand.

But let’s get back to the firm’s broader cannabis research. 22nd Century Group is taking a very different approach to this effort than almost any other firm on the planet. It is researching ways to derive the best traits of cannabinoid plants – without actually using cannabis.

As every pot grower knows, a lot of care and technique goes into the cultivation of a pot plant. Tobacco plants are much more robust. Just plant the seeds, water them, and watch the plant grow. By planting the right DNA from cannabis plants into other plants, such as tobacco, the 22nd Century looks to take advantage of the great ease with which tobacco can be grown.

This isn’t a bid to supply the recreational pot market. Instead, 22nd Century is focusing on strains that have little or no THC. They only want to deliver the CBDs that are showing so much promise of treating neurological and other disorders.

If a broad range of medicines are to be developed with CBDs as a key ingredient, then the need for high-volume, low-cost plants will be crucial to supply the market. This unique cannabinoid-to-tobacco approach could end up helping 22nd Century to play a major role in the industry.

Thanks to a recent capital raise, the firm has roughly $6 million in the bank, and is currently consuming roughly $3 million per quarter. Quarterly sales of $3 million have been on the rise, which should help to slow that cash burn. Still, look for 22nd Century Group to raise more cash in the next few quarters to fully fund its research efforts.

Canopy Growth Corp. (OTC: TWMJF)

It’s called the first-mover advantage. The first firm to establish a strong base of business in a young and fast-growing market can reap major benefits. Strong market share, economies of scale and strong profit margins are the usual end result.

And right now, a new industry is starting from scratch in Canada, as that country becomes possibly the first developed economy to see fully legalized pot. (Uruguay was the first to legalize recreational use, back in 2012.)

16


17

At a recent session of the United Nations, Canada’s Health Minister announced that his country would legalize recreational cannabis in the spring of 2017. That would greatly expand the total pot market in Canada. The current medical marijuana market is expected to grow to $1.2 billion by 2020, according to Health Canada. The recreational market could be up to four times larger, say industry analysts.

That’s great news for Canopy Growth Corp. (OTC: TWMJF), which will clearly have a first-mover advantage. The firm already has the largest market share of the country’s medical legal cannabis market (at 25%) and plans to dominate the recreational market as well.

It’s not as simple as opening a retail storefront or a mail-order operation. The firm already grows its own pot, and has developed deep ties with the medical community. By the company’s count, it has met with more than 10,000 doctors to discuss the merits of medical pot.

And it’s a leader in the production of a range of cannabis oil extract, a key byproduct that is used to make pot edibles. As we said earlier, this fast-growing niche is almost as large as the smoking category in Colorado and will likely be that large in Canada as well.

To be sure, a growing market will invite ample competition. In response, Canopy Growth is sharply boosting its production capacity to ensure that it can enjoy economies of scale and make profits at price points that would put smaller producers out of business.

The firm is also gobbling up rivals such as Bedrocan and Tweet, both of which have a strong reputation among medical marijuana users. Those deals have helped push the firm’s yearly sales base above $10 million.

The focus is on quality as much as on quantity. Canopy Growth has partnered with DNA Genetics, a Netherlands-based firm that is consistently ranked as producing the industry’s most coveted strains of pot. The two firms intend to combine their production and research know-how.

Canopy Growth is also looking to spread its bets around. For example, it bought a 33% stake in CannScience Innovations Inc. (CSI), which plans to build a base of patents around THC extraction processes, ways to produce standardized products, and new formulations that can be used in medical and clinical setting.

To bolster its presence in the medical marijuana market, Canopy Growth recently bought Bedrocan, which sells pharmaceutical-grade strains of pot that boast a strong reputation for potency and consistency or have been used in medical trials for more than a decade. Bedrocan also has a base of more than 20,000 medical marijuana users.

And the firm is venturing into global markets such as Australia, which is getting set to legalize medical marijuana in the next few quarters. An Australian start-up named AusCann will use Canopy Growth’s expertise as it launches a major new growing facility. Canopy Grow got a 15% stake in AusCann as part of the deal.

“Tweed,” one of Canopy’s brands, is housed in a former Hershey’s Chocolate factory.

The firm is well-capitalized, with roughly $15 million in cash on the books. Quarterly sales now exceed $10 million, and the firm is now burning less than $3 million per quarter. Look for that figure to shrink as sales rise higher.

Terra Tech Corp. (OTC: TRTC)

Many new firms in the cannabis field aim to focus on just one part of the industry food chain. Some are adept at growing pot. Others are adept at selling weed in dispensaries. Still others are focused on producing finished edible foods based on cannabis. While some focus on one state or local market.

Terra Tech Corp. (OTC: TRTC) is casting a much wider net – it’s pursuing all of them.

This firm is already one of the largest growers in the country, with roughly $10 million in sales over the past 12 months. Expansion plans should ensure that Terra Tech remains at the top of the leaderboard in coming years as well.

To be sure, this is an industry where scale matters. Just look at what has happened to farming in general. Small-scale growers can succeed, but large-scale growers are the ones that are really thriving.

While the harvesting of marijuana will never be mechanized and will always remain somewhat labor-intensive, there are clear benefits to growing a large volume of supply at a time when more and more dispensaries are creating insatiable demand. Terra Tech will likely remain as one the few growers that can handle large supply contracts.

Terra Tech plans to keep some of that output for itself. The firm’s MediFarm subsidiary owns pot dispensaries in Nevada. And to gain a foothold in the California market, it recently acquired the Black Oak Gallery dispensary, which has 42,000 registered patients. That deal pushes Terra’s yearly revenue base north of $20 million.

This firm is keeping close tabs on legal changes happening across the nation. But it won’t enter potentially lucrative markets until pot is fully approved for either medical and/or recreational use. In the state of New York for example, restrictions on medical marijuana make it too small a market for Terra Tech to consider.


18

The firm is currently looking toward California, the nation’s largest legal pot market, and Nevada, which is seeing a surge in pot-related tourism, as a source of near-term growth.

When pot is harvested, it leaves behind stems and other remnants that can be pressed to make cannabis oil. Terra Tech’s large output now creates enough source material to support a thriving cannabis oil extract business. What’s more, the firm has devised special cartridges that can be used in “vaporizer” machines. These machines have become quite popular with smokers that don’t want to inhale smoke, but only the THC.

At its growing facilities, Terra Tech leaves aside some room for its hydroponically-grown herbs and greens, which are sold under the Edible Garden brand to supermarkets. Some of the produce that it sells has been nutritionally enhanced and is available at 1,800 supermarkets in the northeastern United States.

Its SUPERLEAF lettuce, for example, is high in vitamins A and C, magnesium, iron, and potassium. The lettuce was developed by scientists at Rutgers University and also contains high levels of fiber and antioxidants.

To help increase supply of herbs and greens, and to eventually cultivate a lot more marijuana, the firm is holding early-stage talks with hydroponic growers in New Jersey, Indiana, and Florida. Those deals would focus on legal products for now but could become key sources of cannabis supply if those states choose to legalize pot. The firm has identified one location in Florida that could ultimately grow 70,000 pounds of pot each year.

Terra Tech also aims to help other growers, whether at home or in an industrial facility or greenhouse, to be more productive. Its GrowOp Technology division sells a broad range of equipment geared to pot cultivation and harvesting. These include environmental controllers and timers as well as ballasts, bulbs, reflectors, nutrients, and portable hydroponic trailers.

The execs at Terra Tech are nothing if not ambitious. In just a few short years, they have built a multipronged cannabis business from scratch. Look for interest in this stock to build once the firm completes a 1-for-10 reverse stock split that will move shares out of penny stock territory.

As of today, the company has not set a date for this event. But I believe a move of this nature could very well lead to an uplisting to the Nasdaq. And once that occurs, look for a big pop, because listing on a major exchange helps the stock get closer to becoming “investment grade.”

The firm will likely raise more cash before announcing the 1-for-10 split date. As of the end of March, it had $1.1 million in cash but has been losing nearly $2 million per quarter. Yearly sales should surpass $6 million this year, which should ease the firm’s efforts in lining up fresh capital.


19

MARIJUANA ECOSYSTEM #2 MARIJUANA TECHNOLOGY

As every pot grower knows, a lot of care and technique goes into the cultivation of a pot plant. For one, marijuana plants need to flower to before they produce tetrahydrocannabinol, or THC (the chemical that gets users high). The plants have to be exposed to light for 12 hours a day and kept in darkness for just as long.

Kayvan Khalatbari and Nick Hice, co-owners of Denver Relief, a medicinal-marijuana dispensary told The Denver Post that “The best place to grow marijuana is in a room in the basement with a locked door so light doesn’t inadvertently get in when the plants are ‘sleeping.’”

That’s fine if you’re a “grow your own” private toker. If you spoil a “harvest” or two, you won’t go broke or out of business. Not so for the professional, large-scale cultivator. He has little room for error. As they say in the trade, “His plants have to flower.”

To protect their investment, growers turn to state-of-the-art greenhouses containing high-tech devices and monitors such as hygrometers, which see to it that humidity levels never get above 50%, and CO2 tanks, which add carbon dioxide to the indoor air.

Another way that the major growers control cultivation is through “hydroponics,” which is a method of growing plants in mineral- and nutrient-laced water, without soil. According to Manifest Minds LLC, the hydroponically grown plants will make up a $24 billion market by 2018.

All this barely scratches the surface of marijuana technology. Growers also need high-powered horticultural light bulbs, custom regulated fans, valves and pumps, nutrient and mineral supplements, plus specialized “grow tents.”

With growers so dependent upon technology to operate this soon-to-be $200 billion industry, it’s no surprise that Silicon Valley is pouring money into it: According to Cleantech Group, venture capitalists sank $976 million into agriculture start-ups.

A 2015 report by MarketsandMarkets estimates that the market for “Smart” greenhouses will reach $1.2 billion by 2020.

This is the landscape firms like The Scotts Miracle-Gro Co., Two Rivers Water & Farming Co., and General Cannabis Corp. find themselves in. It’s a landscape filled with opportunities for “growth” in more ways than one.

The Scotts Miracle-Gro Co. (NYSE: SMG)

While the legalization of marijuana is creating the need for acres and acres of professionally-grown cannabis, you shouldn’t forget the little guy.

After all, for decades thousands of consumers have been growing-their-own, even while risking trouble with law enforcement. By one estimate, $60 billion worth of illegal pot is grown each year in the United States.


21

But with marijuana legal, the number of people looking to cultivate it for their own consumption is likely to skyrocket.

The marijuana-growing market could easily top $100 billion within five years, with much of that supply displacing imported marijuana from dangerous jungles in Latin America.

And while this opens up an opportunity for firms that cater to growers and gardeners, it also presents those firms with a strategic dilemma. Should they establish a strong early presence in the pot-growing community? Or wait until the social climate around cannabis normalizes – that is, until growing your own pot is no more controversial than brewing your own beer?

The Scotts Miracle-Gro Co. (NYSE: SMG) is going with option one: Embrace this fast-growing community of growers, and by so doing, “plant the seeds” for robust new paths to growth.

Scotts is already the world’s largest maker of lawn care and gardening products, and is now making a big push into indoor plant cultivation, as evidenced by its April 2015 purchase of General Hydroponics.

“Hydroponic” gardeners use air, light, and water to grow their plants indoors – without the need for soil. This method means no mess, and more importantly, no pesticides. That’s a key consideration for green consumers.

Given the unsettled legal landscape around cannabis, Scotts emphasis on that market might seem like a dangerous choice. But in truth, it’s less risky than it seems.

If the legal marijuana movement stalls, Scotts will still benefit from the growing demand for hydroponic equipment among young urban consumers eager to grow the herbs and greens that go into their salads.

But it’s hard to imagine the push for legal marijuana stalling out. In many respects, that genie has left the bottle.

Even before legal pot made this new growth potential possible, hydroponics had been very popular with a whole array of growers.


22

MARIJUANA MARGINS – HOW PROFITABLE IS CANNABIS?

By some estimates, marijuana is poised to become the new “cash crop” in the United States.

Bank of America and Merrill Lynch estimate that within a decade it’ll be a $150 billion to $200 billion industry. To put that into perspective, consider that tobacco sales are about $100 billion.

And there will be no shortage of growers to supply that market. The reason is that, despite being a tricky crop to cultivate, marijuana is very profitable to grow.

Chris Walker, a manager at a San Francisco company called Heliospectra, which makes lamps for cannabis growers, told the International Business Times last July that, “A tomato producer in a greenhouse might earn roughly 10 percent profit, while a cannabis grower in a similar setup could rake in as much as 80 percent.”

Those high margins can spill over into other parts of the marijuana value chain.

Between 2015 and 2016, Genius Extraction Technologies, which turns marijuana into smokeable oils, grew its revenue 500%. The company expects to double sales every year going forward.

According to Manifest Minds LLC, the global crop value of hydroponically grown plants is on pace to rise from $17 billion in 2013 to $24 billion by 2018.

If other countries follow the lead set by the United States, pot cultivation – and hydroponics – could well soar much higher than that.

There are many reasons why Scotts Miracle Gro should embrace hydroponics. First, populations are increasingly concentrated in cities and even mega-cities. As people trade the countryside for the cityscape, they’ll have to grow their favorite herbs and vegetables indoors, using hydroponics.

Second, there is the perennial concern over pesticides; a number of pesticide bans have begun to take effect. Hydroponics, as we said, needs no pesticides, because it uses no soil.

Third, water shortages are a growing problem around the world and make crop-growing harder. Hydroponics uses controlled, “drip” irrigation, which drastically reduces the amount of water needed to grow plants.

Fourth, Scotts bought into the hydroponics equipment field simply because it’s a very attractive business, with much higher profit margins than traditional lawn and garden supplies.

And finally, there’s the happy fact that demand for hydroponics systems stays strong year-round.

Scotts CEO, Jim Hagedorn isn’t just dipping his toe in the water here. He sees last year’s purchase of General Hydroponics as just the first of several moves, all aimed toward the goal of creating a $1 billion yearly business.

That’s a nice bolt-on addition for a business that currently generates around $3 billion in sales.

Hagedorn is a big believer in market share, and he likely looks at the emerging hydroponics and cannabis markets the same way. Its four leading brands (Scotts, Miracle-Gro, Round-Up, and Ortho) have market shares ranging from 53% to 70%.

And the firm is out to make it easy for people to start using hydroponics equipment, to grow either cannabis or food. Scotts Miracle-Gro has 2,500 sales associates that it sends to visit retail stores, after training them on the merits of hydroponics.

Make no mistake: This is not your typical cannabis investment.

For one thing, Scotts is already quite popular with mutual fund managers, who like the fact that the firm has boosted its dividend for seven straight years. The current yield sits at 2.2%.

If you are building a well-rounded cannabis portfolio, Scotts is a clear choice to anchor the low-risk end of the spectrum. And its early move to embrace the cannabis community could help turn it into a robust grower.

Shares of Scotts trade for around 17 times projected 2017 profits.

General Cannabis Corp. (OTC: CANN)

As we saw when we examined Compass Holdings, in a landscape that has only recently begun taking shape, the watchword is: diversification.


23

General Cannabis Corp. (OTC: CANN) is like a weed mutual fund. CANN has integrated its operations across a broad swath of the cannabis space. The company, whose slogan is “Yes We Cann,” is involved in crop-growing, security, branding, and consulting.

So buying the one stock gives you exposure to four different segments, which allows you to be patient.

The security component of General Cannabis’ operations, Iron Protection Group (IPG), represents a particularly compelling opportunity.

The legal cannabis industry grew from basically $0 to $5.4 billion in sales almost overnight. That’s impressive, to say the least. But there’s a problem.

As long as federal cannabis drug statutes remain inconsistent with state cannabis laws, most banks – especially federally insured ones – refuse to handle transactions from cannabis retailers and growers. Those cannabis operators have in turn been forced to rely almost exclusively on cash to transact business.

