Buckle Up: This Industry Could Be Set to Blast Off
Photo by Yiorgos Ntrahas on Unsplash
The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.
For the majority of the 20th century, the possession, cultivation, and sale of marijuana were illegal. But the tides of change have been swift. On Nov. 6, 2012, Washington and Colorado became the 1st states to legalize marijuana for recreational use. And as of September, marijuana use is legal in 18 states and decriminalized in 13 more.
The march toward legalization looks to be accelerating, and many believe it’s only a matter of time before the plant will become legal at a federal level.
This trend has largely been spurred by one of the most dramatic shifts in public opinion in modern American history. A 2019 Pew Research poll found that 67% of Americans think marijuana should be legalized. That is up from just 16% in 1989. And that number increases to 91% if you include people who think it should at least be legal for medicinal use. Only 8% of people believe it should be illegal in all instances.
This attitude shift has been so total that during the height of the COVID-19 lockdowns, many states deemed marijuana dispensaries “essential business” and kept them open.
With this rapid pace of legalization has come a robust and thriving cannabis market. The industry includes farmers and cultivators, retailers, specialty product makers, pharmaceutical companies, and many others. Some companies, like Tilray Inc. (NASDAQ: TLRY), blur these lines, operating in multiple capacities with different brands.
The industry is big, and it’s only getting bigger. In 2020, the legal market brought in $17.5 billion. That’s a 46% increase from 2019. According to the research firm New Frontier Data, by 2025 the industry is expected to pull in revenues of $43 billion with a compound annual growth rate (CAGR) of 16%. That is potentially strong, attractive growth for any investor.
Money is flowing into the market from large players in other sectors in an attempt to capitalize on that growth. Constellation Brands Inc. (NYSE: STZ), the company behind Corona beers, bought a $4 billion stake in Canopy Growth Corp. (NASDAQ: CGC), one of the largest players in the space, and Anheuser-Busch Inbev SA/NV (NYSE: BUD), which owns the Budweiser brand, is developing a cannabis-infused beer.
This growth has given rise to a financial industry that is providing opportunities to investors. Foothill Capital Management has an actively managed exchange-traded fund (ETF) — Cannabis Growth ETF (NYSE: BUDX) — specifically dedicated to high-growth and innovative opportunities in the cannabis market, serving retail and institutional investors alike.
However you choose to invest in this space, one thing is certain: It is an exciting time for investors in the cannabis market.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained from 888.885.0588. Please read the prospectus carefully before you invest.
Investing involves risk, including possible loss of principal. The cannabis industry is subject to rapidly evolving laws, rules and regulations, and increasing competition which may cause such companies to change business model, shrink or suddenly close. These may limit access to banks, and create significant burdens on company resources due to litigation, enforcement actions, receipt of necessary permits and authorizations to engage in medical cannabis research or to otherwise cultivate, possess or distribute cannabis. Possession and use of cannabis is illegal under federal and certain states’ laws, which may negatively impact the value of Fund investments.
Where legalized by states, cannabis possession and use remains a violation of federal law. The companies in which the Fund invests are subject to various laws and regulations relating to the manufacture, management, transportation, storage and disposal of cannabis, including health and safety, conduct of operations, and environmental protection. Even if a company’s operations are permitted under current law, they may not be permitted in the future, and a company may not be able to continue operations in its current location. Controlled substance legislation differs significantly between countries and may limit a company’s ability to sell products. Please see the prospectus for details of these and other risks.
Distributed by IMST Distributors, LLC. Foothill Capital Management is not affiliated with IMST Distributors.
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