If This Happens in 2020, Marijuana Stocks Could Skyrocket

Strong Marijuana Stocks Prediction for 2020

The marijuana industry is as full of potential now as at almost any other time in its history. That’s because, with all the initial hype beginning to fade, investors who truly see the potential moving forward in the pot industry are now set to profit. Marijuana stocks, in other words, are well positioned to double or triple their values in 2020 and beyond.

Why? Because the industry is going to tackle its biggest competitor: the black market.

Marijuana Stocks & the Black Market

The marijuana industry has, since its inception, had one main opponent: illicit dealers.

While regulators and red tape made legal marijuana more expensive as time wore on, the black market had no such restrictions. Why come into the legal market and pay taxes and licensing fees when you can remain in the black market—only now law enforcement is focusing its attention elsewhere with marijuana becoming increasingly accepted—when you can produce the same product for much cheaper?

That decision is made all the easier when you consider that the black market dealers were operating a monopoly for years. It wasn’t until recently—the past few years in most places—that recreational pot legalization was even being discussed.

In other words, black market dealers had a dedicated consumer base that trusted them, and had done so for decades. There was no real push to stop or even make their dealings legal.

All that could change in 2020.

You see, right now one of the biggest areas of opportunity in the marijuana industry is the black market. In California, the largest recreational marijuana market on earth, the legal market is still being outsold dramatically by the black market.

An audit by the United Cannabis Business Association found that there are about 2,835 unlicensed weed dispensaries and delivery services in California, the largest marijuana market on Earth. That number easily puts to shame the 873 licensed sellers. (Source: “Nearly 3,000 illegal marijuana businesses found in California audit, dwarfing legal trade,” Los Angeles Times, September 11, 2019.)

As you’d expect, that massive disparity in availability has played itself out in a glaring revenue deficit. Another industry-backed audit found that about $8.7 billion will be spent on unregulated cannabis in California this year.

In the same period, it’s expected that there will only be about $3.1 billion spent on cannabis sold by legal operators in the state.

If all that money could be brought into the legal market, marijuana sales would catapult upwards. And that upward trajectory would guide marijuana stocks and their prices higher.

Can Marijuana Stocks Get the Upper Hand?

Right now, the marijuana industry is primarily focused on one thing: revenue and sales.

With pot stocks now having several major markets to operate within (Canada and several large U.S. states, including California, not to mention all the medical marijuana markets around the globe), investors and analysts aren’t interested in expansion or supply capacity at the moment.

No, they’re interested in cold, hard sales. How much product a company can sell and how much of a profit they are making.

Many analysts’ expectations were not met when the market first was legalized in Canada, and that’s mainly because of the black market.

If the black market were even to be marginally chewed into by the legal market, shares would skyrocket as millions upon millions of dollars of revenue would pour into pot stocks.

And with all that newfound revenue, the companies could then set their sights on expansion once again.

Whether in Canada, the U.S., or abroad, the fact is that marijuana stocks will need a good bit of cash in hand to pay for these developments. That would be made instantly possible by all the black market cash finally coming into the legal market.

So, we have what needs to be done in 2020 to spur marijuana stock gains; the next question is how.

It’s simple, really. Marijuana companies need to use their immense popularity (poll after poll is showing that marijuana is becoming increasingly accepted by residents throughout the industrialized world) and their many political connections to focus heavily on eradicating the black market, or at least taking away a large chunk of its power.

At the end of the day, it’s going to take the government and private sectors working in tandem to clamp down on illegal marijuana sellers.

We’re already seeing a lot of progress being made in this area, as Canada has just recently legalized marijuana edibles. Considering they were formerly only under the purview of illicit dealers, this is a huge win for pot stocks. Now those who enjoy marijuana edibles will be able to go into legal stores and have their needs serviced.

Governments can also help by cutting away some of the red tape and onerous taxes from the industry, allowing legal weed to compete price-wise with the black market.

Some markets, like the medical pot market in Oklahoma, have done a perfect job of this, putting little to no restrictions on things like licensing.

Finally, another big blow aimed at the black market comes by way of things like cannabis-infused beverages. These are harder to imitate than other marijuana products, making them proprietary products that legal marijuana companies can use to lure people away from the black market.

And a lot of damage will be done by the black market…to itself. The vaping health scare sweeping the nation, for instance, is largely being fanned by illegal vaping products. Legal vaping products, on the other hand, have yet to cause the adverse health effects that have scared so many.

Analyst Take

The future of the marijuana industry has never been as bright as it is today.

All it will take for pot stocks to reach their potential is a coordinated effort from both government and law enforcement in conjunction with the private sector to effectively terminate the black market and cause pot sales to surge.