And where there’s that much cash, there’s a tremendous need for security.

Also, as cannabis begins generating serious revenue, competition and innovation bring unique (and uniquely profitable) marijuana strains to the fore. Those more remunerative strains need protecting, as do the giant fields where they’re grown.

These security challenges will only grow as the cannabis industry matures.

It’s likely that banks will eventually start accepting commercial deposits from ‘weed-trepreneurs.’ But a growing number of cannabis-based enterprises will still need to secure their stores and move their cash. And agricultural security will remain a challenge for growers and a serious long-term growth opportunity for IPG.

Now, no one wants to steal a seedling marijuana plant, but a mature, bud-laden plant is another matter entirely. So right now, IPG’s business is tied to the planting and harvesting cycles of the crops.

That cyclicality affects earnings, which wax and wane with the seasons. But that’s why smart investors diversify. General Cannabis can offset declining earnings in one division via growth in another.


24

THE STATES VERSUS THE FEDS

Not everyone agrees that marijuana should be legal. But practically everyone agrees that the current disconnect between state and federal law is unsustainable.

For one thing, right now most banks won’t work with cannabis businesses because they fear running afoul of the Feds. The lack of access to financial services has always hurt the industry, but the problem has grown along with the market.

And while it may be legal to cultivate a certain number of pot plants in one state or another (Colorado lets people 21 and older grow up to six plants in “an enclosed, locked space”), that activity is illegal under federal law.

As long as those discrepancies remain, it will be harder for large, established companies to enter the market for legal weed.

But as those big-cap companies come aboard, expect them to pressure Congress to relax federals laws against weed.

It’s also important to note that since IPG is already established it will end up being the standard for security – the modern Wells Fargo if you will – as the industry expands.

General Cannabis is essentially a “one-stop shop” for ambitious weed start-ups. It may begin working with Chiefton Branding, then hire a Next Big Crop consultant, and then start working with IPG.

The stock has been on a tear in recent quarters. Its most recent earnings report gives us a good idea why. Revenues were up 1,117% in the first quarter compared to the same quarter last year.

Consulting divisions Next Big Crop and Chiefton saw revenue increases of 70%. It also raised its outlook for the rest of the year. That’s always an encouraging sign when most industries are searching frantically everywhere for growth.

The stock is up 472% year to date. That’s a nice run, but there’s plenty of headroom here.

Revenue was up more than 60% compared to year ago numbers, with wholesale sales nearly doubling. That is significant.

Management is solid, and it’s in one of the most dynamic growth industries in history.

Just remember, this is a stock with a $63.8 million market cap. It will be volatile. Look for your spot. Don’t chase it. And don’t freak out as it bounces around as momentum traders and the like jump in and out. It’s a long-term pick, and time is on your side.

Two Rivers Water & Farming Co. (OTC: TURV)

At its core, the cannabis industry is a subsector of the agriculture industry.

What makes the investment picture so exciting is that right now no infrastructure exists to help build out that subsector.

But make no mistake: The cannabis subsector is going to get built out – probably sooner than most folks realize. And that means a number of huge opportunities exist for firms able to fill various niches within it.

Two Rivers Water & Farming Co. (OTC: TURV), a state-of-the-art water management business in southeast Colorado, is one of those firms filled with pioneering spirit.

The company works with local growers to boost yields and improve the soil, and has also begun working with cannabis growers – those who grow their crops outside as well those who cultivate it inside grow houses.


2525

General Cannabis’ Denver Greenhouse, serves as an incubator for all types of businesses serving the Cannabis industry.

That last point is important, because Two Rivers aspires to be the go-to choice for any growers needing ultramodern greenhouses.

It recently spun off its cannabis operations under the company name GrowCo Inc., which builds and leases greenhouses that are far more efficient than traditional ones.

It operates in Colorado now, but as states begin to change their laws, GrowCo hopes to expand its business as far and as fast as legalization will allow. It has even sparked interest from overseas investors.

In places like the Netherlands, where cannabis consumption laws are lax and growing space is limited by nature and population, efficient, high-quality greenhouses would be in great demand.

GrowCo’s management team has experience operating seven million square feet of greenhouses with deep ties to major retailers like Lowe’s, Home Depot, and Kroger. Among the company’s chief assets is a strong understanding of how to scale up an operation.

That makes the relationship between GrowCo and its clients more than a lease-for-space operation. It’s also a consultative arrangement that GrowCo can leverage in a “virtuous circle.” The more successful its clients become (with GrowCo’s help), the more space those clients want.

And bear in mind, it has only been a year that Colorado has allowed growers to grow cannabis as an agricultural product. Before that, marijuana cultivation was limited to grow warehouses in industrial parks.

Warehouse growers are essentially limited to growing inside a traditional warehouse with a solid roof and sides. All light is artificial, and managing things like humidity and temperature is challenging. All those factors affect plant size and potency.

That means a massive new market waits not only for GrowCo but existing growers who can divert their land and greenhouses toward the cultivation of cannabis crops.

The COO of GrowCo is a third generation greenhouse grower who brings that accumulated wisdom and expertise to the weed industry.

His company employs translucent roofs that allow plants to absorb all the sunlight they need. Heated floors and roof venting make it easier to manage shifts in humidity and temperature.

All those features mean that GrowCo greenhouses can be built in almost any country and in a wide variety of climates.

Two Rivers has been public since 2010. And despite some recent setbacks – the stock fell from a 2011 high of $3 to its current price of 87 cents a share – GrowCo remains a very promising venture. Given the massive growth in the cannabis industry, it will likely grab sizeable market share as commercial growing expands.

The caveat is: With a $25.18 million market cap, Two Rivers is tiny. That means a lot of short-term volatility. We’ll look to the next few quarters to show us how well GrowCo is doing for Two Rivers.


262626

GrowCo provides state-of-the-art growing infrastructure and water to licensed cannabis growers.

Surna Inc. (OTC: SRNA)

For many garden-supply firms, the boom in marijuana cultivation is a nice revenue booster for their main business. But most of these firms are loath to trumpet their role in this as-yet stigmatized industry. Not Surna Inc. (OTC: SRNA).

The firm aims to offer everything a pot grower needs. Not just the regular growing equipment, but the tools to help boost yields, reduce the risk of contamination, save energy, and lower operating costs for cannabis producers.

Pot growers will tell you that the cannabis plant is hard to cultivate. You need to develop the right seeds, the proper mix of female and male plants, the perfect temperature and moisture conditions. And you need a lighting system that tricks the plants into growth mode at the right times of the day, not just when the sun shines.

This all comes together in what’s known as controlled environment agriculture. While many firms take the CEA approach, Surna proudly says its CEA platform is optimized specifically for pot. Its air chillers, air handlers, dehumidifiers and reflector systems have become the clear choice for firms that are sprouting up in Colorado, California, Oregon, and elsewhere to meet the medical and recreational demand for pot.

Surna is now developing a prototype that will take marijuana cultivation to the next level. The firm’s Hybrid Building is both an indoor growing facility and an open air greenhouse.


27

400K

300K

200K

100K

0

GrowCo’s Planned Growspace Grew 200% in the Past Year

7/15 1/16 7/16 1/17

Surna designed its “chillers” to operate in large, commercial gardens.

The Hybrid prototype, which is being developed in tandem with an engineering team at the University of Colorado, could become an industry benchmark.

This building design allows sunlight (augmented by high power LEDs) to reach the cannabis plants, while the sealed environment minimizes the negative effects of outside air contamination from pests and pathogens. The closed loop system also allows for an injection of up to 30% carbon dioxide in the growing facility, which leads to much faster plant growth.

Surna is no profit-less start-up. The company snagged $2.5 million in sales in the first quarter of 2016, up 200% from the same quarter in 2015. That kind of growth helped turn $880,000 loss a year ago into a $365,000 profit this time around.

Some of that revenue comes from big-ticket projects. For example, Surna recently sold a $725,000 growing system to a Las Vegas-based pot grower, which will span 30,000 square feet and require 550 tons of cooling equipment.

The entire pot growing industry is still in its infancy, both here at home, and eventually, across the globe. With a yearly sales run rate exceeding $10 million, Surna is already a first-mover in large-scale marijuana cultivation and has a decent shot of becoming the first $100 million firm of any stock mentioned in this report. And as we said, Surna is already profitable, meaning that it won’t need massive sums of new money to fulfill its potential.

28


30

MARIJUANA ECOSYSTEM #3 LAND AND REAL ESTATE

It all starts with land, the scarcest resource on Earth.

No land… no growers… and no marijuana growers.

And while it’s true that today’s innovative growers are exploiting cutting-edge tech such as hydroponics and tech-controlled greenhouses, those facilities must still be housed somewhere.

The modern marijuana operation is a sprawling affair.

Take Supreme Pharmaceuticals. They grow medical marijuana out of their greenhouse overlooking Lake Huron in Ontario.

And when you are picturing this greenhouse, don’t imagine something a grandmother uses to grow her tomatoes.

Picture one seven acres long.

That’s not quite seven football fields… but it’s not far off, either.

Given the unclear legal landscape around cannabis, many growers and entrepreneurs say that owning land gives them a measure of safety.

Entrepreneur Sally Vander Veer told Inc. recently that, “With so many obstacles and regulations in our way, owning your real estate is the only thing we can control in this industry. It’s essential to long-term success.”

Zoned Properties (formerly Vanguard Minerals Corp.) out of Arizona is too thinly traded to be put in this report, but they are a great example of the kind of thinking that’s driving property managers in this new “era of legal marijuana.”

Medical marijuana operators lease property from Zoned, which then provides them with property management services, architectural design, general support, landscaping, and security systems.

On the strength of this model, Zoned saw its share price skyrocket almost 12,000%.

Again, we’re not looking at Zoned (right now) as a cannabis investment because the stock is too thinly traded, even by “Tier 3” standards. But it does give you an idea of the opportunity that land and property developers are scrambling to take advantage of.

There are signs the real estate space is gearing up for a new world of legal cannabis: In April, Denver-based AmeriCann Inc., which designs and builds medical cannabis facilities, announced that it was looking to become the first real estate investment trust (REIT) in the cannabis industry.

But the real “land rush” is happening in California, which is widely expected to approve recreational weed in November.


31

Troy Dayton, CEO of cannabis research firm ArcView, told The New York Times in April that, “People are definitely salivating over the California market. It’s huge.”

The Times went on to add, “The price of land [in sections of California] tripled almost overnight as entrepreneurs bought up every inch of property where pot-growing was permitted – most of it bare desert dotted with only Joshua trees and tumbleweeds.”

Not far from California, you’ll find the best play in cannabis real estate right now.

LEGAL WEED – DOING WELL BY DOING GOOD

A booming market for legal cannabis is a “win-win” for investors.

Not only will you make windfall profits as the value of your cannabis holdings rises, you can also sleep well knowing you are enhancing the civic health of your community.

Colorado collects $135 million in taxes and fees from the weed industry. The money goes toward building new schools.

Mason Tvert, a spokesman for the Marijuana Policy Project, told Fortune in February that “Regulating and taxing marijuana has been incredibly successful in Colorado, and it represents a model for other states to follow.”

Forecasts suggest he may well be correct.

California estimates its Adult Use of Marijuana Act could bring in $1 billion a year in revenue and save another $100 million in criminal justice costs.

Already Maine is seeing a $75 million boost to their economy just from medical marijuana. But now that the state’s Marijuana Legalization Initiative has passed, that number could grow 3 or 5-fold - maybe even higher.

Massachusetts is eyeing a $1.1 billion war chest now that it has legalized all forms of marijuana.

Michigan isn’t satisfied with just getting one initiative on the November ballot. They’re aiming for three.

The state government is already targeting $64 million a year in tax revenue from their existing medical marijuana law and the creation of 10,000 jobs. Legalizing recreational marijuana could put even more money in the coffer and provide more jobs.

Nevada which passed the Marijuana Legalization Initiative in November, plans to dedicate the newfound tax revenue to K-12 education.

These are just five of the 20 states in play. And you can see how big the money is for their governments and residents.


32

Grow Condos Inc. (OTC: GRWC)

As legal marijuana spreads to more and more states, the industry could grow to be bigger than the NFL and that organic food industry.

Grow Condos Inc. (OTC: GRWC), which bills itself as a “multi-pronged real estate company catering to the marijuana industry,” is uniquely positioned to profit from this explosive growth.

The company’s mission is to “make real estate the cornerstone and backbone of [our] business model.”

The company deploys a “pick and shovel” strategy.

That term comes from the California Gold Rush of the 1800s. During that period, as thousands of would-be millionaires poured into the state, the folks who really got rich were the merchants supplying the picks, shovels, food, tents, and other goods to the hopeful miners.

So Grow Condos isn’t looking to grow and sell cannabis, but to supply all the goods and services needed by the men, women, and companies who are. These supplies include things as sophisticated as oxygen, custom lighting and irrigation systems, and as prosaic as light bulbs and shelves.

Services include warehousing, transportation, labor, and delivery.

According to the company, the three “revenue prongs” of its business model are: Real Estate, Education and Advisory, and Ancillary Services.

Grow Condos owns, develops, and manages industrial properties exclusively for the cannabis industry. It is the world’s first publicly traded real estate company to do so.

In addition to developing the properties, Grow Condos also garners revenue by selling expensive leasehold improvements, such as custom-ordered modifications to grow units.

According to CEO Wayne A. Zallen, “The marijuana growing community is uniquely specialized as it relates to real estate. Each unit is customized to the specific needs of the owner.”

Grow Condos’ first property, a 10-unit facility in Medford, Oregon, is fully rented, and there’s a long waiting list for future tenants who want to get in.

The company just closed on its second facility, this one in Eugene, Oregon. This property will consist of 37 units, spread out over five buildings.

By factoring in all of the “add-ons” a grower-tenant will typically demands, the company estimates that most tenants will spend about $400,000 per “shell.”

Pioneer Park, in Eugene, OR, will encompass 2.65 acres.


33

Grow Condos has another string to its bow. It plans to develop the world’s first marijuana friendly recreational RV Park. Called “Smoke on the Water,” the development will boast weed-welcoming campgrounds for those “wanting a unique recreational marijuana camping experience in legal states.”

In 2016 the firm is looking to open a private placement offering of stock with the goal of raising $2.5 million ($15 million fully diluted). It is also on the lookout for strategic partners and joint ventures that will allow it to enhance its educational offerings.

On June 24 the company announced that its corporate designation had been “elevated” on the OTC Markets website. CFO Joann Cleckner said in a statement that, “In light of our commitment to transparency, we believe that it is in the best interest of our shareholders to move up to the more notable OTCQB, where our Company will have greater visibility before a larger group of investors. We are excited to be moving in this direction, and believe that our shareholders will benefit greatly from these results.”

The stock is trading at around $1.54, with a three-month average daily volume of 68,000 shares.


MARIJUANA ECOSYSTEM #4 DISPENSARIES

You’d be hard-pressed to find a segment of the modern economy with as much potential for explosive growth as marijuana dispensaries. And that growth is happening right now.

For one thing, it’s estimated that 2.6 million Americans across the entire country would seek medical marijuana treatment if it became available in their state. Instead of lining up at the Duane Reade or the CVS pharmacy counter… those millions will queue up at the nearest dispensary.

The same goes for recreational users – about 100 million people.

Add them into the mix with the medical marijuana consumers, and dispensaries will count one out of every three people as a potential customer. You can see why I expect that, to meet this mushrooming demand, licensed dispensaries will pop up everywhere.

Here’s the kind of growth we’re talking about. On October 1, 2015, Oregon began allowing existing medical dispensaries to engage in “limited” sales of cannabis. The Oregon Retailers of Cannabis Association estimates that sales were $13 million in the first week alone.

