Marijuana Stocks: Is This the Pump Before the Dump?
The great marijuana gold rush is in full swing, and investors are scrambling to get their hands on some equity while it’s still cheap. Marijuana industry stocks — mostly trading over the counter and for fractions of a dollar — have surged anywhere from 20 to 1,700 percent over the past few weeks, catalyzed by the legalization of recreational weed in Colorado.
The frenzy was inevitable. Businesses have been positioning themselves for years, each trying to be a leader in an industry that is expected to be worth billions of dollars in the coming years. Marijuana sales reportedly averaged about $1 million per day in the first five days of legalization in Colorado, and policymakers are expecting full-year 2014 sales of about $600 million. The market in Washington state, which is expected to legalize the retail sale of weed this year, is projected to be at least as large, if not larger. One study cited by the Huffington Post predicts a $10 billion market in the U.S. by 2018.
It’s a big pie that’s only expected to get bigger. Bloomberg Industries estimates that national legalization could open the doors to a $30 to $45 billion a year industry. Jamen Shivley, a founder of Diego Pellicer, puts the market closer to $100 billion.