Marijuana Stocks Set to Spark
An Industry in the Making
By Zach Spiegel
Wednesday, January 14th, 2015
Last year, Colorado and Washington passed laws legalizing retail marijuana sales, and Alaska and Oregon followed closely behind with laws that will go into effect in 2016.
More recently, the District of Columbia has proposed similar legislation, which is awaiting congressional approval.
An additional 21 states have legalized marijuana for medical use, and in Wealth Daily’s home state of Maryland, the punishment for possession of less than 10 grams is now a civic fine rather than criminal penalties.
Outside of these pioneer states, engineer Andy Joseph has built a multi-million dollar business based on the sticky green stuff called Apeks Supercritical. A Navy veteran and father of five young children, this man’s Johnstown, Ohio company is just a small part of the booming American marijuana industry.
Twelve years ago, Joseph designed a machine that extracts natural flavorings like vanilla and mint from plants for the food industry. A few years after that, he saw an increase in orders of his extraction systems from the West Coast, particularly California, which coincided with medical marijuana and cannabis applications trending in the news.
The weed industry had evidently discovered a new use for his invention: extracting cannabis oil from dried marijuana plants. And pot entrepreneurs all around the country began to take notice, buying his machines at $18,000 to $100,000 per unit.
Joseph’s machine uses liquid carbon dioxide to extract botanical oils from plant matter. With marijuana, the extracted oil is a key ingredient in marijuana edibles, which provide a popular alternative to smoking.
In the last year, as a handful of states have legalized the sale of marijuana, his business has taken off. Apeks Supercritical has grown from $700,000 in revenue in 2012 to $9.5 million in 2014 and from a staff of one to 18 full-time employees.
In 2015, Joseph anticipates that Apeks will break double-digit millions in revenue.
Joseph makes a trip to Colorado once a month, where he recently opened a second office to run customer service for his new clients. He also broke ground on a 65,000 square-foot manufacturing facility located right in Johnstown.
With a backlog of over half a million dollars and enormous demand, Apeks can now assemble 1,000 units in an hour where it was once only able to produce 500 units per day.
It’s clear that the American marijuana industry has a bright future, and while Joseph’s company hasn’t gone public yet, there are many other companies well positioned in the weed industry that have.
The End of Prohibition
After Colorado legalized cannabis for recreational use last January, the state’s first year with marijuana saw tourism explode. However, smoking is still illegal in public and in most hotels, leaving tourists without a place to legally burn their green.
A smoking club — the first of its kind and available to private members only — has swooped in to fill the void.
Known as iBAKE Denver, it has found huge success in providing a venue for industry advocates to smoke. Located just outside of Denver, iBAKE doesn’t sell marijuana but allows people to bring their own and smoke in a social setting.
In response to iBAKE’s Rocky Mountain highs, other establishments similar to iBAKE are expected to pop up all throughout pot-friendly states.
To get in on the action, look to GW Pharmaceuticals (NASDAQ: GWPH).
With its current share price of $78.93, analysts expect to see the company’s stock price rise to $119 in 2015. GWPH doesn’t solely deal with marijuana products, so if you’re looking to give the industry a shot and see where it takes you, GW is a good place to start.
Medbox (OTC: MDBX) makes for a fine opportunity as well.
Bear with me: If you’ll observe the behavior of Medbox’s stock on Yahoo Finance, you’ll see it’s prone to meteoric jumps and falls. The current price is $6.15, but it’s been as high as $98 riding the good news of gradual legalization.
For a stock that’s been at $98, $6 is about as close to the ground floor as you’re going to get. Market behavior is cyclical and as legalization spreads, the stock price is going to spike again and again.
And one of the spikes is going to stick.
The legal marijuana industry is rapidly expanding along with the number and size of public companies getting involved. Legal marijuana usage grew 60% in 2014, putting annual revenue at $2.5 billion. Estimates put the industry’s annual activity at $10 billion by 2018.
That’s just the beginning. With only a handful of states green-lighting cannabis usage and no approval at all yet from the federal government, the upside for any company with a sizable foothold in the marijuana industry is going to be massive.
Don’t miss out on this watershed moment.