That’s annualized revenue of $676 million from a single dispensary.

Right now there are an estimated 2,100 dispensaries in California alone. As of December there were at least 900 in Colorado. No one knows for certain how many currently operate in the country as a whole.

What is certain is that, as existing legal restrictions on “weed” first loosen and then fall away, the number of dispensaries will soar as entrepreneurs scramble to get in on such a cash cow.

The “weed rush” has already started.

DEA DRUG SCHEDULES

The following is taken from “The Medical Marijuana Mess,” by the Brookings Institute, March 22, 2016.

Schedule I Highest potential for abuse; has no currently accepted medical use in the U.S Marijuana, heroin, LSD, ecstasy, peyote, psilocybin

Schedule II High potential for abuse; has a currently accepted medical use in the U.S. with severe restrictions Cocaine, methamphetamine, oxycodone (OxyContin), opium poppy, Adderall, Ritalin, hydrocodone (< 15 mg per dosage unit, e.g., Vicodin)

Schedule III Potential for abuse; has a currently accepted medical use in treatment in the U.S. Ketamine, anabolic steroids, testosterone, codeine (< 90 mg per dosage unit, e.g., Tylenol with codeine)

Schedule IV Low potential for abuse; has a currently accepted medical use in treatment in the U.S. Barbital, Xanax, Darvocet, Valium, Ativan, Ambien

Schedule V Lowest potential for abuse; currently accepted for medical use in the U.S. Cough meds with < 200 mg of codeine (e.g., Robitussin AC)

Last year when the state of Maryland made available 94 dispensary licenses, the state’s medical cannabis commission received 811 applications.

Dispensaries carry more than just marijuana.

Companies like Vancouver’s Aurora Cannabis also sell cannabis derivatives, chiefly cannabis oil. They have also begun operating sophisticated web portals that function as a sort of Amazon for marijuana users.

Here are some of the marijuana dispensaries that could be boosting your net worth before long.

Supreme Pharmaceuticals Inc. (OTC: SPRWF)

As of March 2016, there were only 24 approved medical marijuana companies operating in Canada.

Conservative estimates from news organization The Toronto Globe and Mail, show that, even without complete legalization – which is on the agenda of new Prime Minister Pierre Trudeau – the medical cannabis business should hit about $1.5 billion in the next four years. It will be significantly higher if Canada completely legalizes cannabis.

Simple division means each firm could pick up about $416 million over that timeframe.

So it pays to start vetting those companies. Find the companies that have a unique niche they can exploit now to maintain solid growth within the medical marijuana sector, but also scale it up and dominate their niche if full-on legalization comes to pass.

Supreme Pharmaceuticals Inc. (OTC: SPRWF) is the only grower operating a business-to-business (B2B) model. It doesn’t retail its product. Instead it sells to other companies that then sell into the regulated retail market.

This is a pure growth-based weed stock.

Right now, dispensaries are getting their weed from licensed growers like Supreme as well as local, unlicensed growers. It’s very likely that both the regulated weed companies as well as the government would like to rein in the independent growers, since they compete with the new licensed weed companies while at the same time representing a potential huge source of revenue for the government.

The smaller independent growers will likely see some limitations placed on the size and scope of their operations, so they won’t be crushed so much as contained. Otherwise, the independents would have an unfair pricing advantage since they’d be free from the costly regulatory standards the licensed companies have to operate under.

Supreme is focused on national distribution channels and long-term contracts, which would lock in prices for retailers and help them to manage their profitability better.

Also, Supreme offers recognized brands of weed and will “white label” as well. That means that any retailer who wants to sell his or her own ‘house’ brand, can buy weed from Supreme, and call it whatever they like. Supreme is only interested in the sale of its harvests, not consumer branding.

That strategy also means it won’t have to deal with additional advertising costs as the market expands, because it won’t have to worry about branding. Retailers bear that expense.


36

Supreme’s actual growing is carried out by its subsidiary, 7Acres. The name refers to the actual size of the “footprint” – 342,000 square feet of grow space – its greenhouses occupy. The company is located northwest of Toronto near the banks of Lake Huron, a short drive to Toronto or Detroit.

And because of its proximity to the Great Lakes, it can ship by boat, saving transit costs and helping maximize margins.

Also, its proximity to large urban areas in the U.S. means, like we saw with OrganiGram, the company can benefit from medical tourism today and from recreational tourism tomorrow should cannabis be legalized completely.

In late June, while waiting on its dried marijuana sales license, Supreme made its first sale of six genetic strains of its production. That’s an encouraging indication that the firm has a sharp sales team and that its product is stirring interest in the market.

If you can access the Canadian Securities Exchange, the Canada-based stock market where Supreme trades, you may be better off buying shares there since the stock is far more liquid there than it is in the U.S.

If you have to buy OTC, don’t worry. This is a long-term hold, so once you get in you can hang on until the stock gets big enough for financial players to start buying in, raising the volume... and the price.

Aurora Cannabis Inc. (OTC: ACBFF)

This company operates out of Vancouver, Canada. And it’s only been around since December 2015.

But it is already making its mark in the cannabis market in the Great White North.

For a long time, illicit growing in Vancouver was a big market. It had great growing weather and it was very close to the U.S. border on the west coast, so it was relatively easy to move product to the huge U.S. market.

Those days are over. Now cannabis and cannabis derivatives (oils, edibles, etc.) are an established market regulated by the Canadian government. Growing, handling, and distributing facilities have to conform to Canadian regulations, and you need a license to operate.

There’s another big reason to look to Canadian firms. This year it may likely become the first G-7 nation to legalize marijuana for its adult population. You see, Canada recently had an election, and where the former Minister of Health was anti-cannabis, the new Minister is a cannabis supporter.

Aurora Cannabis Inc. (OTC: ACBFF) sells cannabis and cannabis derivatives, chiefly cannabis oil. It has a 55,000 square foot grow facility in the foothills of the Canadian Rockies.

But the most compelling thing about Aurora is the fact that its model isn’t just about shipping products to distributors. It’s set up as the Amazon.com of weed companies.

On its website, it shows patients across Canada how to access medical marijuana. This is a practice that many people still don’t have a lot of information about. So Aurora simplified the process of signing up, registering, sending in the required medical documents that authorize use, and, of course… shopping.

Once you place your order, it’s shipped to you. Simple as that.


37

At full capacity, the 7Acres “Hybrid Greenhouse” will produce 50,000,000 grams of output every year.

Aurora also acts as a referral source for cannabis-savvy doctors, which is good business for Aurora – and for the doctors.

This is key, because many doctors are still uneasy about the ethics of medical marijuana or remain unconvinced that it is in fact an effective treatment option.

This unease represents the biggest barrier for the fledgling Canadian weed companies. By creating essentially a weed-friendly physicians’ database, Aurora is working to overcome that barrier.

This is also one of the first Canadian companies to look to a direct-to-consumer distribution network. That helps keep costs low for Aurora, and it allows significant price savings for customers.

Aurora only has reported one quarter of earnings – the first quarter of 2016. Revenue was $200,000 for the quarter and gross profit was $4.2 million.

But the numbers were very encouraging.

There were also some significant milestones reached in May. For one, more than 3,000 patients were registered on the company’s website.

Also, in May Aurora kicked off its same-day delivery in the Calgary market. Expansion into Edmonton and into Red Deer, Alberta is expected very soon.

Also, Aurora has been approved for the sale of cannabis oils, which only happens after a firm passes a very stringent set of protocols.

Now that it has established itself as an upright regulated company, the next step is to prepare for the complete legalization of marijuana and cannabis derivatives. And that is what’s most exciting about Aurora.


38

From Aurora’s Website: How to Prescribe Medical Marijuana

SignupCreate an account. This will grant you access to our Physician’s Portal with exclusive materials and information on how Aurora works with you to help patients in need receive their medicine.

Welcome PackageOnce we have verified you as a practicing physician we will send you a welcome kit. Find information about medical marijuana, prescribing rules in your Province, and how Aurora works to create the best possible medicine for Canadian patients.

Register PatientsOnce verified as a practicing physician you will be able to fill out our online Medical Documents. This is a quicker and simpler process than completing the printed forms.

1 2 3

By setting up its direct-to-consumer distribution network, it is incredibly well placed to expand its operations at the very moment it becomes as legal to sell cannabis as to sell a carrot cake.

But remember: For all its potential, this is still a tiny company that trades barely 31,000 shares a day and has a current PE of 45. That’s some optimistic growth that’s already priced in, which is fine, since it’s starting from zero and has a massive market to sell into. Just be aware that the ride may be bumpy.

If you choose to invest in Aurora, remember that you can also buy shares off the Toronto Stock Exchange Venture market, which has more volume than the OTC market.

OrganiGram Holdings (OTC: OGRMF)

OrganiGram Holdings (OTC: OGRMF) is another of a handful of licensed growers and distributors in Canada.

Its unique hook is that it is also a certified organic grower. Considering the current and future markets, this makes a good deal of sense.

Based in New Brunswick, OrganiGram is one of the few Atlantic side growers, most of which began in the West and Pacific regions, since the weather tends to be more moderate and conducive to year-round growth.

But its location – very close to Quebec, Nova Scotia, Prince Edward Island (and Maine) gives OrganiGram access to a unique network without any significant competition. It has also made significant inroads with the first responders and veteran communities.

I noted that New Brunswick borders Maine. This is important because most U.S. states on the Eastern Seaboard don’t support medical marijuana, and so patients needing it have the option of working with Canadian doctors to get treatment in Canada. Obviously the more Americans who do that, the better things are for OrganiGram’s business.

Medical tourism is becoming a big industry and there are few places lovelier than the eastern coast of Canada, especially in summer. Mashmed.com projects that more than 20 million Americans will look to go abroad for medical treatment of some kind. The industry is growing rapidly, already exceeding $100 billion.

And the company is delivering on its potential. Second quarter numbers (for the quarter ending February 29) were very good indeed. Sales were up 38% compared to the same quarter last year. And net revenue per gram was up 17%. OrganiGram also saw positive cash flow from operations during the quarter, which is significant for a young, growing firm in any industry.

OrganiGram also has piqued the interest of major Canadian financial player Dundee Securities which purchased $10 million worth of special shares from OrganiGram in early June 2016.

OrganiGram is expected to use the money to expand production at its grow facilities.

The stock is up 245.61% year-to-date, but sold off a bit in February because the Canadian government recently passed a law that allows medical marijuana patients to grow their own cannabis. That hurt all publicly traded Canadian growers, but OrganiGram went on 52-week highs a couple of months later.


39


40

Remember, the market cap on this company is only $167.31 million, so this is a stock for the risk-tolerant only. Also, with stocks at this phase in their life-cycle, you need to be patient and watchful. By watchful I mean don’t check it every day. Review when it reports its quarterly numbers. If it continues to grow and looks like its managing its growth well, stick with it.

The hope is that the company gets big enough to where you will see more institutional interest, which will help boost it price. That’s the bet, and it looks like with OrganiGram the odds are in our favor. It trades more regularly on the Toronto Stock Exchange Venture market if you want to buy directly and play the Canadian dollar as well.

THE WIDE WORLD OF WEED

Gone are the days when marijuana users had to settle for a mere bag of “pot.” Today, Ivy League-trained botanists labor to produce exotic strains of cannabis for the discerning connoisseur.

Here are some the distinction and subtleties surrounding the world of “designer” weed.

Indica – These strains are said to produce a heavy, relaxing effect and are most popular with nighttime and evening users.

Sativa – is associated with an “uplifting, alert effect.” Preferred by daytime users.

Terpenes – Are found in many types of plants and flowers. These organic compounds produce the various aromas and flavors in marijuana.

Hybrid – Are a genetic cross between two or more strains of cannabis. The resulting strain can be balanced between Sativa and Indica, or could favor one strain over the other.

“Whole Bud” – Refers to dried marijuana in its natural form.

Source: OrganiGram website: https://www.organigram.ca/products/

40

https://www.organigram.ca/products/


42

MARIJUANA ECOSYSTEM #5 MARIJUANA EDIBLES

You’ve already seen how a single marijuana dispensary could bring in more than $676 million a year. Not all of that cash comes from weed itself.

Think of a food or a drink that you would never imagine being connected to marijuana. Got it? Well, somebody is probably in a kitchen or distillery concocting it as we speak.

Most folks have already heard about things like “pot brownies.” But the market for marijuana “edibles” goes far beyond that. There are weed deserts and weed energy drinks. In fact, we’re even about to see the opening of the world’s first weed distillery. The founders believe their product is so good, simply calling it marijuana would be doing it the same amount of justice as calling vodka “potato juice.”

The Colorado Department of Revenue reports that in 2014, five million marijuana edibles were sold in the state. And according to the Denver Post, marijuana-infused edibles account for roughly 45% of the legal marijuana marketplace. A February report by Bloomberg says that edibles account for 50% of the revenue earned by dispensaries.

The sheer variety of edibles on offer is mind-boggling. One website boasts a full assortment of bars in six flavors Vanilla Affogato, Mile High Mint, and Peanut Butter Buddha. On every nutritional label, alongside information on calories, carbs, and sodium, you’ll find the amount of THC the bars contain – 100, 200, or 225 milligrams.

For people averse to inhaling smoke, that same site offers THC-laden capsules, lip balms, hash bath oils, topical compounds, and even THC patches that provide “accurate dosing… a quick onset and unsurpassed duration.”

Thirsty users can enjoy THC-infused coffees, sodas, and sparkling waters.

And according to Salon, “one Denver bagel shop recently got attention for serving smoked salmon infused with THC.”

The growth in the edibles market is being driven by more than a desire to satisfy marijuana users’ “munchies.”

A February report by Fortune quotes John Kagia (author of the 2016 State of Legal Marijuana Markets report) as saying that marijuana edibles “come at higher price points than the flower does, which means the businesses are able to capture higher sales per customer.”

The edibles market is also a windfall for marijuana growers, who can sell the trim and other parts of the plant to other companies who use them to make their own marijuana derivatives.

Marijuana-infused edibles make up 45% of the legal weed market.


43

Canadian Cannabis Corp. (OTC: CCAN)

Consumers of cannabis are not an identical cohort.

You can’t assume that everyone who buys marijuana smokes it. Nowadays, there are edibles, drinks, and balms that use cannabis oil or vegetation for health-related uses.

So aside from the market boom in recreational cannabis, medicinal marijuana and derivatives have also been seeing brisk growth, and for good reason.

Cancer patients undergoing chemotherapy and radiation usually lose their appetite and have sensitive stomachs. But if they don’t eat, the treatments aren’t as effective. Cannabis has been proven to help stimulate the appetite and settle the stomach.

There is also new work being done with cannabis oil that shows promise treating epilepsy, multiple sclerosis, some cancers, and even rheumatoid arthritis. The oil is also effective for insomnia.

And the great thing about ingesting oil is… you don’t have to smoke it, which makes it far more portable and far less conspicuous.

Canadian Cannabis Corp. (OTC: CCAN) is one of the market leaders in this growing international sector.

The upside of this sector is that demand is much more stable, and there are high enough barriers to entry – approved facilities, strict protocols, government oversight, etc. – that CCC can consolidate its dominance in this space without having to expand into the lower-margin recreational space.

Since it operates in Canada, CCC faces far less restrictive laws regarding medical marijuana. That means potential breakthroughs can be observed and evaluated in the Canadian marketplace much faster than in the United States.

Canadian Cannabis plans to acquire enough acreage, distribution and medical sales power to become a major integrated player in this burgeoning sector. To that end, the company has been on an acquisition spree in the weed space.

On October 20, 2015, CCC announced plans to acquire Hydropothecary Corporation, a licensed producer of cannabis and cannabis oils as well as a licensed distributor of Medicinal Marijuana.

