Saturday, April 19, 2014

Willy Wonka & The Weed Factory

Is it from childhood dreams that men find the passion and the drive to seek out new adventures and go after vast riches most only dream about?

When I first heard a company wanted to open up a marijuana growing operation at an old chocolate factory I wondered how far and how big this dream could go. Much like earlier days when alcohol was the devils drink and men who drank were thought to live immoral lives we have seen the times change and logic prevail.

You couldn't stop people from drinking during prohibition no more than you can stop people from smoking marijuana which is a naturally growing plant(weed) used around the world in healing for centuries. The greater uses of marijuana have led to a strong push of medical use around the world and recent changes in the laws in Canada and the US have opened the door to a whole new realm of capitalist ideas on making a move into this lucrative sector.

Organized crime seem to have had the jump on everyone by taking this weed and mass producing it cheap and creating a delivery network that has financed empires to thrive and expand into more serious drugs like cocaine and crystal meth. These drugs have more addictive properties and some will tell you to try crystal meth once is to be hooked for life. A life of 3-5 years to be more accurate, since it is a quick killer.

I think its easy to see the pros for a full blown legalization around the world that puts the control and the taxes in the proper hands. In Colorado the tax structure is high but since the monthly yield is had at such a low cost base producers don't seem to care how much the government pockets along the way. As for the consumer of recreational marijuana they will pay the going rate to have their favorite strain of weed for the weekend. I find this no different than a hike in liquor tax. It doesn't mean I will stop buying Crown Royal Black or aged El Dorado Rum. Strict government controls on processing, distribution, transportation and storage will ultimately show this new vibrant industry can not only be safe but can take a bite out of crime at the same time.

There are a lot of new companies to choose from but as I look at the growing trend in the USA I can't help but wonder why some have massive market caps yet very little in the form of a business plan or assets and of course no cash. In Canada we seem to have our share of wanna-be pot plays in the same boat but some buck the trend by preparing a team, a plan and a path to a license and quick production. If you look back to the greatest success stories in North American business they all started the same way. They had a plan, they built a team and they set milestones to success and put the plan into action.

I am invested in this sector. I don't like very many of the companies out there but a couple of them do stand out and will soon rise to the top. If you decide to invest make sure the company has a plan and a means to execute that plan.

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