In April the company announced a joint venture between The Clinic Network (a wholly-owned subsidiary of CCC) and Medicinal Cannabis Resource Centers Inc., an operator of clinics in Vancouver, Kamloops, and Montreal.

And in January of last year it bought Novo Healthnet, which has been successfully providing treatment solutions for patients as well as assessment and diagnostic services across Canada since 1996.

Novo owns 14 multidisciplinary clinics along with a network of 28 affiliate clinics and three partner clinics in the provinces of Ontario, Nova Scotia, and Newfoundland. Its subsidiary, Novo Peak Health Inc., operates Ontario Health Insurance Plan (OHIP), which funds physiotherapy clinics and serves the retirement and long-term-care homes of Physiomed Peak and Peak Health.


44

Novo is a preferred provider within several insurance company networks, and Novo clinics are affiliated with the Department of Physical Therapy at the University of Toronto and McMaster University for their residency programs.

All this means Novo will be instrumental in Canadian Cannabis’s efforts to expand its role in the healthcare sector and open up new revenue opportunities.

There are a couple of things to keep in mind here. For one, how smoothly will CCC integrate all of the parts that all of those acquisitions have set in motion? This is something that would test the mettle of any management team.

Also, most of those acquisitions were cash and stock deals, so the company has had to issue more shares to fund them. That has meant declining stock prices as current shares were diluted.

But this is usually the way small firms become bigger firms. It’s tough for investors to go through a new round of stock issuances, but if the stock gains traction, it’s well worth the wait.

Right now, CCC is still getting profitable, but operating and profit margins are getting stronger every quarter.

The stock is trading closer to its lows than its highs right now. That’s understandable given that the company made three major purchases in 2015.

Cannabis Sativa Inc. (OTCMKTS: CBDS)

As you research cannabis stocks, you’ll rarely come across a management team with a pedigree as impressive as Cannabis Sativa Inc. (CBDS). The result is that this firm’s executives likely understand the legal workings of the U.S. government better than firms 100 times its size.

That pedigree began with Gary Johnson, the fomer governor of New Mexico who shepherded this firm to its current state before recently stepping down to run for President as the nominee of the Libertarian Party.

Johnson was succeeded by Mike Gravel, the fomer senator from Alaska, who is an outpsoken critic of the criminalization of marijuana. Gravel cut his chops in this movement 30 years ago when he was an outspoken opponent of Richard Nixon’s war on drugs.

Judge Jim Gray of Orange County Calif. sits on Cannabis Sativa’s board. He was always an progressive judge, focusing on issues such as drunk driving and juvenile defense reforms. Another board member, Stephen Downing, was a former deputy chief of the Los Angeles Police Department.

But these men didn’t join Cannabis Sativa to change political opinion about pot. They simply see a business model that is perfectly positioned to thrive as pot moves out of the shadows and into the mainstream.

Cannabis Sativa’s CEO is Mike Gravel, the former senator from Alaska.


45

This Nevada-based Cannabis Sativa makes and sells a range of herbal-based skin care products including salves, balms, and lotions. While most of its current products are based on traditional ingredients, Cannabis Sativa is also developing a line of cannabis-based products.

The firm’s Hi Brand of products is targeting the fast-growing marijuana edibles market, for people that prefer to avoid smoking pot but still want the high that the drug can give.

The timing is perfect. In Colorado, for example, edibles accounted for 45% of the legalized pot market last year, a far higher percentage than anyone could have guessed when Colorado first changed its laws.

According to ArcView Research, the edibles category may be worth $3 billion by 2018.

The edibles market has had its share of controversy, as first-time users underestimate just how potent a piece of candy may be. Cannabis Sativa goes to great lengths to help consumers know exactly how much THC they are ingesting.

For example, the company’s Hi Brand chocolate bars have 100 milligrams of THC, and can be broken up into 12 squares. Users can consume just as much or as little as they want. This approach is actually more controlled than smoking. When you take a toke, you have no idea if you inhaled a little or a lot of THC with the smoke.

The management team at Cannabis Sativa thinks there is a great opening for pot dispensary franchises as well. The firm has developed a prototype store that sells both pot and edibles, and the firm has created a range of marketing materials and business tools to help people without a strong business background open a new store without much experience. The firm also plans to sell a number of items that these stores will stock.

The timing is excellent. There isn’t yet any sort of national brand of items, and no sort of major retailer that has a foothold in this market. This firm’s “Hi Brands” stores may become like the Apple Store in terms of user friendliness, pleasing signage, and range of products, according to management.

State governments stand to benefit from these kinds of businesses. In Colorado, for example, stores pay a retail and medical sales tax of a 2.9% along with a 10% retail marijuana sales tax and a 15% marijuana excise tax.

Cannabis Sativa is taking yet another shot on goal in the legal pot market. Beyond its push into edible products and store franchises, it has also patented a unique strain of pot, known as CTA. It’s a hybrid plant, from strains in Ecuador, for consumers that seek what the firm calls a “ceiling-less high.” Translation: It’s potent stuff.

This firm remains quite lean and is spending less than $100,000 per quarter. Still, cash levels were low as of the end of March, so look for a capital injection in coming quarters.


47

MARIJUANA ECOSYSTEM #6 WEED-BASED WONDER DRUGS

By far the biggest segment of the emerging cannabis landscape, and the one that is lending the greatest sense of “legitimacy” to legal weed, is the market for medical marijuana.

For decades the FDA has been quietly greenlighting drugs that contain cannabinoids or similar chemicals as those found in the cannabis plant. The agency has not been shy about expressing its public support of research to explore marijuana’s vast potential.

In fact, the FDA has already granted fast-track approval and orphan drug status to some pot drugs.

In fact, it’s no exaggeration to say that the use of marijuana to treat a wide variety of illness and disease has been the “opening wedge” that is making fully legal marijuana – and the profit opportunity it represents – into a reality.

And medical marijuana will continue propelling the industry as legalization increases.

Last July, Salon reported that, when it comes to legal marijuana, “By far the biggest financial movers and shakers behind the scenes are pharmaceutical and research outfits.”

As you saw earlier, 82% of doctors approve of medicinal marijuana. One of them, a University of California oncologist named Dr. Donald Adams is full-throated in his support. “I say all the time, not a day goes by when I’m not recommending cannabis to patients for nausea, loss of appetite, pains, insomnia and depression – it works… If physicians are in support of cannabis as a medicine, why is it not medicine?”

A MARIJUANA MEDICAL MIRACLE

You’ve probably heard the stories of parents who have children with severe conditions being forced to move to places like Colorado to get access to medical marijuana.

ennifer Cooper of Virginia, 16, is a prime example of this. She suffers from a rare condition called Jeavons syndrome that causes her to experience as many as 15 to 50 seizures an hour.

As a report by the Brookings Institute explains it, “Her seizures began when she was quite young. When Patrick and Beth noticed the jerking motions in her eyes, which were occurring in short stints over dinner and at other times during the day, they took her to a neurologist, who diagnosed her with a mild form of epilepsy. For several years, the condition was manageable.”

“Over time, however, Jennifer’s condition worsened. On New Year’s Eve 2011, one of those clusters led to a more dangerous, full-body grand mal seizure. This was her first grand mal seizure, but it would not be her last.”

All Jennifer’s doctors could offer was a constantly changing mix of drug cocktails with side effects that only added collateral damage to an already bad situation. Her parents, Patrick and Beth, wanted to try medical marijuana.

But until late last year, it was illegal in Virginia and carried a five-year prison sentence. So Beth and her daughter moved to Colorado, where she added medical marijuana to her treatment plan.

Her seizures went from up to 50 an hour down to 10 a day.

Not only that, her depression disappeared, too.

The voters in state after state are quickly coming to an agreement that cannabis is in fact a medicine. The evidence is impossible to ignore. More than 23,000 scientific papers have been released on the medical applications of weed. Alzheimer’s, cancer, epilepsy, post-traumatic stress disorder (PTSD), autoimmune diseases… the list goes on and on.

Advocates of medical (and recreational) marijuana are starting to gather some very powerful allies under their expanding tent.

According to Pot Network, an online media and networking hub devoted to cannabis, “Former New York Giants defensive lineman Leonard Marshall [has been] very vocal about his support for the public embracement of medical marijuana.” The site went on to add that “Marshall was diagnosed with a degenerative brain ailment in 2013 and has been using non-psychoactive variants of medical marijuana to help him deal with the disease.”

Billionaire Sean Parker, creator of Napster and an early investor in Facebook, has publically committed to matching dollar-for-dollar all donations to the Marijuana Policy Project of California as it works to make cannabis fully legal in the Sunshine State.

And for the second year in a row, Congress has voted to forbid a single penny of federal funds from being used to harass, raid, or interfere in any way with the operations of medical marijuana dispensaries in states where these businesses can legally set up shop.

The military understands the medical benefits of marijuana, as well.

The House of Representatives has passed a bill that allows doctors at the Department of Veteran Affairs to discuss marijuana treatment options with soldiers who are suffering from conditions like PTSD, chronic pain, and traumatic brain injury in states where the treatment is legal.

So momentum is only going in one direction.

Cara Therapeutics Inc. (Nasdaq: CARA)

Although marijuana-based drugs may one day fully replace opiates when it comes to pain relief, Cara Therapeutics (Nasdaq: CARA) remains focused on both markets.

Chances are that marijuana-based therapies will be the choice for sufferers of moderate pain, while opiates will still provide relief for patients whose pain burden is simply overwhelming.

Cara’s researchers are focusing on what are known as CB Agonists, cannabinoid receptors that are similar to the brain’s opioid receptors.

48


CANNABIS AS A CURE FOR ADDICTION

The National Institute of Health (NIH) says that 100 million Americans suffer from chronic pain. As the number of prescriptions for opiate-based pain killers has risen, so has the number of people becoming addicted to those drugs.

According to ArcView, “The social costs of the abuse of prescription pain killers is leading to calls for… less addictive pain treatments. For many, cannabis is a strong candidate.”

To see what this means, here’s a quick biology lesson.

A whole range of different pain triggers are found outside the central nervous system (CNS). By targeting the CB receptors outside the CNS, Cara’s CR701 drug compound is giving quick pain relief to sufferers of certain types of pain.

The challenge, of course, is to test CR701 in bigger and bigger drug trials, and though this approach may yield a profound, new approach to pain management down the road, Cara’s management is focused more squarely on the opioid drugs in development in the near term.

And here is where some people think that Cara may be tapping into the “Holy Grail” of pain relief.

For more than three decades, researchers have known that a part of the brain, known as the Kappa Antagonists, hold receptors that can bring pain relief from morphine-based products. These receptors ease pain without the hallucinations and depression that you often find with other opiate-based approaches.

Past efforts to tap into the Kappa Antagonists have failed because drugs invariably cross the blood-brain barrier, hopping over to other receptors that trigger the powerful side effects of opiates.

The good news is that another Cara compound, known as CR845, only goes where it should. In a test of more than 500 patients thus far, not a single one has seen the drug cross into the central nervous system.

Cara is testing CR845 for a pair of treatments. First, Phase III trials are underway for post-surgical pain. Trial results should be released in early 2017, which would serve as a strong catalyst for shares.

Second, this drug is in Phase II trials for the treatment of uremic pruritus, a severe itching and pain problem caused by late stage kidney failure. There are approximately 400,000 patients in the U.S. that undergo dialysis, and roughly half of them experience pruritus.

As CR845 has undergone larger and larger tests, it has become apparent that this drug has almost no side effects. Around 6% or 7% of people experience dizziness or headaches, which usually fade pretty quickly.


49

Cara Therapeutics Drug Development Timeline (Part 1)

Kappa/IV CR845Post-Op Pain

Kappa/Oral CR845Chronic Pain

Kappa/IV CR845Pruritus (Uremic)

CB1/CB2/CR701/Chronic Pain

Through 20152016

Commercialization Preclinical Phase I Phase II Phase III

Cara is looking to move three drugs to Phase III in 2016.

The FDA stresses that new drug must demonstrate minimal side effects, if it is to get a “thumbs up” from the drug agency.

Shares of Cara had a setback in February when the company told the FDA that some CR845 patients saw a spike in blood sodium levels.

That issue was eventually resolved by slightly lowering dosage levels. Investors who can see the long-term potential now have a new buying opportunity.

Shares recently traded around $9.12, down from the 52-week high of $18.12.

Investors should also know the financial risk inherent in a drug developer like Cara. The company is burning through $10 million per quarter as it amps up its research efforts and has less than $100 million in the bank.

So Cara may need to line up a strong strategic partner or sell more shares before it can successfully launch CR-485. But that’s par for the course among early-stage biotech firms.

With so much ground-breaking research being done with both cannabis and opiate-based drugs, Cara should have no trouble finding financial backers when the time comes.

Arena Pharmaceuticals Inc. (Nasdaq: ARNA) For most of the 20th century, doctors knew little about the workings of our most important organ, the

human brain.

But in the past decade, researchers have spent billions to learn more and more about this all-controlling organ. And billions more are spent each year researching ways to design drugs and devices that can leverage this hard-won knowledge to radically change the course of many diseases and disabilities.


50

Cara Therapeutics Drug Development Timeline (Part 2)

Asset

ZYN002CBD Gel

ZYN001THC Pro-

DrugPatch

Preclinical Phase I

Preclinical Phase I

RefractoryEpilepsy

Fragile XSyndrome

OsteoarthritisPhase II

Fibromyalgia

Peripherl Neuopathic Pain

2015 2016 2017

Unp

artn

ered

– Z

yner

ba h

olds

glo

bal r

ight

s

It may be that the toughest choice is simply where to focus all this effort.

San Diego-based Arena Pharmaceuticals Inc. (Nasdaq: ARNA) has chosen to target G protein-coupled receptors (GPCRs), biological clusters that can sense molecules outside the cell and activate responses within the cell.

Brain cells dictate almost every one of our sensations, thoughts, and actions. For example, they send signals that trigger appetite and hunger. Arena exploited this correspondence between cause in the brain and effect on the body to develop BELVIQ, which helped people with binge-eating disorders to curb their appetite.

When that drug was approved in June, 2012, analysts thought it might become a blockbuster. But sales haven’t been as robust as expected. Blame goes to a lack of enthusiasm for obesity drugs, from both insurers and doctors.

Shares of Arena, which traded in the low teens when the drug hit the market, now hover below $2. As you’re about to see, this reversal is no cause for alarm.

Arena has been wise enough to pursue its research around GPCRs, especially in the areas of cardiovacular, central nervous system, and metabolic diseases. And it now has a deep pipeline of drugs that may help this stock stage a sharp rebound in coming years.

For example, Arena is testing a range of drugs under a program known as APD334. One approach, for the treatment of auto-immune diseases such as ulcerative colitis, is in Phase II trials. That drug may have peak yearly sales in excess of $1 billion, if approved by the U.S Food and Drug Administration (FDA).

But for this special report, you need to know about APD371. It’s targeting the cannabinoid-2 receptor and could deliver breakthrough gains in the field of pain management. In Phase I trials this drug has been very effective while showing no signs of psychotropic effects and no potential for dependence or abuse, a key drawback of many opiate-based pain treatments.

Yet APD371 isn’t just going after the opiate replacement market. Recall that over the past decade, there was a great deal of interest around a new class of pain drugs, called nonsteroidal anti-inflammatory drugs (NSAIDs).

The most popular NSAID, Pfizer Inc.’s (NYSE: PFE) Celebrex, became a poster child for this group of drugs. But post-approval studies found that the use of Celebrex led to a 37% spike in strokes and heart problems and an 81% increase in internal bleeding.

Arena’s APD371 side steps those concerns, as it has no direct impact on the heart, liver, stomach, and other organs that NSAIDs impacted. It simply changes how the brain perceives pain. In layman’s terms, APD371 makes the pain receptors in the brain less sensitive.

After announcing stellar Phase I results this past April, Arena got the green light to design a much larger Phase II trial.

Let’s be clear: This isn’t a drug derived from cannabis. Instead, it acts on the same exact mechanisms of action and on the same part of the brain as pot-based drugs do. In effect, clinical trial progress


51

for APD371 will further validate the entire medical approach and philosophy around the emerging cannabinoid targeting drug firms.

All of these drugs face a powerful market opening. An estimated 100 million American adults suffer chronic pain, which makes the global pain management therapeutics market worth more than $30 billion each year.

In light of the well-established drawbacks of opiates and NSAIDs, it’s pretty clear that a better solution is needed. You don’t see these kinds of massive medical markets like this very often.

Arena should have the staying power to fund its clinical trials. It has $140 million in cash, which should last several more years at current burn rates.

The firm spends roughly $18 million to $20 million per quarter on R&D and burns through around $20 million per quarter, suggesting that current cash balances should last into 2018.

As APD334 and APD371 show more progress in clinical trials, the firm may look to strike a global sales partnership for these drugs, which would bring cash in the door.

Zynerba Pharmaceuticals Inc. (Nasdaq: ZYNE)

This company is taking a two-pronged approach to the medical marijuana market. A pair of drugs in development aims to capitalize on the therapeutic strengths of the cannabis compounds THC and CBD.

First, Zynerba Pharmaceuticals Inc. (Nasdaq: ZYNE) is developing a CBD-based topical gel that offers relief from a range of ailments, including epilepsy.

The firm has been perfecting a topical gel formula that more effectively penetrates the top layers of skin. This gel approach could work better than traditional pill-based approaches, as the drug will not need to pass through the liver before hitting the bloodstream.

Early testing results look great. While adult epileptics found relief from a placebo 13% of the time, Zynerba’s gel, known as ZYN002, proved effective in reducing seizures 88% of the time.

The drug also appears to combat the effects of osteoarthritis, a form of joint inflammation.

Roughly 25 million Americans have some form of osteoarthritis. And the affliction becomes more acute with age, making ZYN002 a potential blockbuster treatment for 73.5 million Baby Boomers.

High concentrations of ZYN002 led to a sharp decrease in swelling in affected joints in just four days. Thus far, the marijuana-derived drug has shown few side effects.

Zynerba is also targeting Fragile X syndrome, a genetic mutation that can lead to a host of behavioral issues. Fragile X afflicts 71,000 Americans and another 88,000 outside our borders. ZYN002 actually silences the gene responsible for Fragile X, which opens the door for other kinds of gene-altering treatments down the road.

Look for ZYN002 to enter Phase II clinical trials this summer for all three of those indications. As with any biotech stock, strong data from these trials will serve as a powerful catalyst for shares to move higher.


52

As for its second prong, Zynerba is also developing a THC-based patch, known as ZYN001 that targets the body’s cannabinoid receptors. Early tests have shown this drug to be very effective against fibromyalgia and peripheral neuropathic pain.

Roughly 5.6 million people in the U.S. and 24 million people worldwide suffer from fibromyalgia, which causes severe pain, memory loss, and countless sleepless nights.

While doctors don’t yet fully understand what causes the disease, marijuana users have long known that the drug can bring great relief.

In a survey led by the National Pain Foundation, 62% found marijuana to be “very effective” in the treatment of fibromyalgia symptoms.

By contrast, that same survey found that the current drugs on the market, Cymbalta, Lyrica, and Savella, gave clear relief to only 8% to 10% of patients. In fact, more than 60% of the people surveyed said that those existing drugs gave “no relief at all.”

As one patient said, “I would use [marijuana] when the burning pains started down my spine or my right arm, and shortly after, I found I could continue with housework and actually get more done.”

Peripheral Neuropathic Pain (PNW), which afflicts 20 million people in the U.S. each year, according to the National Institutes of Health, is another target for this drug.

While Zyberna’s ZYN001 drug is only in the early stages of testing, the firm has reason to be hopeful.

The fact that fibromyalgia and PNW are massive unmet needs means that the FDA could put ZYN001 on the “fast track” toward approval.

Look for Phase II trials to begin in the first half of 2017. If the data from the trials are strong, Zyberna could very well be looking to bring a potential blockbuster to market as early as 2018.

Before that happens, Zynerba will likely need to raise more cash. The firm is spending about $4 million each quarter and has $37 million left in the bank, thanks to an August 2015 IPO.

Shares briefly traded above $40 in summer 2015, but now trade at around $12, thanks in large part to the biotech sector’s selloff over the last several quarters.

The good news is that with Zynerba so low, the potential for profit is that much higher.

As Zynerba’s drugs make more progress in trials, and investors come again to realize the massive markets this firm is targeting, look for shares to enter a new uptrend.

INSYS Therapeutics Inc. (Nasdaq: INSY)

While companies like GW Pharma focus on CBD, one of the two main ingredients found in marijuana, other firms are focused on THC, the psycho-active component in cannabis famous for its range of strong properties, including the ability to reduce pain.


53

Of course the standard way to care for many people experiencing pain has been to prescribe opiates. But the risk of drug addiction that can accompany opiate use has prompted a hunt for a better class of drugs that truly alleviates pain without the risk of addiction.

Ironically, the firm that markets one of the top-selling opiates, Fentanyl, is also a pioneer in the race to come up with pain-relieving drugs based on cannabis.

INSYS Therapeutics Inc. (Nasdaq: INSY) has five different THC-based drugs working their way through clinical trials.

Here’s a key factor to keep in mind about INSYS: The company is able to synthesize THC in its labs.

It may be artificial THC, but its effects appear to be very real. And it’s a lot cheaper to produce than a warehouses filled with water- and nutrient-hungry marijuana plants.

INSYS’s synthetic THC is being made into a drug called Dronabinol, which the company is already able to produce in large quantities at an FDA inspected U.S.-based facility.

The drug is used to treat the nausea and vomiting that accompany chemotherapy. It also helps stimulate appetites for AIDS patients that have seen server weight loss.

U.S.-based production is a priority because the FDA wants to ensure that Dronabinol won’t be easily imported and doesn’t become a black market recreational drug.

By the company’s math, Dronabinol faces a $450 million yearly sales window. The key virtue for this drug is how quickly it takes effect. Marinol, the former THC-derived standard of care, can take up to 60 minutes to work. Dronabinol starts working in just 15 minutes.

INSYS is also pouring a lot of research dollars into other methods of drug delivery. It has developed a unique oral formulation for Dronabinol, called Syndros, which allows for the rapid onset I just mentioned.

The firm is also working on devices that enable patients to inhale or inject the medicine, which would bring even faster relief. These devices could also be used to improve delivery of the firm’s other drugs as well.

INSYS is also targeting some of the same markets that other marijuana-focused firms are tackling, including epilepsy, various cancer tumors such as glioblastoma, pediatric schizophrenia, and others.

While INSYS moves quickly to build out its synthetic pot franchise, it continues to generate strong profits from its key drug, Fentanyl.

That brings up why this stock is such a great “special situation” play.

Fact is, opioids like Fentanyl are coming under greater government scrutiny, but are still the best option for cancer sufferers dealing with extreme pain.

INSYS got on the bad side of the FDA in 2015 when it was found to be overly aggressive in pushing sales of Fentanyl to doctors. That led to the removal of the firm’s former CEO. Company founder John Kapoor is now back at the helm, steering a more conservative sales strategy for Fentanyl.


54

The hangover from previous sales tactics for this drug continues to create headaches for the firm. A pair of sales managers, both of whom were subsequently fired, were recently arrested and charged with giving kickbacks to doctors.

The company itself is also undergoing a federal investigation, which has created a deep overhang on the stock. It currently trades for around $13, down from the 52-week high of $40.

But Wall Street is glossing right over how healthy the firm really is. Yes, it may end up paying some fines, but the company has more than $200 million in net cash, which is a more than ample war chest to cover legal fees.

More to the point, right now there appears to be zero risk that Fentanyl will be pulled from the market.

Indeed, the firm has already changed it sales approach and now uses less aggressive tactics. But that change and the firm’s long-term upside are not yet reflected in the stock’s price.

While legal costs are weighing on 2016 profits, analysts think INSYS’s per share profits will rebound more than 100% in 2017 to around $0.90 a share.

While investors should be aware problems with Fentanyl, they should know that the drug is merely a placeholder to support current profits while INSYS develops a broad cannabis-focused drug franchise.

GW Pharmaceuticals PLC (Nasdaq ADR: GWPH)

Study after study has shown that up to two dozen medical conditions could be treated with marijuana.

Its two key ingredients, cannabidiol (CBD) and tetrahydrocannabinol (THC), have a clear impact on brain function and pain management.

Glaucoma sufferers, for example, have long known that pot can reduce ocular swelling. Many people swear by pot’s ability to improve lung function, counterintuitive as that may seem. And people suffering


55

INSYS CANNABINOID MANUFACTURING CAPABILITIES• U.S.-based facility approved to produc pharmaceutical

dronabinol (THC) and cannabidiol (CBD) with scale for commercial quantities

• Expanding manufacturing capacity to support future demand

• Constructed second facility to manufacture API for dronabinol oral solution and pharmaceutical CBD

• Capable of producing over 99% pure CBD synthetically in controlled environment

• Received Drug Master File (DMF) #28255 from FDA in Q2 2014

• DEA-approved to manufacture CBD in October 2014

• Quota increased by 200kg in August tto 290 kg CBD

from conditions such as multiple sclerosis will tell you that this drug can greatly ease the daily pain they must live with.

Results like those are part of the reason medical marijuana has been approved in 24 states and in many countries around the world.

The legal market for medical marijuana exceeded $4 billion last year, and will likely be a $10 billion industry within a few years, according to ArcView Market Research. Pennsylvania recently became the 24thth market to approve medical marijuana, and more are expected to follow suit in the next year or two.

That got the scientists at GW Pharmaceuticals PLC (Nasdaq ADR: GWPH) thinking. If marijuana has such a broad range of potentially healing properties, and is finally receiving more respect among doctors, why not build a business around CBD and THC?

GW has a great head start in the race to build drug franchises around the healing powers of cannabis.

For the past five years the firm has been cultivating strains of the plant with an eye to increasing concentrations of these two key ingredients. This effort has made it possible for GW to provide its engineers with a robust supply of the raw material they need as they ramp up research into a broad range of new drug candidates.

GW’s scientists are looking to capitalize on a series of medical breakthroughs made in the 1990’s, when researchers first realized that the body actually has three systems that regulate disease and pain.

Two of these, the central nervous system and the immune system, were already well understood. But what researchers discovered was that our body is also regulated by proteins called endocannabinoid receptors.

THC and CBD go right to these receptors and can have a profound impact on the body’s various mental and physical responses.

GW Pharma has focused on the impact of CBD, which targets the brain’s receptors that can control mood and brain seizures.

For the three million epilepsy sufferers in the United States (and the 62 million sufferers worldwide), relief from seizures would be nothing short of a miracle.

That’s why so many of them are focused on GW’s Epidiolex, which has been quickly moving through clinical trials.

A turning point came in 2012, when an 11-year-old boy named Sam was given high doses of CBD for the first time. Despite having taken a dozen anti-seizure medications, Sam still suffered from more than 100 seizures every day.

Thanks to GW Pharma’s CBD formulation, Sam now experiences only three to five seizures each day. Some days, he doesn’t have a single one. As you’d imagine, many families are clamoring to get their children enrolled in Epidiolex clinical trials. They soon got their wish.

By 2015, 20 separate studies were underway involving 750 children. On average, patients have experienced a greater than 50% reduction in seizures.


56

Fully 95% of all patients enrolled in clinical trials for this drug have stayed in the program. You see, typically a combination of toxic side effects and lack of effectiveness leads 20% or more of patients to drop out of trials like this.

But Epidiolex has shown only fatigue (in 17% of patients), diarrhea (17%), and sleepiness (21%) as side effects.

Based on results from several years’ worth of promising clinical data, Epidiolex may be approved by the FDA in early 2017. Following approval, GW Pharma will have exclusive sales rights to the drug for seven years in the United States and 10 years in Europe.

Right now, GW Pharma is looking to make its treatments available to 466,000 children in the United States who suffer from epilepsy and another 208,000 in key European markets.

These patients currently consume tens of thousands of dollars in epilepsy medicine each year, drugs that barely make a dent in the number of daily seizures they must endure.

GW is also testing Epidiolex in Phase II trials with adult epilepsy patients. That’s a far larger market, as there are around 65 million adults with epilepsy worldwide.

Simply put, this could be a blockbuster drug launch. Solely based on approval for children with epilepsy, annual sales for Epidiolex may exceed $1 billion five years from now.

Even as GW prepares to tackle the epilepsy market, its scientists have been testing high concentrations of CBD on patients with schizophrenia, Type 2 Diabetes, perinatal asphyxia, and other types of seizure.

A variant of CBD, known as CBDV, is also showing a lot of promise in other areas, including treating certain social and repetition behaviors associated with autism.

In April of 2014, the company received the coveted FDA “Fast Track” designation for Sativex for “the treatment of pain in patients with advanced cancer.” The drug had already been launched in 15 countries for the treatment of spasticity caused by multiple sclerosis.

The FDA’s Fast Track program grants a drug maker favorable treatment for the purpose of accelerating the development of a drug that both treats a deadly condition and also addresses an unmet medical need.

Ahead of its first drug hitting the market, GW Pharma is already building the foundation to become a top-tier drug maker. It recently hired Julian Gagnolli as president of its North America division.


57

U.S. GW PHARMA COMMERCIALIZATION

• Approximately 140,000 children in U.S. have treatment-resistant epilepsy.

• Incidence of Dravet and LGS: 25-35K.

• Epidiolex would represent a new class of anti-epileptic Drug.

• Experienced U.S. commercial leadership team in place.

• Implementation of “high efficiency” commercial deployment model.

• 4,000-5,000 U.S. physicians, expected to require sales force of approximately 50-55.

• Establish “high touch” patient, payor and physician communication, education and distribution model.

• Strong relations with patient organizations.

Gagnolli earlier ran the North American sales operations for Allergan plc (NYSE: AGN), a $97 billion drug and medical supplier.

GW plans to hire 50 to 60 experienced sales pros that have a background in the epilepsy market, and has already identified the 4,000 to 5,000 U.S. physicians that specialize in epilepsy.

This firm is well-armed to pursue an active slate of drug trials and the buildout of a sales force. It has around $250 million in cash in the bank (as of the end of the second quarter of 2016), and by the end of 2017, should still have around $186 million in cash, according to Merrill Lynch.

The success in treating epilepsy will change the marijuana-based drugs are perceived. Once the medical community sees how key ingredients such as CBD or THC deliver better results than existing treatments, GW Pharma and other cannabis-focused stocks will be no longer be seen as outliers.

With a roughly $3 billion market cap, the stock trades at $123.81 and is priced to move.

GrowBlox Sciences (OTCMKTS: GBLX)

While firms like CannaGrow Holdings aim to gear up for massive production volume in states where recreational pot is already legal, other firms that grow cannabis want to stay on the medical research end of the business.

Las Vegas-based GrowBlox Sciences Inc. (OTC: GBLX) focuses on the research and development of medical marijuana. It produces medical-grade cannabis, cannabis concentrates, and cannabinoid therapies, applying a healthy dose of biotechnology in the process.

Think of GrowBlox as the tech support team for any medical research firms that want to grow very specific strains of pot.

For example, the firm’s TissueBLOX system provides a blueprint for the right growing equipment and also shows growers how to produce genetically-identified strains of cannabis without the use of seeds. Researchers can’t risk using different strains of pot if they are looking to get consistent results from their clinical trials.

GrowBlox helps growers at every step of the cultivation process. Its CureBLOX tools help growers to cure the plants to reduce moisture to desired levels, right at harvest time. Curing the plant at the right temperature and humidity is the only way that growers can ensure that a plant is free from pathogens that can impact medical research.

This isn’t just a business cooked up by a bunch of quick buck opportunists. The firm’s leadership has the pedigree you usually find at a leading biotech firm.

GrowBlox is led by Chief Science Officer Dr. Andrea Small-Howard and also has a big data expert Dr. Long Nguyen along with botanical expert Dr. Ulrich Reimann-Philipp.


58

We believe that U.S. physician enthusiasm for a new therapeutic alternative is very high.

-GW Pharma

The firm’s scientific board is led by immunologist expert Dr. Helen Turner, small molecule expert Dr. Tony Ortiz, clinical investigator expert Dr. Daniel Chueh, orthopedic expert Dr. Alfredo L. Axtmayer, and liver disease expert Dr. John Abroon. Each of these medical researchers is convinced that marijuana represents the next big breakthrough in the treatment of diseases and the relief of pain.

You’ll note that we mentioned a Big Data expert among that group.

This is because GrowBlox takes a unique approach to finding the best ways that marijuana can benefit patients. The firm ties together the key traits of the active ingredients within cannabis with various symptoms and diseases.

After poring over the preclinical and clinical data produced from thousands of peer-reviewed studies, the firm is now focusing on the most effective ingredients in pot in seven therapeutic categories. These include cancer treatments, cardio protection, metabolic syndrome, pain management, neurological disorders, and inflammation.

This is a very cost-effective way of making major breakthroughs. The firm doesn’t conduct expensive clinical trials. It simply looks for way to find diamonds in the rough among research programs that have already been completed.

GrowBlox’s CEO, Dr. Small-Howard, is convinced that this approach can accelerate drug development, from the typical


59

GrowBlox Matches Cannabis Strains with Disease Targets

GBX01 GBX02 GBX03 GBX04

Cancer Treatments

Cardio- protection

Metabolic Syndrome

Pain Management

Reduces Nauseu

Fights ischemia

Lowers blood sugar

Reduces aches & pains

Increases Appetite

Increases circulation

Suppresses appetite

Reduces Chronic pain

Decrease cancer growth

Decrease inflammation

Decrease inflammation pain

GBX05 GBX06 GBX07

Neurological Disorder Inflammation

Compromised Immune System

Induces sleep

Relieves psoriasis Immunostimulant

Relieves anxiety Decrease gastric inflammation

Fights nausea

Protects Nerves Reduces wasting syndrome

Lessens spasms

Fights psychosis

Combats depression

Reduces epileptic seizures

15-20 year time horizon down to just 3-5 years. This would reduce the cost of identifying and developing new drugs to just one-tenth of what a regular drug might cost.

One way such a small firm can pursue such big ambitions is by awarding shares of stocks to any partners that play a helpful role in the firm’s research and sales efforts. That’s just what GrowBlox does.

In effect, GrowBlox is focused on the initial discovery of promising compounds, while partners at universities handle pre-clinical trials, CROs handle clinical trials, and pharmaceutical partners handle distribution.

These efforts are already starting to bear fruit. Nearly 200 cannabis-related trials have been registered with the National Institutes of Health. And this is where the various pot-growing tools and knowledge we mentioned earlier really pay off. GrowBlox can provide its research partners with high quality and customized strains of pot.

Note that GrowBlox has not yet filed its 10-K, which was due in late June. The firm is likely raising money to bolster low cash levels, and presumably will be current with its filings once its balance sheet needs have been addressed.

Of course, this is a young firm with much to prove. But this is a clearly unique approach to the fast-growing field of medical marijuana research.

Inmed Pharmaceuticals Inc. (OTC: IMLFF)

We’ve been talking in this report about small companies with big ambitions. To succeed, they’ll need the right mix of compelling product strategies backed by experienced management teams, and they’ll need to target potentially large market opportunities. That’s the only way they’ll be able to attract the kind of investor interest – and financial backing – to transform a business vision into a full-fledged, cannabis-focused business.

Vancouver, Canada-based Inmed Pharmaceuticals Inc. (OTC: IMLFF) has all of these factors in its favor and looks set to emerge as a leading light in the emerging cannabis industry.

This firm’s entire business model is based on a simple belief: that cannabis has unique and valuable medical properties, specifically, that it can reduce the key factors that lead to inflammation. In fact, the firm’s name was Cannabis Technologies Inc. until it changed its name to the less controversial Inmed Pharmaceuticals in 2014.

For more than two decades, Inmed has been focusing on what it calls an “Intelligent Cannabinoid Drug Design Platform.” The firm has been testing pot’s impact on various genetic maladies, in addition to those that lead to inflammation.

For example, Inmed is testing a cure for epidermolysis bullosa (EB), which are a group of genetic conditions that cause the skin to be very fragile and to blister easily. It’s a very painful – and sometimes lethal – condition that currently has no cure. Patients apply bandages and hope for the best.


60

Inmed’s scientists realized that cannabis can stop the inflammation that leads the top layer of skin (the epidermis) to separate from the layer underneath (the epidermis).

The firm is developing INM-750, which is applied as an ointment, and has delivered robust results in early stage trials. That has led the firm’s research team to explore treating other sources of inflammation.

This is a huge unmet need. Allied Market Research predicts that sales of anti-inflammation products will reach $106.1 billion by 2020. Current treatments for inflammation are often only partially effective, and no firm thus far has developed a cannabis-based solution.

As we have mentioned elsewhere in this report, pot does not have a long history in medical research labs, but it could underpin so many different kinds of conditions.

Inmed is also targeting glaucoma with its CTI-085 drug. Glaucoma affects more than three million Americans, and 10% of those sufferers will eventually go blind.

As we said earlier, Inmed has lined up an impressive leadership team. CEO Eric Adams has been helping fund and nurture biopharma firms for more than 25 years and was previously Chairman of BIOTECanada’s Emerging Company Advisory Board. He has also mentored younger biotech entrepreneurs and is now one himself.

While Adams handles the business end of Inmed, Dr. Sazzad Hossain is the firm’s founder and Chief Scientific Officer. He was a senior scientist at the Biotechnology Research Institute of National Research Council Canada. And at Xenon Pharmaceuticals in Vancouver, he oversaw a research team focused on pain, inflammation and cardiovascular diseases.

Inmed’s research team isn’t just interested in the interaction between cannabis and genetic maladies. They are interested in the genetics of cannabis itself as well. Over the past few years, they have been developing a unique database of cannabis bioinformatics, and plan to start helping other medical research firms advance their own understanding of the properties and curative abilities of marijuana.

Inmed also aims to develop purified phytocannabinoids, which are extracted from the cannabis plant. The firm is re-engineering the plant to develop strains that are free from by-products and


61

InMed is Focusing Its Research on Six Major Therapuetic Categories

OcularPain &

Inflammation Dermatology CNSMetabolic Disease Respiratory

Glaucoma Arthritis Psoriasis Huntingdon Diabetes COPD

Ocular Allergies

Orofacial Pain

Pemphigus Vulgaris

EpilepsyMetabolic Syndrome

Asthma

Anti-anxiety Obesity Rhinitis

impurities that can emerge in a typical extraction process. Scaling up this process will enable Inmed to sell these highly-valued phytocannabinoids to other medical firms.

Like many young cannabis-focused firms, Inmed is pursuing several paths to success, although over time, it will likely winnow its focus to the most promising paths in terms of cannabis research.


62

MARIJUANA ECOSYSTEM #7 BANKING AND VENTURE CAPITAL

As you’ve already seen, there is a stark disconnect between state and federal law when it comes to marijuana. The feds say that weed is illegal, period. More than 25 states plus the District of Columbia say that it isn’t.

One serious consequence of this legal “Twilight Zone” is that marijuana growers and sellers cannot readily obtain the kind of financial services and support that every mom-and-pop operation takes for granted.

Even bankers in states where weed is legal are loath to handle transactions from pot operations. To do so is to invite a raid by the DEA and charges of aiding a criminal enterprise.

Congress may be poised to address this discrepancy. The Marijuana Business Access to Banking Act of 2015 (H.R.2016) was written to “prohibit a federal regulator from (1) terminating or limiting the deposit or share insurance of a depository institution solely because it provides financial services to a marijuana-related legitimate business.”

Until that bill becomes law, a new breed of financial entrepreneurs is stepping into this void. Some provide payment processing solutions that help dispensaries take in all that cash from their customers.

Others offer medical savings plans to help patients pay for their marijuana prescriptions.

And still others provide physical security services that protect those truckloads of cash that are moving for place to place.

Mentor Capital provides upfront capital and start-up expertise to “budding” cannabis entrepreneurs.

Compass Diversified Holdings specializes in mergers and acquisitions and invests in small weed companies that demonstrate a solid potential for growth.

Let’s examine these companies one at a time.

Compass Diversified Holdings (NYSE: CODI)

There are a lot of ways to get involved in the weed industry.

There are companies that work with growers and retailers and some that work the financial management aspects. Some focus on social media, others on security.

What these “weed stock” companies have in common is, they are almost all of them small stock plays that will look very different in a year or two, as this industry grows.

Because these firms are operating at the frontiers of social acceptance, they can be volatile and even risky.

As the weed movement begins looking more and more attractive both to state governments and local economies, and especially to the hard hit agriculture sector, today’s local weed-focused companies can potentially extend their operations into more and more states.

So there’s the potential for explosive growth.


64

But again, we’re in unchartered territory here, and to date there are no “roadmaps” that weed companies can follow as they expand.

So every company’s management has to think long and hard about growth plans lest it jeopardize its existing operation. And of course, all executives and managers are not created equal. Some will execute well, others poorly.

Given the amount of uncertainty that attends an investment in weed-based small companies, right now every investor’s best bet is to diversify.

Compass Diversified Holdings (NYSE: CODI) gives you a great way to do just that.

Basically, Compass is a private equity firm that’s publicly traded. It specializes in mergers and acquisitions and invests in small companies with a solid track record for growth. It then seeks to maximize each firm’s potential. Each of its investments is in the $100 million to $500 million range, and it’s usually looking to own the company outright or at least maintain majority control.

The quality of management that Compass provides means that small companies now have available to them a seasoned team to guide their growth and build out their future – a great advantage for any start-up.

Compass currently has a broad portfolio of companies in various industries – from off-road suspension manufacturers… to environmental remediation firms… to baby accessories. Compass’s holdings even include food-warming icon Sterno and a Canada-based hemp edibles firm called Manitoba Harvest.

Manitoba started selling hemp oil 17 years ago, and its products are now carried in more than 7,000 health and grocery stores around North America, including in big box giant Costco (NASDAQ: COST).

The company also now works with hundreds of Canadian growers who use hemp as a “rotation crop” to keep their fields nitrogen-rich without having to use expensive fertilizers.

“In contrast to other plants, hemp aerates the soil it grows in by adding carbon dioxide to it. The crop that follows the hemp will develop better than if it followed than if it followed another,” according to Rocky Mountain Hemp Inc.

As an added benefit, hemp keeps pests at bay, which reduces the amount growers need to spend on insecticides.

It was even influential in getting Canada to pass legislation allowing growers to grow hemp for commercial production.

Like many cannabis-focused firms, Manitoba faces an extraordinary opportunity. It can expand its hemp-based foods business while looking to further explore marijuana edibles as legal restrictions fall. Building a prescription-based drug business would hold even more promise.

Compass looks to either spin off its holdings – like it did with Fox Factory Holding Corp. (Nasdaq: FOXF) – or sell it holdings at a premium.

For its part, Manitoba is well on its way toward a premium valuation. In early May, Compass released earnings, which overall were strong, and Manitoba led the way. Revenues were up nearly 30% for the quarter.


65

Compass is up almost 17% in the past three months, a performance that’s trouncing all the major averages while showing that the company’s results and outlook since acquiring Manitoba in July 2015 are stirring interest with investors.

Another nice thing about this stock is that it has $1.01 billion market cap, which is much larger than most weed stocks. Moreover, Compass has both a top and bottom line to justify that valuation.

As a diversified company, Compass makes its business attractive to stockholders by throwing off a solid dividend that currently stands at a massive 7.82%.

And given the fact that cash flow is growing by around 100% year over year, there’s plenty of revenue to keep that dividend strong. Also, accounts payable are significantly lower, inventories are lower, and net cash from continuing operations is growing substantially. Operating margins are lower compared to last year, but that is likely more due to product cycles in its various businesses than anything else.

Compass represents a great way for investors to “back in” to the growing weed industry without feeling overwhelmed by having to pick and choose from small firms whose prospects are not easy to divine.

Even if the weed side of the business doesn’t fully pan out, you’re still sitting on a stock that’s proven to have some legs.

Mentor Capital Inc. (OTC: MNTR)

Bankers are a cautious lot. They aren’t accustomed to giving out loans to illegal businesses. And at the federal level growing, transporting or selling marijuana is still very illegal.

That creates a real Catch-22 for pot entrepreneurs. If they want to start a business, they better have some very deep pockets.

Of course most of them don’t have hundreds of thousands in cash lying around. As another option, these small business owners can turn to alternative forms of funding.


66

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$14

$12

$10

$8

$6

$4

$2

$0

Distributions Paid Since IPO (Approx. $13.65 per share) >9% yield at 3/31/16

Distributions Paid Per YearCumulative Distributions PaidQ1’16 Distributions Paid

While regular loans remain hard to come by, these small business owners can offer up a stake in their business to Mentor Capital Inc. (OTC: MNTR). The financial services firm provides upfront capital and start-up expertiset.

While Mentor will support a range of pot businesses such as growers and retailers, it prefers to invest in medical marijuana firms. Its mission is to work with cannabis firms that are tackling the issue of cancer wasting, or working to calm seizures, cure Parkinson’s disease, reduce ocular pressures from glaucoma, or blunt chronic pain.

Clearly, it’s an approach that is resonating with this community, as more than 5,000 shareholders have invested in Mentor’s unique capital structure. As more capital flows in, participating firms get additional cash injections.

And all of this is reflected in the firm’s share price. In effect, if this stock performs well, then all of the participating firms will see an increased value for their businesses as well.

Mentor’s decision to focus on cannabis came in a roundabout fashion. The firm had initially been providing seed capital to cancer-focused medical research start-ups. But management came to believe that cannabis was one of the best ways to tackle a range of challenges related to cancer. So a few years ago, Mentor’s board decided to officially rebrand the firm as a cannabis financing business.

Mentor won’t invest in just any pot business. It is only interested in firms that have already scaled up to a certain level, and funding only goes to top players in any given niche or region. This is not a source of funding for the guy in the garage that think he’s come up with the Next Big Thing.

As you might suspect, this is the kind of business that will require patience. Mentor Capital is making investments today that may reap great returns in the future. But in the near-term, the firm’s portfolio companies are just gearing up for growth, and not in a position to generate much in the way of profits. That means Mentor Capital will likely need to raise more money to fund operations and make new investments.

With all those concerns in mind, it’s still worth noting that this is one of the few firms providing funds to a capital-starved industry, and as along as marijuana remains illegal on a national level, Mentor doesn’t have to worry about a market encroachment from traditional banks.

Mentor Capital appears financially healthy for now, with more than $2 million in the bank and a quarterly cash burn


67

THE IRS IS NOT CANNABIS FRIENDLY

Right now legal marijuana businesses face a host of competitive disadvantages not shared by their “legitimate” competitors.

Because cannabis is a “controlled substance” under federal law the IRS forbids weed businesses from deducting their expenses, the way any normal business would.

This disparity more than doubles the tax burden faced by legal marijuana enterprises. Obviously this leaves every marijuana business at a severe competitive disadvantage compared to non-cannabis businesses.

As marijuana gains increased legal and social sanction, this tax double standard will likely vanish, making it easier for weed-based businesses to stay afloat and even thrive.

rate of around $200,000. The firm’s $2.5 million annual revenue base is not quite large enough to reach break-even, although any sale of the firms that it has invested in would provide an injection of cash to this financing firm.


68

MARIJUANA ECOSYSTEM #8 SOCIAL MEDIA

Here’s something I didn’t share with you in my video presentation.

The drive toward legal cannabis is not just opening up new profit-vistas in banking medicine, agriculture, etc.

Like every other sector of the modern economy, legal weed is putting down roots in the social media space.

It hasn’t always been easy. For one thing, Facebook forbids and bans “any promotion or encouragement of drug use.” A Fortune report from March detailed how a Facebook user and “potrepreneur” named Joe Hodas saw the Facebook page he’d created for a legal cannabis business called Dixie Elixirs, along with its more than 11,000 followers, vanish overnight.

He saw the same thing happen with Instagram, which suspended the Dixie Elixirs account in January.

For small companies looking to reach existing and potential customer, losing social media can be devastating.

According to Fortune, “Dozens – by some estimates, hundreds – of cannabis-related companies operating legally within their respective states have suffered similar account suspensions in recent months, instantly losing social media followings that in some cases took years to develop.”

Not surprisingly, new social media websites are stepping into the breech.

Sites like JointBuds, Weedlife, and High There are bringing together cannabis users, weed entrepreneurs, activists and others. These sites seek to displace Facebook, Instagram, Tinder, and Reddit in the eyes of the cannabis community.

MassRoots, featured below, has gained serious traction and today is the best of the new social media operations. It looks to connect cannabis users with dispensaries in Washington, Oregon, or Colorado.

And as you’re about to see, MassRoots is also out to alter the political landscape as well, by helping activists find support and resources in states where weed is still illegal.

Here’s what you need to know.

MassRoots Inc. (OTC: MSRT)

As marijuana moves from the shadows into the spotlight, there is still a great deal of confusion and misinformation about the drug.

Some fret that the legalization of pot will lead to society’s ruin. Others think that cannabis is the Holy Grail of medicine and will become the dominant source of new drug development in the future.

The truth lies somewhere in between.


70

To cut through all this noise, in 2013 a pair of college roommates launched MassRoots Inc. (OTC: MSRT). It’s a sort of social media platform, kind of the Facebook Inc. (Nasdaq: FB) of the marijuana crowd.

At the start, their site was a bit of a lark – a way for young people to hide pot-based photos and conversations from their grandparents. Perhaps an analogy to Instagram is more apt, as users like to post selfies of themselves and their marijuana buds and bongs.

But it soon grew into a serious platform for information, especially for anyone that is involved in either the medical or recreational pot industry.

The firm’s core mission is twofold. First, to connect cannabis users with dispensaries and edibles in states such as Washington, Oregon, or its home state of Colorado, where the drug has already been legalized.

The company leverages its current subscriber base to drive growth. It has launched MassRoots.com/shop, an ecommerce site offering various paraphernalia. It also supports MassRoots for Business, a free online portal for dispensaries to schedule posts, view analytics, and learn more about their clients.

When online pot purchases become legal, MassRoots app will be able to go to a dispensary’s profile, scroll through its menu, and place an order through the app.

The second part of the firm’s mission is political. MassRoots connects activists with campaign resources in states where pot is still illegal. The site figures to play a big role in certain Congressional elections this year where legal pot is up for discussion.

MassRoots is a sort of clearinghouse for industry news as well, which is great timing when you consider that legal pot may be on the ballot in up to eight states this year. These states have close to 40% of the U.S. population.

The fact that this firm went public just two years after launch speaks to the fact that traditional bankers and venture capitalists are still wary of being associated with this kind of business.


71

11/13 5/14 11/14 5/15 11/15 5/16

$1M

$750K

$500K

$250K

$0

MassRoots User Growth – Up 350% in 18 Months

Not Available in the App Store

That skittishness may cost them. Today, MassRoots has more than 900,000 registered users, up from 200,000 at the start of 2015. The firm is now learning how to profit from that base, just as Facebook eventually learned to do. Sales are rising 20% each month.

Bankers were not alone in their caution. Apple Inc. was so leery that in 2014 it banned MassRoots’ app from its App Store. The resulting outcry was so fierce – it even included declarations of support from the National Cannabis Industry Association – that Apple eventually relented and let the app onto its shelves.

This is a platform ripe for what in social media is called “monetization.” Advertisers and other pot-related firms love the idea of access to a targeted audience that will buy what they have to sell. And MassRoots pitch to clients is really starting to resonate.

For example, users can now see listings from more than 1,000 cannabis businesses, everything from dispensaries to firms selling gear to help users grow their own product.

MassRoots is filling a void created by the fact that Google, Twitter, and Facebook (shades of the Apple Store debacle) currently ban most marijuana-related advertising. With those three doors closed to them, dispensaries could only turn to cannabis-focused magazines and newspapers.

MassRoots evolved into the leading ad portal for such firms, and will only grow larger as legalization expands. Faced with a fast-growing market and dominant market share, MassRoots is likely to emerge as a larger business than its current, relatively small revenue streams may suggest.

It is also likely that Google, Twitter, and/or Facebook will in time embrace this “budding” industry. MassRoots will be one tempting buyout target if they do.

Considering its market cap is currently $48.4 million, it looks to be a bargain at current prices.

Here are a few other things to keep in mind.

Compared to most industries, the weed sector underperforms market averages yet is one of the fastest growth sectors in the economy.

MassRoots stock only went public in the last few months on its second try. But it’s getting a lot of press and doesn’t have any competitors at this point. And with 900,000 subscribers who have used the app nearly 50 million times, there’s a proven opportunity.

According to Fortune, “CEO Isaac Dietrich said the company has fulfilled most of the requirements for listing on the Nasdaq, and he hopes to be listed later this year as its user base tops one million.”

It has also just inked advertising deals with Uber and Fusion, a division of Univision, with unrealized long-term advertising contracts waiting to add another $320,000 to the bottom lines. There are already 7,000 businesses that have profiles on its site, which means MassRoots has a healthy potential advertising base on top of what it already has.


72

“Everywhere, some optimistic entrepreneur was saying he or she wants to be the ‘Uber’ of pot or the ‘Starbucks’ of pot.”

– Los Angeles Times

Consider this one a ground floor play in a unique space, one that is going to take years to pan out. So don’t consider it a trade. Also, don’t chase it if the stock starts to run.

These small stocks in hyped sectors tend to get tossed around like a chew toy until they can prove a strong balance sheet and consistent path to growth. If it goes up quickly, in a short time, expect it will come down almost as quickly in the short term.

Don’t get caught in the whipsaw, buy in a decent price (like now) and then don’t look at it for a quarter or two just to see how it’s doing.

There’s a good chance that in coming quarters, as the Street looks to keep investors engaged in growth stories, the cannabis sector, which is expected to grow 20% from last year to this year, will become one of those stories.

And MassRoots will rise on that media attention.


73


74

A Mega-Cap Company Moves Into MarijuanaWhether or not marijuana ever becomes a Schedule II or Schedule III drug down the road, and no

matter the specific outcome of the November elections, the move to decriminalize and legalize cannabis is one of the great social sea changes of our age.

And as you’ve just seen, that unstoppable trend is creating profit opportunities in dozens of markets and market segments.

Because this trend is still in its infancy, investors can get in on a bevy of small- and micro-cap companies, any one of which could be the next mega-cap blockbuster.

That said, I don’t want to leave you with the impression that these small, volatile companies are the only way to make a killing off of legal cannabis.

As you just saw with Scotts Miracle-Gro, Compass Diversified Holdings, and GW Pharmaceuticals, nothing could be farther from the truth.

Here is one Tier I company that is positioning itself to profit as marijuana goes mainstream.

Unlike its riskier cousins, this stock is about as safe and solid an investment as you’ll find.

It’s a big-cap company. It trades on a major exchange with tons of volume. And it pays a generous dividend.

And while you’re not likely to see this stock climb 1,000%, the way a penny stock might, you can expect significant double- and even triple-digit gains from this “marijuana major.”

Microsoft Corp. (Nasdaq: MSFT)

In a move that USA Today described as “defining” and a “watershed industry moment,” tech giant Microsoft Corp. (Nasdaq: MSFT) revealed in June that it was dipping its toe into the legal marijuana trade.

Microsoft is getting in on the software side of the business. The company is partnering with a California startup called Kind Financial to help ensure that cannabis company’s stay inside the legal lines.

For its part, Kind (which created the actual software that Microsoft is about to begin selling) “offers a range of products, including A.T.M.-style kiosks that facilitate marijuana sales,” according to The New York Times.

And so, no, the Redmond, Wash., icon will not be touching so much as a single cannabis seed.

Instead, it will work with Kind’s “government solutions” division to make available to state and local governments the software they need to develop ways to track compliance.

The software will allow governments and entrepreneurs a way to monitor the distribution of cannabis “from seed to sale.”

David Dinenberg, Kind’s CEO, told USA Today that “Thanks to Microsoft’s huge reach, it’ll be easier for us to target every state with our compliance solutions. It’s a win-win for both of us as more states look to legalize medical marijuana.”


75

This move is as significant from a symbolic standpoint as it is from a purely financial and business point of view. In one swoop Microsoft has done nothing less than legitimize the cannabis trade in the eyes of many.

Matthew A. Karnes, an advisor to the cannabis industry, told the Times that, “It’s very telling that a company of this caliber is taking the risk of coming out and engaging with a company that is focused on the cannabis business.”

Dinenberg was even more hopeful: “I would like to think that this is the first of many dominoes to fall.”

There are signs that other major companies recognize that marijuana is moving into the mainstream. For example, Oracle Corp. is working with the state of New York to help administer its Medical Marijuana Program.

And in May, the world’s largest drugstore chain, Walgreens, published a 650-word blog post exclusive about medical marijuana. Titled “What is Medical Marijuana? Clarifying Clinical Cannabis,” the post went on to answer common questions about medical marijuana and even told readers what to do to if they wanted to obtain it.

It’s easy to read that blog as an opening gambit in what could become an all-out effort on the part of Walgreens to eventually lobby for the right to dispense cannabis.

But Microsoft has stepped forward publicly and unambiguously. It is now a player in the legal marijuana trade.

The company will begin by marketing the software to government employees, but hasn’t ruled out marketing through dedicated cannabis events. The Microsoft logo flying proudly at a conference packed with marijuana growers and distributors would be a huge leap forward for the industry.

The software that Microsoft will market uses the company’s Azure platform, which allows users to build and manage applications through Microsoft’s data centers. The platform was designed to be compliant with Health Insurance Portability and Accountability Act (HIPPA) regulations.

“Microsoft is helping us support governments in their expansion of cannabis legislation,” Dinenberg told CNN Money in June. “They’re experienced at providing platforms for government regulation. This is something Microsoft does every day of the week with other businesses in other categories.”

Azure has been growing like a weed since its launch in 2010. For the first quarter of fiscal 2017, Azure revenue jumped 116%.

So Microsoft’s move into the weed space spotlights the way it’s leveraging the cloud to propel growth. It’s a smart strategy: Market researcher Forrester estimates the cloud market will grow from $55 billion in 2014 to $241 billion by the end of the decade.

Weed is just the latest development in the Microsoft’s exciting cloud story.


76

Now, no one is suggesting that an alliance with the cannabis markets constitutes anything approaching a “game changer” for Microsoft. The company has a market cap of $470.45 billion and annual revenue north of $85 billion – don’t look for the stock price to triple.

That said, it’s worth noting that mainstream analysts already have a high-water target of $72 on the stock – a gain of 20% from a recent closing price of $60.

As marijuana moves into more and more American homes and doctor’s offices, that projection could turn out to be conservative. I can readily believe the stock could reach $80 to $85 for a gain of 42%.

Not too shabby, considering that Microsoft also pays a respectable 2.5% dividend yield. That’s nothing to sneeze at an era of fast-approaching negative interest rates.


77


78

We’ve covered a lot of ground together in this report – 25 ways to play the coming $22.8 billion market for legal marijuana.

And we still have five more stocks to go.

Now, as you’ve seen more than once in this long report, the cannabis landscape is still filled with uncertainty – even as it’s packed with opportunity.

But two things seem certain…

One, before the end of this decade we will see more and more states begin loosening restrictions on marijuana. First they’ll allow medical cannabis; then they’ll allow full adult-use recreational weed.

And two, as the legal and social landscape around marijuana settles, and more and more firms and individuals grow wealthy off of weed…

We are going to see a ton of large, established companies stampede for a piece of the action. After all, we’re looking a potential $22.8 billion market in less than four years.

It can be a challenge to try and suss out which companies will or will not make the leap into legal cannabis. But there are hints, clues, and indications…

For example, obviously the tobacco companies would look to make the leap. After all, rolling and selling “joints” is very similar to rolling and selling tobacco.

The same thing goes for any company that’s already settled and successful in agriculture. If you can grow one crop, you can grow a pot crop.

And naturally “Big Pharma” is watching how the legal weed market shapes up around the country. As things settle, expect more of them to begin buying up medical marijuana companies and dispensaries, in addition to developing cannabis-based treatments of their own.

What follows is a list of five companies that stand the best chance of getting into legal marijuana. As you study these firms, please keep in mind that these are “wild card” stocks. We can’t say for sure when, or to what degree, they’ll make their move.


79

WOMEN AND WEED

One of the untold stories about the legal-marijuana industry is the role that women have played pushing it forward. In 2014 a national study found that more than 53,000,000 women have tried marijuana at least once. More than 8.2 million had tried it “in the past month.”

A study by ArcView found that “women accounted for 25% of the founders listed in the incorporation documents of cannabis businesses in Washington. Nationally, they are estimated to hold 36% of the leadership positions among cannabis businesses.”

According to ArcView, “Women make 80% of family healthcare decisions and 85% of consumer purchase decisions.”

The result is that women are, directly or indirectly, behind more than $7 trillion in yearly spending. This economic matriarchy has not escaped the notice of cannabis companies, who have already begun to strategize ways to capture this market.

So expect to see strains of marijuana designed to appeal to women, as well as a host of offerings (such as Whoopi Goldberg’s medical marijuana products) geared toward them as well.


80

We can point out, though, that these are established firms. They have money, experience, executive leadership and a proven track record in the marketplace.

Once they make a move into cannabis, if they ever do, you can expect that all of them will probably be successful.

So all of them bear close watching.

Legal Weed Wildcard #1 Teva Pharmaceutical Industries Ltd. (NYSE ADR: TEVA)

Teva Pharmaceutical Industries Ltd. (NYSE ADR: TEVA), out of Israel, manufactures, markets, and distributes generic and specialty medicines worldwide. It is currently the world’s largest maker of “generic” drugs.

Teva has signaled that it wants in on marijuana.

In July of 2015 Teva announced that it planned to acquire rival Allergan Generics for $40.5 billion dollars.

The move made perfect sense. Copaxone, Teva’s lead drug, is going off patent. That means generic equivalents can be developed and sold, which will siphon away much of the $3.29 billion in revenue Teva hoped to earn from Copaxone this year. Buying the generic drug maker would help offset some of those losses.

Teva made another announcement last July that garnered less attention from the press.

The company revealed that it had made a bid to acquire the patents of another Israeli firm, One World Cannabis (OWC).

One World Cannabis (a wholly owned subsidiary of OWC Pharmaceutical Research Corp. (OTC: OWCP)) conducts research and clinical trials into cannabis-based products to treat multiple myeloma, psoriasis, fibromyalgia, PTSD, migraines, and other ailments.

Again, the move makes perfect sense. To offset declining revenue as its lead drug loses patent protection, Teva is looking to expand into medical marijuana.

OWC is still in the early stages of drug development, but it has produced some promising results.

According to online news site The Marker, “OWC recently reported a study by the Sheba Medical Center that showed a 60% reduction of malignant multiple myeloma cells within 24 hours of treatment using the cannabis plant’s active ingredients.”

Nothing hurts a drug-makers top line as much as having its lead drug go off patent. So expect more and more Big Pharma players to begin exploring ways to leverage legal cannabis to replace some of that revenue.

Teva Pharmaceutical has already made an “opening gambit.”

There are other signs that that the Israeli giant is taking a good look at medical marijuana.


81

At the same time the company announced its bid to buy OWC’s patents, it also revealed that not one, but two of its executives had accepted appointments onto the board of Cannabics Pharmaceuticals, a Maryland-based firm also pursuing cannabis-based treatments.

As an Israeli-based firm, Teva could be well situated for a move into legal weed. According to TechCrunch, there are only eight farms growing legal weed in Israel, but “the country’s Health Ministry announced a plan to open the medical marijuana market to new players. This means that anyone who meets specific safety and quality requirements is eligible to grow and sell cannabis.”

And here’s a tantalizing tidbit. One of its Israeli subsidiaries, Abic Marketing Limited, recently entered into a partnership with Arena Pharmaceuticals, one of the stocks already featured in this briefing. Together the firms will market an anti-obesity drug in Israel.

So an investment in Teva is at the same time a “backdoor” way to play Arena.

Teva currently trades at around $40 and pays a dividend yielding a respectable 3.4%.

Legal Weed Wildcard #2 Lindsay Corp. (NYSE: LNN)

As marijuana becomes legalized for recreational purposes, we’re going to see an explosion of large-scale cannabis farming.

Competition is going to force growers to make every effort to both cut costs and to take maximum advantage of economies of scale.

In addition to those concerns, cultivating marijuana comes with a host of other problems. The “weed” is notoriously hard to grow. It requires a delicate balance of sunlight and darkness, as well as carefully adjusted and monitored ratios of oxygen, nitrogen, water, and other nutrients.

The Omaha, Neb.-based Lindsay Corp. (NYSE: LN) is the kind of firm that can allow cannabis growers to scale up to maximum efficiency at minimal cost.

With facilities in seven countries, Lindsay manufactures farm and construction equipment along with road and railroad building materials. It employs more than 1,300 people world wise.

But the company is probably best known as the maker of the Zimmatic brand of high-performing “pivot” irrigation systems.

These systems take advantage of Automated Irrigation Management System (AIMS) control panels to allow growers to precisely program water, fertilizer, and chemical applications.

QUICK FACTS: LINDSAY CORPORTION• Founded in 1955

• Manufacturing in 7 Countries

• Global Sales and Distribution

• Leading Brands

• 1,300 Employees Worldwide


82

Features like these will save growers money and labor (by eliminating repeated forays into the fields to monitor water levels) and also make it possible to “set it and forget it” when adjusting the balance among the nutrients marijuana needs.

In 2015 the company had sales of $560.2 million. Of that, 81% came from its irrigation operation. Fully 49% came from its U.S. irrigation operations.

The company’s irrigation products have received increased attention during the current worldwide water shortage.

California has been particularly hit hard. In July the National Weather Service reported that in Los Angeles, the previous five years have been the driest ever in the 140 years records have been kept.

According to the U.S. Department of Agriculture (USDA), California produces more than 33% of America’s vegetables and almost 66% of its fruits and nuts.

And by all accounts California will produce the bulk of the nation’s legal marijuana.

The state already allows medical marijuana, and there are currently more than 2,100 dispensaries in the state. In November, California will probably legalize adult-use recreational weed. When that happens, the number of growers will increase.

Those weed growers, facing drought conditions and water restrictions, will turn to firms like Lindsay, and its pivot irrigation systems, to keep the water flowing and the weed crop growing.

Lindsay will be able to pick a lot of low-hanging fruit.

According to the USDA’s 2013 Farm and Ranch Irrigation Survey, more than 90% of the irrigated land in California uses old, inefficient methods such as gravity or flood irrigation. Lindsay’s pivot systems use 45% less water than the other methods.

Lindsay pays a dividend yielding 1.61%.

Legal Weed Wildcard #3 The Mosaic Co. (NYSE: MOS)

As every “homegrown” enthusiast will tell you, it takes more than land, water, and sunlight to grow marijuana.

It also takes a well-balanced recipe of nutrients. This is as true on a giant farm as it is in someone’s attic or basement.

The Mosaic Co. (NYSE: MOS) produces and markets concentrated phosphate- and potash-based crop nutrients for the global agriculture industry.

Potash is a salt that contains water-soluble potassium, which is one of three major plant and crop nutrients. The others are nitrogen and phosphorus.

More than 30 million tons of potash are produced each year, almost all of it for agriculture.


83

The industry is currently mired in a slump caused by over-supply. The Globe and Mail reported in April that potash producers the in major markets such as Canada and Russia has not yet signed contracts with Chinese importers. “The price China pays for potash is considered a key benchmark for the commodity and deals in past years have often been concluded in January, setting the tone for the year ahead.”

Talks stretching into April is a sign of a market under pressure.

However, in this soft market, Mosaic is emerging as the best of its class.

For example, StockPricesNow, an online hub for information about marijuana stocks, reported in March that the company “sprang a surprise when it reported flat net income for 2015 at a time when peers… saw their profits tumble.”

The report went on to add that “While declining nutrient prices hurt every fertilizer company, Mosaic’s focus on phosphate… coupled with stringent cost control helped it weather the storm.”

Like we saw with Lindsay, and the need for irrigation, Mosaic will benefit as the number of marijuana growers balloons up in lock-step with greater legalization – pushing up slacking demand and allowing the company to leverage the advantage it has recently accrued.

In February, Mosaic CEO Joc O’Rourke said that his firm is looking to take advantage of the downturn to acquire distressed companies.

In June, Reuters reported that the company, which last year bought distribution assets from Archer Daniels Midland Co., was in talks to purchase the fertilizer division of Brazilian multinational Vale SA for $3 billion.

TheStreet recently gave a mixed review to Mosaic, citing poor profit margins and “disappointing” returns on equity, which were offset by what it called “largely solid financial position with reasonable debt levels by most measures and attractive valuation levels.”

To our way of thinking, the pluses outweigh the minuses here.

Mosaic Has a History of Operational Excellence

MaintenanceOrganic GrowthInvestment CommitmentsReturn to Shareholders(dividends & repurchases)

Total: $11.5 Billion2013 through 2015

18%

13%

29%40%


84

The company’s strong financial position should allow it to ride out the current slump, while bulking up for future growth (which could come from the cannabis industry).

The stock closed recently around $26, but analysts have a high-water target of $48 on it. That’s a 85% gain.

But with Mosaic’s acquisitions, and the coming legal marijuana trade, the stock could get as high as $60, for a gain of more than 140%.

Legal Weed Wildcards #4 and #5 Altria Group Inc. (NYSE: MO) and British American Tobacco PLC (NYSE ADR: BTI)

We round our list of 30 ways to play the legal cannabis market with two “wild card” tobacco stocks.

In a world where pot pipes may soon be less controversial than cigarettes, the idea that tobacco companies would want a piece of the action is self-evident to the point of truism.

Think of it this way: The reason electric cars are no real threat to, say, General Motors, is that as soon as it’s clear that demand exists for electric cars… GM will start making and selling them.

The same goes for marijuana.

“Big Tobacco” already has farms, distribution and storage infrastructure, access to capital, and a sprawling, trained, and motivated sales force.

Each of these assets is up and running, and standing by ready to shift into cannabis the moment it is profitable to do so.

In other words, the only reason people aren’t lighting up a Marlboro Joint instead of a “Marlboro Light” is that Phillip Morris hasn’t started making them yet.

They probably will start making them sooner than most folks realize.

In fact, in January Phillip Morris international announced that it was investing $20 million into an Israeli company that is looking to market an inhaler for the medical marijuana market.

Both Altria Group Inc. (NYSE: MO) and British American Tobacco PLC (NYSE ADR: BTI) are giants in their field.

Altria is a component of the S&P 500, while BTI is one of the top five tobacco companies in the world.

We’ll take each in turn.

Altria, a Fortune 200 company based in Virginia, already owns Phillip Morris, the largest tobacco company in the United States. It also owns…

• U.S Smokeless Tobacco Co., makers of the iconic Copenhagen and Skoal brands of smokeless tobacco…


85

• John Middleton, a leading producer of cigar and pipe tobacco…

• Ste. Michelle Wine Estates, a collection of 44 wine estates, many in California and the Pacific Northwest…

• Nu Mark, which focuses on innovative ways to consume tobacco, such as via so “vaporizers”…

• Phillip Morris Capital Corp., which invests in a portfolio of “leveraged leases” in things such as aircraft, power stations, rail cars, and real estate.

Notice that (except for the last one) each of those firms supplies a market for something – cigarettes, cigars, wine – the users of which could find a ready substitute in legal marijuana.

That means that Altria could potentially offer its legal weed, not just to cigarette smokers, but to a whole spectrum of existing customers.

Wine drinkers in particular are an attractive market for weed producers.

Like wine, marijuana comes in a bewildering variety of flavors, potencies and strains. Wine drinkers are already oriented to “connoisseur culture.” It’s only natural to think they could be tempted toward marijuana.

In fact, “pot enthusiasts are increasingly starting to style themselves more like sommeliers [wine stewards],” says a recent report by Vox Media.

The company reported first-quarter 2016 results on April 28. Adjusted diluted earnings per share (EPS) came in at 72 cents, an increase of 14.3% from the previous quarter. And the company is looking at full-year EPS to come in at around $3.05, 7% higher than 2015.

Also in 2016 the company expects to complete a $1 billion share repurchase program. During Q1 it spent $168 million buying back 2.8 million shares.

The stock currently trades for around $65. Analysts’ consensus high-water target is $74, for a gain of 14%. It bears repeating that Altria’s stock price will benefit big time should cannabis become to the 21st century what cigarettes were to the 20th.

Altria’s dividend yields a fat 3.5%.

As for British American Tobacco…

WHAT IS “VAPING?”

“Vaping” is an alternative to smoking.

The “vaper” inhales water vapor through a hand-held, personalized device called a vaporizer, which heats a water-based liquid (called in some circles ‘e-juice’) into vapor.

The liquid can be infused with nicotine, in which case the vaporizer is called an ‘e-cigarette.’ Various flavors can be added to the liquid as well.

Enthusiasts claim that vaping is safer than inhaling a traditional cigarette, and comes with no foul odors or second–hand smoke.

Needless to say, marijuana smokers were quick to apply the e-cigarette to their indulgence of choice. One 26-year-old weed vaper told BuzzFeed News last year that, “If I’m going to partake I might as well do so in a manner that doesn’t increase cancer.”


86

The London-based company is a leader in 55 markets. Of the more than one billion smokers around the world, BTI sells to 125,000,000 of them under renowned brands such as Kent, Dunhill of London, Pall Mall, Benson & Hedges, and Lucky Strike.

BTI outsources its cultivation to more than 90,000 contracted farmers worldwide, according to the company. In 2015 it employed 50,000 people to sell 663 billion cigarettes, made in 44 factories in 41 countries.

In 2013 BTI became the first international tobacco company to introduce e-cigarettes in the UK.

Imagine all of that know-how, man-power and capital devoted to producing and marketing legal cannabis, an idea that might not be far from the minds of BTI’s leaders. The company website carries tantalizing references to “leading the Next Generation Products category” and to meeting the “evolving needs” of consumers.

BTI has even dipped a toe into the medical markets. According to the company, BTI “became the first tobacco company to have a nicotine product licensed as a medicine following receipt of the relevant licenses… We are now working on the large-scale manufacturing and commercialization of this new product.”

The stock has a primary listing on the London Stock Exchange (LSE), but also trades on the New York Stock Exchange (NYSE).

For the three months ended on March 31, the company increased revenue by 7.5% over the previous quarter.

In 2015 BTI grew its adjusted diluted EPS by 10.1%. Full-year revenue came in at $19.6 billion.

Currently, analysts have a high target of $139 on BTI – about 25% above recent levels.

But like with Altria, those estimates are probably conservative, and fail to take into account a brand-new ecosystem – legal marijuana.

The stock pays a dividend yielding 2.37%.

Some Concluding ThoughtsThere you have it. Thirty ways to play the burgeoning market for legal weed.

Again, experts say the market for legal weed will hit $22.8 billion before the decade is out. So there’s a lot of money on the table here, and someone is going to grab it. It might as well be us.

Many forces are pushing for cannabis to come out of the shadows and into the mainstream – doctors, millennials, medical researchers, and a host of “potrepreneurs” eager to service millions of avid consumers of cannabis.

As you’ve just seen cannabis prohibition is on its last legs.

And of course we just watched the November elections, when voters in eight states decided to legalize recreational or medicinal marijuana.


87

The results of that effort will decide the near-future of legal weed, and the fortunes of the companies featured in this report.

We’re also going to keep our eyes peeled for any signs that large conglomerates are taking a keener interest in weed.

As we saw with Microsoft (cloud software), Altria and BTI (tobacco), Mosaic (phosphate nutrients), and other established firms, cannabis could very well present the next great opportunity for existing industry leaders across a variety of market segments.

What’s more, once the cannabis landscape settles, we should expect that, rather than go head-to-head with local firms that enjoy a head start in the weed industry, large companies will instead go on a buying binge, and snap up the best startups and small-to-midsized firms.

And no matter what happens from now, rest assured that we’re going to keep our eyes on the investment opportunity that legal marijuana represents.

Cheers, and good investing.

Michael Robinson

WEBNVX1116-697

Copyright 2007-present, Money Map Press, 16 W. Madison Street, Baltimore, MD 21201 Phone: 888.384.8339 or 410.226.2069

All rights reserved. Money Map Press provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to Money Map Press recommendations are proud of our history and reputation. We believe the advice presented to our subscribers in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any in-formation published by Money Map Press, electronic or otherwise, is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time, so members are encouraged to make regular use of the website and pay special attention to Money Map Press updates sent out via e-mail. The publishers, editors, employees or agents are not responsible for errors and/or omissions.

Privacy NoticeYou and your family are entitled to review and act on any recommendations made in this document. All Money Map Press publications are protected by copyright. No part of this report may be reproduced by any means (including facsimile) or placed on any electronic medium without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. Money Map Press expressly forbids its writers from having a financial interest in any security recommended to its readers. All Money Map Press employees and agents must wait 24 hours after an Internet publication and 72 hours after a print publication is mailed prior to following an initial recommendation. Money Map Press does not act as a personal investment advisor, nor does it advocate the purchase or sale of any security or investment for any specific individual. Investments recommended in this publication should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company.

Money Map Press • 16 W. Madison Street • Baltimore, MD 21201 • 888.384.8339 or 410.226.2069

NOTE: Money Map Press is not a broker, dealer or licensed investment advisor. No person listed here should be considered as permitted to engage in rendering personalized investment, legal or other professional advice as an agent of Money Map Press. Money Map Press does not receive any compensation for these services. Additionally, any individual services rendered to subscribers by those mentioned are considered completely separate from and outside the scope of services offered by Money Map Press. Therefore if you choose to contact anyone listed here, such contact, as well as any resulting relationship, is strictly between you and them.

Please Note: From time to time, Money Map Press will recommend stocks or other investments that will not be included in our regular portfolios. There are certain situations where we feel a company may be an extraordinary value but may not necessarily fit within the selection guidelines of these existing portfolios. In these cases, the recommendations are speculative and should not be considered as part of Money Map Press philosophy.

Also, by the time you receive this report, there is a chance that we may have exited a recommendation previously included in our portfolio. Occasionally, this happens because we use a disciplined selling strategy with our investments, meaning that if a company’s share price falls below a certain price level, we immediately notify our subscribers to sell the stock.